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What changed in Regional Management Corp.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Regional Management Corp.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+335 added−421 removedSource: 10-K (2024-02-22) vs 10-K (2023-02-24)

Top changes in Regional Management Corp.'s 2023 10-K

335 paragraphs added · 421 removed · 299 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

75 edited+12 added−7 removed101 unchanged
Biggest changeRegional Management Corp. | 2022 Annual Report on Form 10-K | 8 We also offer our employees a variety of training and development opportunities. New employees complete a comprehensive training curriculum that focuses on the company- and position-specific competencies needed to be successful. The training includes a blended approach utilizing eLearning modules, hands-on exercises, webinars, and assessments.
Biggest changeWe believe that an emphasis on DE&I drives value for our employees, customers, and stockholders, and that our DE&I commitment enables us to better serve our communities. We also offer our employees a variety of training and development opportunities. New employees complete a comprehensive training curriculum that focuses on the company- and position-specific competencies needed to be successful.
The information contained on our corporate responsibility website is not and should not be viewed as being incorporated by reference into this Annual Report on Form 10-K. Payment and Loan Servicing We have implemented company-wide payment and loan servicing policies and procedures, which are designed to maintain consistent portfolio performance and to ensure regulatory compliance.
The information contained on our corporate responsibility website is not and should not be viewed as being incorporated by reference into this Annual Report on Form 10-K. Payment and Loan Servicing We have implemented company-wide payment and loan servicing policies and procedures, which are designed to maintain consistent portfolio performance and ensure regulatory compliance.
We believe that the rates on our products are significantly more attractive than many other credit options available to our customers, such as payday, pawn, and title loans, which often come Regional Management Corp. | 2022 Annual Report on Form 10-K | 2 with APRs over 300%.
We believe that the rates on our products are significantly Regional Management Corp. | 2023 Annual Report on Form 10-K | 2 more attractive than many other credit options available to our customers, such as payday, pawn, and title loans, which often come with APRs over 300%.
Over time, w e intend to improve our existing product offerings, to introduce new products and services, and to capture customers through new channels and partnerships. For example, in 2020, we introduced an enhanced auto-secured large loan product, through which we offer larger auto-secured loans to some of our highest credit quality customers.
Over time, we intend to improve our existing product offerings, to introduce new products and services, and to capture customers through new channels and partnerships. For example, in 2020, we introduced an enhanced auto-secured large loan product, through which we offer larger auto-secured loans to some of our highest credit quality customers.
Our branch personnel market our products in a number of ways, including through a merchant referral program, customer referrals, direct telephone and mail solicitations of current and former customers, and by leveraging our direct mail program and leads generated by our digital affiliates and consumer website.
Our branch personnel market our products in a number of ways, including through customer referrals, direct telephone and mail solicitations of current and former customers, and by leveraging our direct mail program and leads generated by our digital affiliates and consumer website.
We believe that there remains substantial opportunity to grow the finance receivable portfolios of our existing branches by continuing our focus on large loan originations and by cross-selling new loan products to our existing customers. During 2022, we expanded into Mississippi, Indiana, California, Louisiana, and Idaho.
We believe that there remains substantial opportunity to grow the finance receivable portfolios of our existing branches by continuing our focus on large loan originations and by cross-selling new loan products to our existing customers. During 2022, we expanded into Mississippi, Indiana, California, Louisiana, and Idaho, and we further expanded into Arizona during 2023.
In the fourth quarter of 2022, approximately 80% (by dollar amount) of customer payments were made by debit card or ACH. If a loan becomes severely delinquent, a branch may receive co-collection assistance from our centralized servicing team or third-party collector. Our philosophy is to work with customers experiencing payment difficulties.
In the fourth quarter of 2023, approximately 83% (by dollar amount) of customer payments were made by debit card or ACH. If a loan becomes severely delinquent, a branch may receive co-collection assistance from our centralized servicing team or third-party collector. Our philosophy is to work with customers experiencing payment difficulties.
Borrowers who have signed up for online account access have on-demand access to their account information through Regional’s website. In addition, borrowers may elect to receive automated, one-way text messages with information regarding their account, including payment reminders.
Borrowers who have signed up for online account access have on-demand access to their account information through Regional’s website and mobile app. In addition, borrowers may elect to receive automated, one-way text messages with information regarding their account, including payment reminders.
However, during that time, we also remained keenly focused on driving operating leverage through the prudent management of our expenses. Between 2018 and 2022, our operating expense ratio (annualized general and administrative expenses as a percentage of average net finance receivables) decreased from 16.1% to 14.5%.
However, during that time, we also remained keenly focused on driving operating leverage through the prudent management of our expenses. Between 2018 and 2023, our operating expense ratio (annualized general and administrative expenses as a percentage of average net finance receivables) decreased from 16.1% to 14.2%.
ITEM 1. BUSINESS . Overview We are a diversified consumer finance company that provides installment loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies, and other lenders.
ITEM 1. BU SINESS . Overview We are a diversified consumer finance company that provides installment loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies, and other lenders.
Our Chief Executive Officer has over 30 years of experience in consumer financial services, our Chief Operating Officer has over 35 years of experience in consumer financial services, our Chief Financial Officer has over 20 years of financial services experience, and our Chief Credit Risk Officer has 20 years of financial and consumer lending experience.
Our Chief Executive Officer has over 30 years of experience in consumer financial services, our Chief Financial Officer has over 20 years of financial services experience, and our Chief Credit Risk Officer has 20 years of financial and consumer lending experience.
In 2022, 2021, and 2020, interest and fee income from large loans contributed $288.5 million, $229.9 million, and $180.3 million, respectively, to our total revenue. • Optional Payment and Collateral Protection Insurance Products – We offer our customers optional payment and collateral protection insurance relating to our loan products, including credit life insurance, accident and health insurance, involuntary unemployment insurance, and personal property insurance.
In 2023, 2022, and 2021, interest and fee income from large loans contributed $323.9 million, $288.5 million, and $229.9 million, respectively, to our total revenue. • Optional Payment and Collateral Protection Insurance Products – We offer our customers optional payment and collateral protection insurance relating to our loan products, including credit life insurance, accident and health insurance, involuntary unemployment insurance, and personal property insurance.
Our large loans, which are reserved for higher credit quality customers who meet more stringent underwriting requirements than those applied to small loan applicants, had an average APR of 29.5% for loans originated in 2022.
Our large loans, which are reserved for higher credit quality customers who meet more stringent underwriting requirements than those applied to small loan applicants, had an average APR of 29.7% for loans originated in 2023.
Our branch network serves as the foundation of our omni-channel platform and the primary point of contact with our customers. Over 72% of our loan originations in 2022 were facilitated by one of our branch locations, and nearly all loans, regardless of origination channel, are serviced through our branches, allowing us to maintain frequent, in-person contact with our customers.
Our branch network serves as the foundation of our omni-channel platform and the primary point of contact with our customers. Nearly 73% of our loan originations in 2023 were facilitated by one of our branch locations, and nearly all loans, regardless of origination channel, are serviced through our branches, allowing us to maintain frequent, in-person contact with our customers.
However, as with the optional insurance products that we offer, any customer purchasing an Auto Plus Plan acknowledges that the purchase is optional and not a condition of the loan and that the plan may be cancelled within 30 days for a full refund.
However, as with the optional insurance products that we offer, any customer purchasing these products acknowledges that the purchase is optional and not a condition of the loan and that the plan may be cancelled within 30 days for a full refund.
We are regulated by state agencies that regularly audit our branches and operations. In general, most state statutes establish maximum loan amounts and interest rates, as well as the types and maximum amounts of fees and insurance premiums that we may charge for both direct and indirect lending. These specific allowable charges vary by state.
We are regulated by state agencies that regularly audit our branches and operations. In general, most state statutes establish maximum loan amounts and interest rates, as well as the types and maximum amounts of fees and insurance premiums that we may charge. These specific allowable charges vary by state.
Our flexible loan products, generally ranging from $500 to $25,000 with terms of up to 60 months, are competitively priced, easy to understand, and incorporate features designed to meet the varied financial needs and credit profiles of a broad range of consumers.
Attractive Products for Customers with Limited Access to Credit. Our flexible loan products, generally ranging from $500 to $25,000 with terms of up to 60 months, are competitively priced, easy to understand, and incorporate features designed to meet the varied financial needs and credit profiles of a broad range of consumers.
We exist to serve that purpose, and accordingly, we offer our customers access to credit through our affordable, easy-to-understand small and large loan products, which we price on fair terms in consideration of the associated credit risk and servicing costs. The average annual percentage rate (“ APR ”) of our small loans originated in 2022 was 42.7%.
We exist to serve that purpose, and accordingly, we offer our customers access to credit through our affordable, easy-to-understand small and large loan products, which we price on fair terms in consideration of the associated credit risk and servicing costs. The average annual percentage rate (“ APR ”) of our small loans originated in 2023 was 45.2%.
However, changes in macroeconomic factors, including inflation, rising interest rates, and geopolitical conflict, have impacted our typical seasonal trends for loan volume and delinquency. Government Regulation Consumer finance companies are subject to extensive regulation, supervision, and licensing under various federal, state, and local statutes, regulations, and ordinances.
Consequently, we experience seasonal fluctuations in our operating results. However, changes in macroeconomic factors, including inflation, rising interest rates, and geopolitical conflict, have impacted our typical seasonal trends for loan volume and delinquency. Government Regulation Consumer finance companies are subject to extensive regulation, supervision, and licensing under various federal, state, and local statutes, regulations, and ordinances.
At December 31, 2018 2019 2020 2021 2022 Texas 27 % 27 % 29 % 31 % 33 % South Carolina 21 % 19 % 18 % 15 % 12 % North Carolina 16 % 15 % 14 % 15 % 15 % All Other States 36 % 39 % 39 % 39 % 40 % Total 100 % 100 % 100 % 100 % 100 % The following table sets forth the total number of large loans, total large loan finance receivables, and average size per loan by state as of December 31, 2022.
At December 31, 2019 2020 2021 2022 2023 Texas 27 % 29 % 31 % 33 % 32 % North Carolina 15 % 14 % 15 % 15 % 16 % South Carolina 19 % 18 % 15 % 12 % 11 % All Other States 39 % 39 % 39 % 40 % 41 % Total 100 % 100 % 100 % 100 % 100 % The following table sets forth the total number of large loans, total large loan finance receivables, and average size per loan by state as of December 31, 2023.
In 2022, 2021, and 2020, interest and fee income from small loans contributed $160.4 million, $150.6 million, and $151.5 million, respectively, to our total revenue. • Large Loans – We offer large installment loans with cash proceeds to customers ranging from $2,501 to $25,000, with terms between 18 and 60 months.
In 2023, 2022, and 2021, interest and fee income from small loans contributed $164.7 million, $160.4 million, and $150.6 million, respectively, to our total revenue. • Large Loans – We offer large installment loans with cash proceeds to customers ranging from $2,501 to $25,000, with terms between 18 and 60 months.
As a result, our new branches opened in 2021 and 2022 have on average grown their net finance receivables and operating income contribution at a faster pace than branches opened prior to 2021.
As a result, our new branches opened between 2021 and 2023 have on average grown their net finance receivables and operating income contribution at a faster pace than branches opened prior to 2021.
As of December 31, 2022, we operated under the name “Regional Finance” online and in branch locations in 18 states across the United States, serving 517,700 active accounts. Most of our loan products are secured, and each is structured on a fixed-rate, fixed-term basis with fully amortizing equal monthly installment payments, repayable at any time without penalty.
As of December 31, 2023, we operated under the name “Regional Finance” online and in branch locations in 19 states across the United States, serving 538,400 active accounts. Most of our loan products are secured, and each is structured on a fixed-rate, fixed-term basis with fully amortizing equal monthly installment payments, repayable at any time without penalty.
In 2022, 2021, and 2020, insurance income, net contributed $43.5 million, $35.5 million, and $28.3 million, respectively, to our total revenue. Through November 2022, we also offered indirect retail installment loans of up to $7,500.
In 2023, 2022, and 2021, insurance income, net contributed $44.5 million, $43.5 million, and $35.5 million, respectively, to our total revenue. Through November 2022, we also offered indirect retail installment loans of up to $7,500.
As of the end of 2022, this product exceeded $100 million in total portfolio. In the future, we will continue to assess new credit and non-credit products and services and expand the channels and partnerships through which we acquire customers. Maintain Sound Underwriting and Credit Control. We have invested heavily in our credit and collections functions.
As of the end of 2023, this product represented $134.5 million in total portfolio. In the future, we will continue to assess new credit and non-credit products and services and expand the channels and partnerships through which we acquire customers. Maintain Sound Underwriting and Credit Control. We have invested heavily in our credit and collections functions.
We also structure our loans on a fixed-rate, fixed-term basis with fully amortizing, equal monthly installment payments that are designed to be affordable for our customers and made over an average term of 22 months and 46 months for small and l arge loans , respectively ( for loans originated in 2022 ).
We also structure our loans on a fixed-rate, fixed-term basis with fully amortizing, equal monthly installment payments that are designed to be affordable for our customers and made over an average term of 23 months and 46 months for small and large loans, respectively (for loans originated in 2023).
In 2022, the average originated principal balance and term for our small loans were $2,069 and 22 months, respectively. The average yield we earned on our portfolio of small loans was 35.2% in 2022. The following table sets forth the distribution of our small loan finance receivable portfolio by state as of the dates indicated.
In 2023, the average originated principal balance and term for our small loans were $2,091 and 23 months, respectively. The average yield we earned on our portfolio of small loans was 35.6% in 2023. The following table sets forth the distribution of our small loan finance receivable portfolio by state as of the dates indicated.
We believe that refinancing delinquent loans for certain deserving customers who have made periodic payments allows us to help customers resolve temporary financial setbacks and repair or sustain their credit. During 2022, we refinanced approximately $13.5 million of loans that were 60 or more days contractually past due, representing approximately 0.8% of our total loan originations in 2022.
We believe that refinancing delinquent loans for certain deserving customers who have made periodic payments allows us to help customers resolve temporary financial setbacks and repair or sustain their credit. During 2023, we refinanced approximately $16.2 million of loans that were 60 or more days contractually past due, representing approximately 1.1% of our total loan originations in 2023.
Our small loans are typically secured by non-essential household goods and/or, to a lesser extent, a lien on a vehicle, which may be an automobile, motorcycle, boat, or all-terrain vehicle. As of December 31, 2022, we had 287,000 small loans outstanding representing $481.6 million in finance receivables, or an average of approximately $1,700 per loan.
Our small loans are typically secured by non-essential household goods and/or, to a lesser extent, a lien on a vehicle, which may be an automobile, motorcycle, boat, or all-terrain vehicle. As of December 31, 2023, we had 289,300 small loans outstanding representing $493.5 million in finance receivables, or an average of approximately $1,700 per loan.
Our large loans are typically secured by non-essential household goods and/or a vehicle. As of December 31, 2022, we had 225,600 large loans outstanding representing $1.2 billion in finance receivables, or an average of approximately $5,400 per loan.
Our large loans are typically secured by non-essential household goods and/or a vehicle. As of December 31, 2023, we had 246,600 large loans outstanding representing $1.3 billion in finance receivables, or an average of approximately $5,200 per loan.
We ceased offering indirect retail installment loans in November 2022 to focus on growing our core loan portfolio, but we continue to own and service the loans that we previously originated. As of December 31, 2022, we had 5,100 retail loans outstanding representing $9.6 million in finance receivables, or an average of approximately $1,900 per loan.
We ceased offering indirect retail installment loans in November 2022 to focus on growing our core loan portfolio, but we continue to own and service the loans that we previously originated. As of December 31, 2023, we had 2,500 retail loans outstanding representing $3.8 million in finance receivables, or an average of approximately $1,500 per loan.
These efforts enabled us to grow new digitally sourced volumes as a percentage of total new customer volumes to nearly 30% in 2022, compared to 27% in 2021. In the future, we will continue our focus on the digital channel.
These efforts enabled us to maintain new digitally sourced volumes as a percentage of total new customer volumes at nearly 29% in 2023, compared to nearly 30% in 2022. In the future, we will continue our focus on the digital channel.
As of December 31, 2022, the outstanding balance of such refinanced loans was $11.2 million, or 0.7% of finance receivables as of such date. We may also agree to settle a past-due loan by accepting less than the full principal balance owed.
As of December 31, 2023, the outstanding balance of such refinanced loans was $14.6 million, or 0.8% of finance receivables as of such date. We may also agree to settle a past-due loan by accepting less than the full principal balance owed.
At December 31, 2018 2019 2020 2021 2022 Texas 34 % 39 % 37 % 35 % 33 % South Carolina 16 % 13 % 12 % 12 % 10 % North Carolina 15 % 15 % 17 % 16 % 16 % Alabama 13 % 11 % 11 % 10 % 10 % All Other States 22 % 22 % 23 % 27 % 31 % Total 100 % 100 % 100 % 100 % 100 % The following table sets forth the total number of small loans, total small loan finance receivables, and average size per loan by state as of December 31, 2022.
At December 31, 2019 2020 2021 2022 2023 Texas 39 % 37 % 35 % 33 % 30 % North Carolina 15 % 17 % 16 % 16 % 13 % Alabama 11 % 11 % 10 % 10 % 10 % All Other States 35 % 35 % 39 % 41 % 47 % Total 100 % 100 % 100 % 100 % 100 % The following table sets forth the total number of small loans, total small loan finance receivables, and average size per loan by state as of December 31, 2023.
We began building our branch network over 30 years ago and have expanded the network to 345 branches in 18 states as of December 31, 2022.
We began building our branch network over 30 years ago and have expanded the network to 346 branches in 19 states as of December 31, 2023.
These investments allow us to control the credit quality of our portfolio, maintain compliance with evolving state and federal law, and react quickly whenever market dynamics may change. We have also expanded our centralized collections department and provided our branches with improved collections tools, training, and incentives.
These investments allow us to control the credit quality of our portfolio, maintain compliance with evolving state and federal law, and react quickly whenever market dynamics may change. We have also expanded our centralized collections department and provided our branches with improved collections tools, training, Regional Management Corp. | 2023 Annual Report on Form 10-K | 3 and incentives.
The Military Lending Act applies to active duty servicemembers and their covered dependents. We are prohibited from charging a borrower covered under the Military Lending Act more than a 36% Military Annual Percentage Rate, which includes certain costs associated with the loan in calculating the interest rate. • Gramm-Leach-Bliley Act.
We are prohibited from charging a borrower covered under the Military Lending Act more than a 36% Military Annual Percentage Rate, which includes certain costs associated with the loan in calculating the rate. • Gramm-Leach-Bliley Act.
Accordingly, we believe that alternative financial services providers are not an attractive option for customers who meet our underwriting standards, which are generally stricter than the underwriting standards of alternative financial services providers. Our small and large loans also compete with pure online lenders, peer-to-peer lenders, and issuers of non-prime credit cards.
Accordingly, we believe that alternative financial services providers are not an attractive option for customers who meet our underwriting standards, which are generally stricter than the underwriting standards of alternative financial services providers. Our loan products also compete with pure online lenders, peer-to-peer lenders, and issuers of non-prime credit cards. Seasonality Our loan volume and contractual delinquency follow seasonal trends.
In evaluating a loan for renewal, in addition to our standard underwriting requirements, we are able to Regional Management Corp. | 2022 Annual Report on Form 10-K | 5 take into consideration the customer’s prior payment performance with us, which we believe is a very strong indicator of the customer’s future credit performance . Small Loans.
In evaluating a loan for renewal, in addition to our standard underwriting requirements, we are able to take into consideration the customer’s prior payment performance with us, which we believe is a very strong indicator of the customer’s future credit performance. Small Loans.
Renewals typically refinance one or more of a customer’s loans into a single new loan, which in some cases will be for a larger principal balance than the customer’s original loan, though we permit renewals of existing loans at or below the original loan amount.
Renewals typically refinance one or more of a customer’s loans into a single new loan, which in some Regional Management Corp. | 2023 Annual Report on Form 10-K | 5 cases will be for a larger principal balance than the customer’s original loan, though we permit renewals of existing loans at or below the original loan amount.
Our investment in our digital channel allows us to add capabilities, improve efficiencies, enhance the customer experience, and test new mechanisms for lead generation to diversify and expand our new business acquisition opportunities. Regional Management Corp. | 2022 Annual Report on Form 10-K | 4 Enhance Our Products, Channels, and Services .
Our investment in our digital channel allows us to add capabilities, improve efficiencies, enhance the customer experience, and test new mechanisms for lead generation to diversify and expand our new business acquisition opportunities. Enhance Our Products, Channels, and Services.
We are also subject to state laws and regulations governing insurance agents in the states in which we sell insurance. State insurance regulations require that insurance agents be licensed and limit the premium amount Regional Management Corp. | 2022 Annual Report on Form 10-K | 10 charged for such insurance.
We are also subject to state laws and regulations governing insurance agents in the states in which we sell insurance. State insurance regulations require that insurance agents be licensed and limit the premium amount charged for such insurance.
For example, in 2022, we worked with many of our deserving customers to refinance nearly 35,000 of our customers’ small loans into large loans, representing $203.4 million in finance receivables at origination, and resulting in a decrease in these customers’ average APR from 42.2% to 30.2%.
For example, in 2023, we worked with many of our deserving customers to refinance nearly 24,000 of our customers’ small loans into large loans, representing $133.6 million in finance receivables at origination, and resulting in a decrease in these customers’ average APR from 41.8% to 30.3%.
All of our employees are located within the United States, and none are covered by a collective bargaining agreement. We work diligently to attract the best talent in order to meet the current and future demands of our business, and we have demonstrated a history of investing in our workforce by offering competitive compensation, comprehensive benefits, and development opportunities.
We work diligently to attract the best talent in order to meet the current and future demands of our business, and we have demonstrated a history of investing in our workforce by offering competitive compensation, comprehensive benefits, and development opportunities.
Our primary insurance products include optional credit life insurance, accident and health insurance, involuntary Regional Management Corp. | 2022 Annual Report on Form 10-K | 6 unemployment insurance, and personal property insurance. These insurance products are optional and not a condition of the loan, and we do not sell insurance to non-borrowers.
Our primary insurance products include optional credit life insurance, accident and health insurance, involuntary unemployment insurance, and personal property insurance. These insurance products are optional and not a condition of the loan, and we do not sell insurance to non-borrowers.
We plan to expand the testing of our digital origination product and channel to new geographies and improve the customer experience. We also expect to complete the development of our mobile app and further enhancements to our customer portal, allowing our customers easy access to payment functionality and additional features.
We plan to expand the testing of our digital origination product and channel to new geographies and improve the customer experience. We also expect to complete enhancements to our customer portal and mobile app, allowing our customers easy access to payment functionality and additional Regional Management Corp. | 2023 Annual Report on Form 10-K | 4 features.
As of December 31, 2022, our state operations vice presidents averaged nearly 26 years of industry experience and 11 years of service at Regional, while our associate vice presidents and district supervisors averaged nearly 23 years of industry experience and 8 years of service with Regional.
As of December 31, 2023, our state operations vice presidents averaged nearly 30 years of industry experience and over 10 years of service at Regional, while our associate vice presidents and district supervisors averaged over 20 years of industry experience and nearly 10 years of service with Regional.
Regional Management Corp. | 2022 Annual Report on Form 10-K | 9 Information Technology We utilize a loan origination and servicing platform offered by Nortridge Software, LLC (“ Nortridge ”) both to originate loans and to service our loan portfolio.
Information Technology We utilize a loan origination and servicing platform offered by Nortridge Software, LLC (“ Nortridge ”) both to originate loans and to service our loan portfolio.
In 2022 , insurance income, net was $43.5 million , or 8. 6 % of our total revenue. Credit life insurance provides for the payment in full of the borrower’s credit obligation to the lender in the event of the borrower’s death and, in some states, may provide a payment to a secondary beneficiary listed by the borrower.
Credit life insurance provides for the payment in full of the borrower’s credit obligation to the lender in the event of the borrower’s death and, in some states, may provide a payment to a secondary beneficiary listed by the borrower.
Regional Management Corp. | 2022 Annual Report on Form 10-K | 7 The following table sets forth the net finance receivables per branch based on maturity: Age of Branch (As of December 31, 2022) Net Finance Receivables Per Branch as of December 31, 2022 Percentage Increase From Prior Age Category Number of Branches (In thousands) Branches open less than one year $ 2,612 — 16 Branches open one to three years $ 4,478 71.4 % 28 Branches open three to five years $ 3,601 (19.6 )% 35 Branches open five years or more $ 5,286 46.8 % 266 All branches $ 4,926 345 The following table sets forth the average operating income contribution per branch for the year ended December 31, 2022, based on maturity of the branch.
Regional Management Corp. | 2023 Annual Report on Form 10-K | 7 The following table sets forth the net finance receivables per branch based on maturity: Age of Branch (As of December 31, 2023) Net Finance Receivables Per Branch as of December 31, 2023 Percentage Increase From Prior Age Category Number of Branches (In thousands) Branches open less than one year $ 3,621 — 6 Branches open one to three years $ 5,782 59.7 % 35 Branches open three to five years $ 3,377 (41.6 )% 23 Branches open five years or more $ 5,212 54.3 % 282 All branches $ 5,120 346 The following table sets forth the average operating income contribution per branch for the year ended December 31, 2023, based on maturity of the branch.
In addition, in select states, we offer an “Auto Plus Plan” auto club product that is administered and serviced through a third-party provider.
In addition, in select states, we offer home and auto club products that are administered and serviced through a third-party provider.
We have invested in customizing the Nortridge platform to meet our needs based upon our specific products, processes, and reporting requirements. The Nortridge custom decision engine utilizes application information and a credit report detailing the applicant’s credit history to generate an initial credit decision and to guide our branch employees through the loan origination process to the final credit decision.
The Nortridge custom decision engine utilizes application information and a credit report detailing the applicant’s credit history to generate an initial credit decision and to guide our branch employees through the loan origination process to the final credit decision.
For example, we rolled out an improved digital prequalification experience for our customers, including expanded integrations with existing and new digital affiliates and lead generators. We also began testing a digital origination product and channel for new customers, through which new loans can be fulfilled entirely online without intervention by our personnel, and we launched an enhanced customer portal.
We also began testing a digital origination product and channel for new customers (through which new loans can be fulfilled entirely online without intervention by our personnel), we launched an enhanced customer portal, and we deployed our mobile app.
Age of Branch (As of December 31, 2022) Average Branch Operating Income Contribution Percentage Increase From Prior Age Category Number of Branches (In thousands) Branches open less than one year $ (5 ) — 16 Branches open one to three years $ 291 5,920.0 % 28 Branches open three to five years $ 268 (7.9 )% 35 Branches open five years or more $ 661 146.6 % 266 All branches $ 560 345 Historically, net finance receivables per branch and average branch operating income contribution have increased as our branches mature.
Age of Branch (As of December 31, 2023) Average Branch Operating Income Contribution Percentage Increase From Prior Age Category Number of Branches (In thousands) Branches open less than one year $ (220 ) — 6 Branches open one to three years $ 195 188.6 % 35 Branches open three to five years $ 194 (0.5 )% 23 Branches open five years or more $ 497 156.2 % 282 All branches $ 434 346 Historically, net finance receivables per branch and average branch operating income contribution have increased as our branches mature.
Customers generally are limited to two deferrals of their monthly payment in a rolling twelve-month period unless it is determined that an exception is warranted (e.g . due to a natural disaster or pandemic). For example, since the COVID-19 pandemic, we have temporarily allowed up to three deferrals in a rolling twelve-month period.
In the past, customers have generally been limited to two deferrals of their monthly payment in a rolling twelve-month period unless it was determined that an exception was warranted (e.g. due to a natural disaster, pandemic, or other macroeconomic stressors).
Direct mail campaigns are launched throughout the year but are weighted to coincide with seasonal consumer demand. In addition, we mail convenience checks in new markets as soon as new branches are open, which develops a customer base and builds finance receivables for these new branches.
In addition, we mail convenience checks in new markets as soon as new branches are open, which develops a customer base and builds finance receivables for these new branches.
In 2022, our average originated principal balance and term for large loans were $5,993 and 46 months, respectively. The average yield we earned on our portfolio of large loans was 27.1% for 2022. The following table sets forth the distribution of our large loan finance receivable portfolio by state as of the dates indicated.
The average yield we earned on our portfolio of large loans was 26.1% for 2023. The following table sets forth the distribution of our large loan finance receivable portfolio by state as of the dates indicated.
Our direct mail campaigns include mailings of pre-screened convenience checks, pre-qualified offers, and invitations to apply, which enable us to market our products to millions of current and potential customers in a cost-effective manner. We have also developed our consumer website and partnered with digital lead generation sources to promote our products and facilitate loan applications via the internet.
Our direct mail campaigns include mailings of pre-screened convenience checks, pre-qualified offers, and invitations to apply, which enable us to market our products to millions of current and potential customers in a cost-effective manner.
Seasonality Our loan volume and contractual delinquency follow seasonal trends. Demand for our loans is typically highest during the second, third, and fourth quarters, which we believe is largely due to customers borrowing money for vacation, back-to-school, and holiday spending.
Demand for our loans is typically highest during the second, third, and fourth quarters, which we believe is largely due to customers borrowing money for vacation, back-to-school, and holiday spending. Loan demand has generally been the lowest during the first quarter, which we believe is largely due to the timing of income tax refunds.
The Auto Plus Plan is not an insurance product, and therefore, it is not included in our results of operations as insurance income, net, but rather, it is included as part of revenue under other income.
These products are not insurance, and therefore, they are not included in our results of operations as insurance income, net, but rather, they are included as part of revenue under other income.
We also intend to explore opportunities for growth in states outside of our existing geographic footprint that enjoy favorable operating environments. We plan to expand our operations to one or two additional states by the end of 2023, and over time, we expect to have a national presence. Leverage Direct Mail Marketing.
We also intend to explore opportunities for growth in states outside of our existing geographic footprint that enjoy favorable operating environments, and over time, we expect to have a national presence. Leverage Direct Mail Marketing. Direct mail campaigns are launched throughout the year but are weighted to coincide with seasonal consumer demand.
We may be required to reduce interest rates on “pre- Regional Management Corp. | 2022 Annual Report on Form 10-K | 11 service” debts incurred by servicemembers, and we may be prohibited from pursuing certain forms of legal action against servicemembers, such as default judgments, during periods of active duty. • Military Lending Act.
The Servicemembers Civil Relief Act is designed to ease legal and financial burdens on military personnel and their families during active-duty status. We may be required to reduce interest rates on “pre-service” debts incurred by servicemembers, and we may be prohibited from pursuing certain forms of legal action against servicemembers, such as default judgments, during periods of active duty.
Our captive insurance subsidiary is regulated by the insurance authorities of the Turks and Caicos Islands of the British West Indies, where the subsidiary is organized and domiciled. Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “ Dodd-Frank Act ”). At the federal level, Congress enacted comprehensive financial regulatory reform legislation in 2010.
Our captive insurance subsidiary is regulated by the insurance authorities of the Turks and Caicos Islands of the British West Indies, where the subsidiary is organized and domiciled. Regional Management Corp. | 2023 Annual Report on Form 10-K | 10 Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “ Dodd-Frank Act ”).
Training content is focused on our operating policies and procedures, as well as several key compliance areas. Incentive compensation for new employees is contingent upon the successful and timely completion of the required new hire training curriculum. All current employees are also required to complete annual compliance training and re-certification.
Incentive compensation for new employees is contingent Regional Management Corp. | 2023 Annual Report on Form 10-K | 8 upon the successful and timely completion of the required new hire training curriculum. All current employees are also required to complete annual compliance training and re-certification.
This receivables growth has driven a revenue increase of 86.2 %, from $ 272.5 million in 201 7 to $ 507.2 million in 2022 , a CAGR of 13.2 %. Our portfolio growth has come from expanding our geographic presence , growing our finance receivable portfolios within existing branches, and developing new products and channels, including through digital lead generation.
Our portfolio growth has come from expanding our geographic presence, growing our finance receivable portfolios within existing branches, and developing new products and channels, including through digital lead generation.
A significant focus of the law, known as the Dodd-Frank Act, is heightened consumer protection.
At the federal level, Congress enacted comprehensive financial regulatory reform legislation in 2010. A significant focus of the law, known as the Dodd-Frank Act, is heightened consumer protection.
We believe that our omni-channel platform provides us with a competitive advantage by giving us broad access to our existing and former customers and multiple avenues to attract new customers. Attractive Products for Customers with Limited Access to Credit.
We have also developed our consumer website and partnered with digital lead generation sources to promote our products and facilitate loan applications and originations via the internet. We believe that our omni-channel platform provides us with a competitive advantage by giving us broad access to our existing and former customers and multiple avenues to attract new customers.
More importantly, we have grown our core small loan and large loan finance receivables by 128.5 %, from $ 739.4 million at December 31, 201 7 to $ 1.7 billion at December 31, 2022 , a CAGR of 18.0 %.
More importantly, we have grown our small loan and large loan finance receivables by 92.0%, from $920.8 million at December 31, 2018 to $1.8 billion at December 31, 2023, a CAGR of 13.9%. This receivables growth has driven a revenue increase of 79.8%, from $306.7 million in 2018 to $551.4 million in 2023, a CAGR of 12.4%.
Regional Management Corp. | 2022 Annual Report on Form 10-K | 3 Demonstrated Organic Growth. We have grown our total finance receivables by 103.8 %, from $ 834.0 million at December 31, 201 7 to $1.7 billion at December 31, 2022 , a compound annual growth rate (“ CAGR ”) of 15.3 %.
We have grown our total finance receivables by 86.2%, from $951.2 million at December 31, 2018 to $1.8 billion at December 31, 2023, a compound annual growth rate (“ CAGR ”) of 13.2%.
Between 201 8 and 2022 , we entered nine new states, and since 2020, we have introduced new technologies and marketing strategies to enable remote loan closings and to extend the geographic reach of our branches .
Between 2018 and 2023, we entered ten new states, and since 2020, we have introduced new technologies and marketing strategies to enable remote loan closings and to extend the geographic reach of our branches. Historically, our branches have rapidly increased their outstanding finance receivables during the early years of operations and generally achieved profitability within 18 months of opening.
Historically, our branches have rapidly increased their outstanding finance receivables during the early years of operations and generally achieved profitability within one year of opening. Experienced Management Team. Our executive and senior operations management teams consist of individuals experienced in installment lending and other consumer finance services.
Experienced Management Team. Our executive and senior operations management teams consist of individuals experienced in installment lending and other consumer finance services.
Changes in quarterly growth or liquidation could result in larger allowance for credit loss releases in periods of portfolio liquidation, and larger provisions for credit losses in periods of portfolio growth. Consequently, we experience seasonal fluctuations in our operating results.
Delinquencies generally reach their lowest point in the first half of the year and rise in the second half of the year. Changes in quarterly growth or liquidation could result in larger allowance for credit loss releases in periods of portfolio liquidation and larger provisions for credit losses in periods of portfolio growth.
Number of Loans Net Finance Receivables Average Size Per Loan (In thousands) Texas 70,477 $ 392,533 $ 5,570 South Carolina 27,581 147,848 5,361 North Carolina 35,031 183,823 5,247 All Other States 92,500 483,981 5,232 Total 225,589 $ 1,208,185 $ 5,356 Insurance and Ancillary Products We also offer our customers various optional payment and collateral protection insurance products as a complement to our lending operations.
Number of Loans Net Finance Receivables Average Size Per Loan (In thousands) Texas 71,560 $ 409,998 $ 5,729 North Carolina 43,304 209,490 4,838 South Carolina 25,938 136,713 5,271 All Other States 105,797 517,936 4,896 Total 246,599 $ 1,274,137 $ 5,167 Insurance and Ancillary Products We also offer our customers various optional payment and collateral protection insurance products as a complement to our lending operations.
Our insurance products, including the types of products offered and their terms and conditions, vary from state to state in compliance with applicable laws and regulations. Insurance policy premiums, claims, an d expenses are included in our results of operations as insurance income, net in the consolidated statements of comprehensive income.
Our insurance products, including the types of products offered and their terms and Regional Management Corp. | 2023 Annual Report on Form 10-K | 6 conditions, vary from state to state in compliance with applicable laws and regulations.
Accordingly, the sum of branch contributions from all of our branches is greater than our income before taxes. Human Capital As of December 31, 2022, we had 1,991 employees, including 1,603 employees on our field operations teams and 388 employees (including centralized customer service and collections staff) on our headquarters teams.
Accordingly, the sum of branch contributions from all of our branches is greater than our income before taxes. Human Capital As of December 31, 2023, we had 2,081 employees. All of our employees are located within the United States, and none are covered by a collective bargaining agreement.
Removed
Number of Loans Net Finance Receivables Average Size Per Loan (In thousands) Texas 93,082 $ 162,018 $ 1,741 South Carolina 25,234 46,202 1,831 North Carolina 44,622 76,125 1,706 Alabama 26,307 45,836 1,742 All Other States 97,788 151,424 1,548 Total 287,033 $ 481,605 $ 1,678 Large Loans.
Added
While the economic environment has challenged our customers and stressed our portfolio credit performance in recent years, we believe that our customers and business model have remained resilient. Demonstrated Organic Growth.
Removed
We believe that an emphasis on DE&I drives value for our employees, customers, and stockholders, and that our DE&I commitment enables us to better serve our communities. In 2022, in furtherance of our DE&I objectives, we engaged a third-party consultant to complete a DE&I assessment and make recommendations as to how we can further promote DE&I within our organization.
Added
For example, we rolled out an improved digital prequalification experience for our customers, including expanded integrations with existing and new digital affiliates and lead generators.
Removed
Loan demand has generally been the lowest during the first quarter, which we believe is largely due to the timing of income tax refunds. Delinquencies generally reach their lowest point in the first half of the year and rise in the second half of the year.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeEmployee misconduct or misconduct by third parties acting on our behalf could harm us by subjecting us to significant legal liability, regulatory scrutiny, and reputational harm. Our reputation is critical to maintaining and developing relationships with our existing and potential customers and third parties with whom we do business.
Biggest changeFurther, if we are unable to identify and hire qualified personnel, we may be unable to grow our business effectively in current or new markets. Employee misconduct or misconduct by third parties acting on our behalf could harm us by subjecting us to significant legal liability, regulatory scrutiny, and reputational harm.
Should there be a COVID-19 resurgence or a new public health crisis, epidemic, or pandemic and we experience disruptions in our online operations, including our remote origination capabilities, or are unable to timely expand our remote working infrastructure in response to government or company initiated restrictions, we may be unable to timely and effectively service accounts and perform key business functions.
Should there be a new public health crisis, epidemic, or pandemic, or a COVID-19 resurgence, and we experience disruptions in our online operations, including our remote origination capabilities, or are unable to timely expand our remote working infrastructure in response to government or company initiated restrictions, we may be unable to timely and effectively service accounts and perform key business functions.
The extent to which any COVID-19 resurgence and/or new public health crises, epidemics, or pandemics will ultimately impact our business and financial condition will depend on future events that are difficult to forecast, including, but not limited to, the duration and severity of the event (including as a result of waves of outbreak or variant strains), the success of actions taken to contain, treat, and prevent the pathogen, and the speed at which normal economic and operating conditions return and are sustained.
The extent to which any new public health crises, epidemics, or pandemics and/or COVID-19 resurgence will ultimately impact our business and financial condition will depend on future events that are difficult to forecast, including, but not limited to, the duration and severity of the event (including as a result of waves of outbreak or variant strains), the success of actions taken to contain, treat, and prevent the pathogen, and the speed at which normal economic and operating conditions return and are sustained.
These risks are discussed in greater detail below, and include, but are not limited to, risks related to: Risks related to our business and operations • Managing our growth effectively, implementing our growth strategy, and opening new branches as planned; • Our convenience check strategy; • Our policies and procedures for underwriting, processing, and servicing loans; • Our ability to collect on our loan portfolio; • Our insurance operations; • Exposure to credit risk and repayment risk, which risks may increase in light of adverse or recessionary economic conditions; • The implementation of evolving underwriting models and processes, including as to the effectiveness of our custom scorecards; • Changes in the competitive environment in which we operate or a decrease in the demand for our products; Regional Management Corp. | 2022 Annual Report on Form 10-K | 12 • Geographic concentration of our loan portfolio; • Failure of third-party service providers, including those providing information technology products; • Changes in economic conditions in the markets we serve, including levels of unemployment and bankruptcies; • Our ability to achieve successful acquisitions and strategic alliances; • Our ability to make technological improvements as quickly as our competitors; • Security breaches, cyber-attacks, failures in our information systems, or fraudulent activity; • Our ability to originate loans; • Our reliance on information technology resources and providers, including the risk of prolonged system outages; • Changes in current revenue and expense trends, including trends affecting delinquencies and credit losses; • Any future public health crises (including the resurgence of COVID-19), including the impact of such crisis on our operations and financial condition; • Changes in operating and administrative expenses; • The departure, transition, or replacement of key personnel; • Our ability to identify and hire qualified personnel; • Our ability to timely and effectively implement, transition to, and maintain the necessary information technology systems, infrastructure, processes, and controls to support our operations and initiatives; • Changes in interest rates; • Existing sources of liquidity become insufficient or access to these sources becomes unexpectedly restricted; and • Exposure to financial risk due to asset-backed securitization transactions.
These risks are discussed in greater detail below, and include, but are not limited to, risks related to: Risks related to our business and operations • Managing our growth effectively, implementing our growth strategy, and opening new branches as planned; • Our convenience check strategy; • Our policies and procedures for underwriting, processing, and servicing loans; • Our ability to collect on our loan portfolio; • Our insurance operations; • Exposure to credit risk and repayment risk, which risks may increase in light of adverse or recessionary economic conditions; • The implementation of evolving underwriting models and processes, including as to the effectiveness of our custom scorecards; • Changes in the competitive environment in which we operate or a decrease in the demand for our products; • Geographic concentration of our loan portfolio; Regional Management Corp. | 2023 Annual Report on Form 10-K | 12 • Failure of third-party service providers, including those providing information technology products; • Changes in economic conditions in the markets we serve, including levels of unemployment and bankruptcies; • Our ability to achieve successful acquisitions and strategic alliances; • Our ability to make technological improvements as quickly as our competitors; • Security breaches, cyber-attacks, failures in our information systems, or fraudulent activity; • Our ability to originate loans; • Our reliance on information technology resources and providers, including the risk of prolonged system outages; • Changes in current revenue and expense trends, including trends affecting delinquencies and credit losses; • Any future public health crises (including the resurgence of COVID-19), including the impact of such crisis on our operations and financial condition; • Changes in operating and administrative expenses; • The departure, transition, or replacement of key personnel; • Our ability to identify and hire qualified personnel; • Our ability to timely and effectively implement, transition to, and maintain the necessary information technology systems, infrastructure, processes, and controls to support our operations and initiatives; • Changes in interest rates; • Existing sources of liquidity become insufficient or access to these sources becomes unexpectedly restricted; and • Exposure to financial risk due to asset-backed securitization transactions.
Among other things, these provisions: • authorize the issuance of undesignated preferred stock, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend, or other rights or preferences superior to the rights of the holders of common stock; • prohibit stockholder action by written consent, which will require all stockholder actions to be taken at a meeting of our stockholders; • provide that the Board of Directors is expressly authorized to make, alter, or repeal our bylaws and that our stockholders may only amend our bylaws with the approval of 80% or more of all of the outstanding shares of our capital stock entitled to vote; and • establish advance notice requirements for nominations for elections to our Board of Directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.
Among other things, these provisions: • authorize the issuance of undesignated preferred stock, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend, or other rights or preferences superior to the rights of the holders of common stock; • prohibit stockholder action by written consent, which will require all stockholder actions to be taken at a meeting of our stockholders; • provide that the Board is expressly authorized to make, alter, or repeal our bylaws and that our stockholders may only amend our bylaws with the approval of 80% or more of all of the outstanding shares of our capital stock entitled to vote; and • establish advance notice requirements for nominations for elections to our Board or for proposing matters that can be acted upon by stockholders at stockholder meetings.
There are several risks associated with the use or origination of convenience checks, including the following: • it is more difficult to maintain sound underwriting standards with convenience check customers who historically have presented a higher risk of default than customers that originate loans in our branches, as we do not meet convenience check customers prior to soliciting them and extending a loan to them, and we may not be able to verify certain elements of their financial condition, including their current employment status, income, or life circumstances; Regional Management Corp. | 2022 Annual Report on Form 10-K | 14 • we rely on credit information from a third-party credit bureau that is more limited than a full credit report to pre-screen potential convenience check recipients, which may not be as effective as a full credit report or may be inaccurate or outdated; • we face limitations on the number of potential borrowers who meet our lending criteria within proximity to our branches; • we may not be able to continue to access the demographic and credit file information that we use to generate our mailing lists due to expanded regulatory or privacy restrictions; • convenience checks pose a risk of fraud; • any failure by the bank that issues and processes our convenience checks to properly process the convenience checks could limit the ability of a recipient to cash the check and enter into a loan with us; • customers may opt out of direct mail solicitations and solicitations based on their credit file or may otherwise prohibit us from soliciting them; • postal rates and production costs may continue to rise; • potential changes in federal or state laws may prohibit the practice of directly mailing convenience checks to potential borrowers; and • the bank that issues our convenience checks may exit the business, and we may be unable to find a replacement issuer bank.
There are several risks associated with the use or origination of convenience checks, including the following: • it is more difficult to maintain sound underwriting standards with convenience check customers who historically have presented a higher risk of default than customers that originate loans in our branches, as we do not meet convenience check customers prior to soliciting them and extending a loan to them, and we may not be able to verify certain elements of their financial condition, including their current employment status, income, or life circumstances; • we rely on credit information from a third-party credit bureau that is more limited than a full credit report to pre-screen potential convenience check recipients, which may not be as effective as a full credit report or may be inaccurate or outdated; Regional Management Corp. | 2023 Annual Report on Form 10-K | 14 • we face limitations on the number of potential borrowers who meet our lending criteria within proximity to our branches; • we may not be able to continue to access the demographic and credit file information that we use to generate our mailing lists due to expanded regulatory or privacy restrictions; • convenience checks pose a risk of fraud; • any failure by the bank that issues and processes our convenience checks to properly process the convenience checks could limit the ability of a recipient to cash the check and enter into a loan with us; • customers may opt out of direct mail solicitations and solicitations based on their credit file or may otherwise prohibit us from soliciting them; • postal rates and production costs may continue to rise; • potential changes in federal or state laws may prohibit the practice of directly mailing convenience checks to potential borrowers; and • the bank that issues our convenience checks may exit the business, and we may be unable to find a replacement issuer bank.
If we were to experience a security breach or cyber-attack, we could be required to incur substantial costs and liabilities, including, among other things, the following: • expenses to rectify the consequences of the security breach or cyber-attack; • liability for stolen assets or information; • costs of repairing damage to our systems; • lost revenue and income resulting from any system downtime caused by such breach or attack; • increased costs of cyber security protection; • costs of incentives we may be required to offer to our customers or business partners to retain their business; and • damage to our reputation causing customers and investors to lose confidence in our company.
If we were to experience a security breach or cyber-attack, we could be required to incur substantial costs and liabilities, including, among other things, the following: • expenses to rectify the consequences of the security breach or cyber-attack; • liability for stolen assets or information; • costs of repairing damage to our systems; • lost revenue and income resulting from any system downtime caused by such breach or attack; • increased costs of cybersecurity protection; • costs of incentives we may be required to offer to our customers or business partners to retain their business; and • damage to our reputation causing customers and investors to lose confidence in our company.
Any material adverse change in the effectiveness of our underwriting models, our implementation of such models (including through our loan origination software and processes), or the ability or willingness of a significant portion of our borrowers to meet their obligations to us, whether due to changes in general economic, political, or social conditions, the cost of consumer goods, interest rates, natural disasters, military conflict or acts of war or terrorism, a prolonged public health crisis, epidemic, or pandemic (such as COVID-19), or other causes over which we have no control, or to changes or events affecting our borrowers such as unemployment, major medical expenses, bankruptcy, divorce, or death, would have a material adverse impact on our earnings and financial condition.
Any material adverse change in the effectiveness of our underwriting models, our implementation of such models (including through our loan origination software and processes), or the ability or willingness of a significant portion of our borrowers to meet their obligations to us, whether due to changes in general economic, political, or social conditions, the cost of consumer goods, interest rates, natural disasters, military conflict or acts of war or terrorism, a prolonged public health crisis, epidemic, or pandemic, or other causes over which we have no control, or to changes or events affecting our borrowers such as unemployment, major medical expenses, bankruptcy, divorce, or death, would have a material adverse impact on our earnings and financial condition.
Our ability to execute this growth strategy is subject to significant risks, some of which are beyond our control, including: • the inherent uncertainty regarding general economic conditions, including the impact of recent elevated inflation; • the prevailing laws and regulatory environment of each state in which we operate or seek to operate and federal laws and regulations, all of which are subject to change at any time; • the degree of competition in new markets and its effect on our ability to attract new customers; • our ability to identify attractive locations for new branches; • our ability to recruit qualified personnel, particularly in remote areas and in areas where we face a great deal of competition; and • our ability to obtain adequate financing for our expansion plans.
Our ability to execute this growth strategy is subject to significant risks, some of which are beyond our control, including: • the inherent uncertainty regarding general economic conditions, including the impact of recent elevated inflation and interest rates; • the prevailing laws and regulatory environment of each state in which we operate or seek to operate and federal laws and regulations, all of which are subject to change at any time; • the degree of competition in new markets and its effect on our ability to attract new customers; • our ability to identify attractive locations for new branches; • our ability to recruit qualified personnel, particularly in remote areas and in areas where we face a great deal of competition; and • our ability to obtain adequate financing for our expansion plans.
Our amended and restated certificate of incorporation authorizes us to issue these shares of common stock and options, rights, warrants, and appreciation rights relating to common stock for the consideration and on the terms and conditions established by our Board of Directors in its discretion, whether in connection with acquisitions or otherwise.
Our amended and restated certificate of incorporation authorizes us to issue these shares of common stock and options, rights, warrants, and appreciation rights relating to common stock for the consideration and on the terms and conditions established by our Board in its discretion, whether in connection with acquisitions or otherwise.
Our Board of Directors may take into account general and economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax, and regulatory restrictions and such other factors as our Board of Directors may deem relevant.
Our Board may take into account general and economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax, and regulatory restrictions and such other factors as our Board may deem relevant.
As of December 31, 2022, subject to adjustments as provided in the 2015 Plan, the maximum aggregate number of shares of our common stock that may be issued under the 2015 Plan may not exceed the sum of (a) 2,600,000 shares plus (b) any shares remaining available for the grant of awards as of the 2015 Plan effective date under the 2007 Management Incentive Plan (the “ 2007 Plan ”) or the 2011 Stock Incentive Plan (the “ 2011 Plan ”), plus (c) any shares subject to an award granted under the 2007 Plan or the 2011 Plan, which award is forfeited, cash-settled, cancelled, terminated, expires, or lapses for any reason without the issuance of shares or pursuant to which such shares are forfeited.
As of December 31, 2023, subject to adjustments as provided in the 2015 Plan, the maximum aggregate number of shares of our common stock that may be issued under the 2015 Plan may not exceed the sum of (a) 2,600,000 shares plus (b) any shares remaining available for the grant of awards as of the 2015 Plan effective date under the 2007 Management Incentive Plan (the “ 2007 Plan ”) or the 2011 Stock Incentive Plan (the “ 2011 Plan ”), plus (c) any shares subject to an award granted under the 2007 Plan or the 2011 Plan, which award is forfeited, cash-settled, cancelled, terminated, expires, or lapses for any reason without the issuance of shares or pursuant to which such shares are forfeited.
Economic factors include interest rates, unemployment levels, gasoline prices, the availability and cost of credit (including mortgages), upward adjustments in monthly mortgage payments, real estate values, the rate of inflation, and consumer perceptions of economic conditions generally.
Economic factors include interest rates, unemployment levels, gasoline prices, the availability and cost of credit (including mortgages), upward adjustments in monthly mortgage payments and rents, real estate values, the rate of inflation, and consumer perceptions of economic conditions generally.
We intend to continue to pay a quarterly cash dividend for the foreseeable future; however, the declaration, amount, and payment of any future cash dividends on shares of our common stock will be at the discretion of our Board of Directors.
We intend to continue to pay a quarterly cash dividend for the foreseeable future; however, the declaration, amount, and payment of any future cash dividends on shares of our common stock will be at the discretion of our Board.
If in any legal proceeding we incur liability or defense costs that exceed our insurance coverage or that are not within the scope of our insurance coverage, it could have a material adverse effect on our business, financial condition, and results of operations. Current and proposed regulation related to consumer privacy, data protection, and information security could increase our costs.
If in any legal proceeding we incur liability or defense costs that exceed our insurance coverage or that are not within the scope of our insurance coverage, it could have a material adverse effect on our business, financial condition, and results of operations. Current and proposed regulations related to consumer privacy, data protection, and information security could increase our costs.
A region’s economic condition may be directly, or indirectly, adversely affected by international events such as military conflicts or wars, prolonged public health crises, epidemics, or pandemics (such as COVID-19), national events such as civil disturbances, or natural disasters such as hurricanes, wildfires, earthquakes, and other extreme conditions (including an increase in frequency of such conditions and events as a result of climate change).
A region’s economic condition may be directly, or indirectly, adversely affected by international events such as military conflicts or wars, prolonged public health crises, epidemics, or pandemics, national events such as civil disturbances, or natural disasters such as hurricanes, wildfires, earthquakes, and other extreme conditions (including an increase in frequency of such conditions and events as a result of climate change).
Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may make the acquisition of our company more difficult without the approval of our Board of Directors.
Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may make the acquisition of our company more difficult without the approval of our Board.
If there is a resurgence of the COVID-19 pandemic, or another public health crisis, epidemic, or pandemic arises, governmental authorities c ould impose new or similar restrictions to those imposed previously during the COVID-19 pandemic. If a new public health crisis emerges, we could also deem it prudent to reinstate company-initiated quarantines or other restrictions.
If another public health crisis, epidemic, or pandemic arises, or there is a resurgence of the COVID-19 pandemic, governmental authorities could impose new or similar restrictions to those imposed previously during the COVID-19 pandemic. If a new public health crisis emerges, we could also deem it prudent to reinstate company-initiated quarantines or other restrictions.
From time to time, we enter into derivative transactions for economic hedging purposes, such as managing our exposure to interest rate risk.
From time to time, we may enter into derivative transactions for economic hedging purposes, such as managing our exposure to interest rate risk.
AWS and VMWare also possess broad discretion to interpret and change their terms of services and other policies that apply to us, which may be unfavorable to our business. Our technology platforms may not meet expectations, and we may not be able to make technological improvements as quickly as some of our competitors.
AWS, Microsoft Azure, and VMWare also possess broad discretion to interpret and change their terms of services and other policies that apply to us, which may be unfavorable to our business. Our technology platforms may not meet expectations, and we may not be able to make technological improvements as quickly as some of our competitors.
Lastly, there is an inherent risk that a portion of the retail installment contracts that we hold will be subject to certain claims or defenses that the borrower may assert against the originator of the contract and, by extension, us as the holder of the contract.
Lastly, there is an inherent risk that a portion of the retail installment loans that we hold will be subject to certain claims or defenses that the borrower may assert against the originator of the contract and, by extension, us as the holder of the contract.
Any such catastrophic event(s) or other unexpected disruption of our headquarters or data center facility could have a material adverse effect on our business, financial condition, and results of operations. The “decentralized” nature of our origination and servicing creates additional risks.
Any such catastrophic event(s) or other unexpected disruption of our headquarters or data center facilities could have a material adverse effect on our business, financial condition, and results of operations. The “decentralized” nature of our origination and servicing creates additional risks.
On October 29, 2020, we announced that our Board of Directors initiated and declared a quarterly cash dividend of $0.20 per share, which was increased by our Board of Directors to $0.25 per share on June 15, 2021 and to $0.30 per share on February 9, 2022.
On October 29, 2020, we announced that our Board of Directors (the “ Board ”) initiated and declared a quarterly cash dividend of $0.20 per share, which was increased by our Board to $0.25 per share on June 15, 2021 and to $0.30 per share on February 9, 2022.
The CFPB is authorized to pursue administrative proceedings or litigation for violations of federal consumer financial laws.
The CFPB is also authorized to pursue administrative proceedings or litigation for violations of federal consumer financial laws.
Due to the nature of the AWS and VMWare products and services provided, we are unable to easily transition from these vendors to other providers, and any such transition could require business downtime that could negatively impact our business.
Due to the nature of the AWS, Microsoft Azure, and VMWare products and services provided, we are unable to easily transition from these vendors to other providers, and any such transition could require business downtime that could negatively impact our business.
We utilize a centralized branch structure in a limited number of markets with the intent that such centralized branch service our customer base; however, we conduct significant operations through our branch offices, including key parts of the underwriting process. There can be no assurance that we will be able to attract and retain qualified personnel to perform these tasks.
We utilize a centralized branch structure in certain markets with the intent that such centralized branch service our customer base; however, we conduct significant operations through our branch offices, including key parts of the underwriting process. There can be no assurance that we will be able to attract and retain qualified personnel to perform these tasks.
As of December 31, 2022, we have completed nine securitizations, and we may in the future securitize certain of our finance receivables to generate cash to originate new finance receivables or to pay our outstanding indebtedness.
As of December 31, 2023, we have completed nine securitizations, and we may in the future securitize certain of our finance receivables to generate cash to originate new finance receivables or to pay our outstanding indebtedness.
Economic conditions may also be impacted by localized weather events and environmental disasters or adverse impacts from public health crises, epidemics, or pandemics (such as COVID-19). Social factors include changes in consumer confidence levels and attitudes toward incurring debt and changing attitudes regarding the stigma of personal bankruptcy.
Economic conditions may also be impacted by localized weather events and environmental disasters or adverse impacts from public health crises, epidemics, or pandemics. Social factors include changes in consumer confidence levels and attitudes toward incurring debt and changing attitudes regarding the stigma of personal bankruptcy.
The turnover among all of our branch employees has risen in each of our most recent fiscal years, from approximately 37% in 2019 to approximately 58% in 2022. This turnover increases our cost of operations and makes it more difficult to operate our branches. Our account executives and assistant manager roles have historically experienced high turnover.
The turnover among all of our branch employees has risen in each of our most recent fiscal years, from approximately 37% in 2019 to approximately 49% in 2023. This turnover increases our cost of operations and makes it more difficult to operate our branches. Our account executives and assistant manager roles have historically experienced high turnover.
ITEM 1A. RISK FACTORS. We operate in a rapidly changing environment that involves a number of risks, some of which are beyond our control. The following discussion highlights some of the risks that may affect our future operating results.
ITEM 1A. RIS K FACTORS. We operate in a rapidly changing environment that involves a number of risks, some of which are beyond our control. The following discussion highlights some of the risks that may affect our future operating results.
Except for loans originated by a centralized branch and serviced at a centralized location in a limited number of markets, the primary responsibility for the servicing and collections process generally resides with the applicable local branch, although in the future, we may direct borrowers to remit payments through one or more lockboxes.
Except for loans originated by a centralized branch and serviced at a centralized location in certain markets, the primary responsibility for the servicing and collections process generally resides with the applicable local branch, although in the future, we may direct borrowers to remit payments through one or more lockboxes.
In particular, we currently rely on one key vendor to print and mail our convenience check and other offers for direct mail marketing campaigns, and on certain other third-party service providers in connection with loan underwriting, origination, and servicing. Our reliance on these third parties can expose us to certain risks.
In particular, we currently rely on two key vendors to print and mail our convenience check and other offers for direct mail marketing campaigns, and on certain other third-party service providers in connection with loan underwriting, origination, and servicing. Our reliance on these third parties can expose us to certain risks.
These provisions could also discourage proxy Regional Management Corp. | 2022 Annual Report on Form 10-K | 36 contests and make it more difficult for you and other stockholders to elect directors of your choosing and to cause us to take other corporate actions you desire.
These provisions could also discourage proxy Regional Management Corp. | 2023 Annual Report on Form 10-K | 35 contests and make it more difficult for you and other stockholders to elect directors of your choosing and to cause us to take other corporate actions you desire.
Further, as of December 31, 2022, all of our operations were across 18 states. As a result, we are highly susceptible to adverse economic conditions in these areas. The unemployment and bankruptcy rates in some states in our footprint are among the highest in the country.
Further, as of December 31, 2023, all of our operations were across 19 states. As a result, we are highly susceptible to adverse economic conditions in these areas. The unemployment and bankruptcy rates in some states in our footprint are among the highest in the country.
Subject to statutory limits, our ability to react to changes in prevailing market rates is dependent upon the speed at which our customers pay off or renew loans in our existing loan portfolio, which allows us to originate new loans at prevailing market rates.
We originate finance receivables at either prevailing market rates or at statutory limits. Subject to statutory limits, our ability to react to changes in prevailing market rates is dependent upon the speed at which our customers pay off or renew loans in our existing loan portfolio, which allows us to originate new loans at prevailing market rates.
These potential conflicts of interest could have a material adverse effect on our business, financial condition, results of operations, or prospects if attractive corporate opportunities are allocated by such non-employee directors to themselves or their other affiliates instead of us. Regional Management Corp. | 2022 Annual Report on Form 10-K | 37 ITEM 1B. UNRESOLVED STAFF COMMENTS. None.
These potential conflicts of interest could have a material adverse effect on our business, financial condition, results of operations, or prospects if attractive corporate opportunities are allocated by such non-employee directors to themselves or their other affiliates instead of us. Regional Management Corp. | 2023 Annual Report on Form 10-K | 36 ITEM 1B. UNRESOLVE D STAFF COMMENTS. None.
Any failure, interruption, or breach in security of these systems, including any failure of our back-up systems, hardware failures, or an inability to access data maintained offsite, could Regional Management Corp. | 2022 Annual Report on Form 10-K | 20 result in failures or disruptions in our customer relationship management, general ledger, loan, and other systems and could result in a loss of data (including loan portfolio data), a loss of customer business, or a violation of applicable privacy and other laws, subject us to additional regulatory scrutiny, or expose us to civil litigation, possible financial liability, and other adverse consequences, any of which could have a material adverse effect on our financial condition and results of operations.
Any failure, interruption, or breach in security of these systems, including any failure of our back-up systems, hardware failures, or an inability to access data maintained offsite, could result in failures or disruptions in our customer relationship management, general ledger, loan, and other systems and could result in a loss of data (including loan portfolio data), a loss of customer business, or a violation of applicable privacy and other laws, subject us to additional regulatory scrutiny, or expose us to civil litigation, possible financial liability, and other adverse consequences, any of which could have a material adverse effect on our financial condition and results of operations.
Regional Management Corp. | 2022 Annual Report on Form 10-K | 35 There can be no assurance of our ability to declare and pay cash dividends in future periods.
Regional Management Corp. | 2023 Annual Report on Form 10-K | 34 There can be no assurance of our ability to declare and pay cash dividends in future periods.
We use convenience checks to seed new branch openings and to attract new customers to existing branches in our geographic footprint. In 2021 and 2022, loans initiated through convenience checks represented 22.8% and 27.2%, respectively, of the value of our originated installment loans.
We use convenience checks to seed new branch openings and to attract new customers to existing branches in our geographic footprint. In 2022 and 2023, loans initiated through convenience checks represented 27.2% and 27.3%, respectively, of the value of our originated installment loans.
Furthermore, the annual turnover rate among our branch managers was approximately 17% in 2021 and 23% in 2022, and turnover rates of managers in our new branches may be similar or higher.
Furthermore, the annual turnover rate among our branch managers was approximately 23% in 2022 and 15% in 2023, and turnover rates of managers in our new branches may be similar or higher.
If material weaknesses or significant deficiencies in our internal control over financial reporting are discovered or occur in the future or if our controls and procedures fail or are circumvented, our consolidated financial statements may contain material misstatements, we could be required to restate our financial results, we may be unable to produce accurate and timely financial statements, and we may be unable to maintain compliance with applicable stock exchange listing requirements, any of which could have a material adverse effect on our business, results of operations, financial condition, and stock price.
If material weaknesses or significant deficiencies in our internal control over financial reporting are discovered or occur in the future or if our controls and procedures fail or are circumvented, our consolidated financial statements may contain material misstatements, we could be required to restate our financial results, we may be unable to produce accurate and timely financial statements, and we may be unable to maintain compliance with applicable stock exchange listing requirements, any of which could Regional Management Corp. | 2023 Annual Report on Form 10-K | 24 have a material adverse effect on our business, results of operations, financial condition, and stock price.
For additional information on the key areas for which assumptions and estimates are used in preparing our financial statements, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” and Note 2, “Significant Accounting Policies,” of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary Data.” Regional Management Corp. | 2022 Annual Report on Form 10-K | 25 We depend to a substantial extent on borrowings under our senior revolving credit facility to fund our liquidity needs.
For additional information on the key areas for which assumptions and estimates are used in preparing our financial statements, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” and Note 2, “Significant Accounting Policies,” of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary Data.” We depend to a substantial extent on borrowings under our senior revolving credit facility to fund our liquidity needs.
While our business was generally classified by government authorities as essential and permitted to remain open during previous government-mandated COVID-19 business closures, we were required to temporarily close our branches in the state of New Mexico for approximately a month in 2020 when the governor issued an executive order to close non-essential Regional Management Corp. | 2022 Annual Report on Form 10-K | 21 businesses that excluded consumer finance companies like us from the definition of “essential business es .” We also experienced temporary closure of certain locations due to company-initiated quarantine measures.
While our business was generally classified by government authorities as essential and permitted to remain open during previous government-mandated COVID-19 business closures, we were required to temporarily close our branches in the state of New Mexico for approximately a month in 2020 when the governor issued an executive order to close non-essential businesses that excluded consumer finance companies like us from the definition of “essential businesses.” We also experienced temporary closure of certain locations due to company-initiated quarantine measures.
These laws and regulations govern or affect, among other things: • the interest rates and manner of calculating such rates that we may charge customers; • terms of loans, including fees, maximum amounts, and minimum durations; • origination practices; • disclosure requirements, including posting of fees; • solicitation and advertising practices; • currency and suspicious activity reporting; • recording and reporting of certain financial transactions; • privacy of personal customer information; Regional Management Corp. | 2022 Annual Report on Form 10-K | 29 • the types of products and services that we may offer; • servicing and collection practices; • approval of licenses; and • locations of our branches.
These laws and regulations govern or affect, among other things: • the interest rates and manner of calculating such rates that we may charge customers; • terms of loans, including fees, maximum amounts, and minimum durations; • origination practices; • disclosure requirements, including posting of fees; • solicitation and advertising practices; • currency and suspicious activity reporting; • recording and reporting of certain financial transactions; • privacy of personal customer information; • the types of products and services that we may offer; • servicing and collection practices; • approval of licenses; and • locations of our branches.
Your stock ownership may be diluted by the future issuance of additional common stock in connection with our incentive plans, acquisitions, or otherwise. We have approximately 986 million shares of common stock authorized but unissued, as of February 22, 2023.
Your stock ownership may be diluted by the future issuance of additional common stock in connection with our incentive plans, acquisitions, or otherwise. We have approximately 985 million shares of common stock authorized but unissued, as of February 20, 2024.
An administrative proceeding or litigation relating to one or more allegations or findings of the violation of such laws by us could result in modifications to our methods of doing business, which could impair our ability to originate or otherwise acquire new loans or collect on our loan portfolio or result in us having to pay damages and/or cancel the balance or other amount owing under the loan associated with such violations.
An administrative proceeding or litigation relating to one or more allegations or findings of the violation of such laws by us could result in modifications to our methods of doing business, which could impair our ability to originate or otherwise acquire new loans or collect on our loan portfolio or result in us having to pay damages and/or Regional Management Corp. | 2023 Annual Report on Form 10-K | 29 cancel the balance or other amount owing under the loan associated with such violations.
These processes could be disrupted if a catastrophic event, such as a tornado, power outage, or act of terror, affected Greenville, Greer, Northern Virginia, or Ohio, or the nearby areas.
RMC business operations could be disrupted if a catastrophic event, such as a tornado, power outage, or act of terror, affected Greenville, Greer, Northern Virginia, or Ohio, or the nearby areas.
In the event that a significant portion of our loan portfolio is comprised of loans owed by borrowers residing in certain jurisdictions, economic conditions, elevated bankruptcy filings, natural disasters, or other factors affecting these jurisdictions Regional Management Corp. | 2022 Annual Report on Form 10-K | 18 in particular could adversely impact the delinquency and default experience of our loan portfolio, and , we could experience reduced or delayed payments on outstanding loans.
In the event that a significant portion of our loan portfolio is comprised of loans owed by borrowers residing in certain jurisdictions, economic conditions, elevated bankruptcy filings, natural disasters, or other factors affecting these jurisdictions in particular could adversely impact the delinquency and default experience of our loan portfolio, and, we could experience reduced or delayed payments on outstanding loans.
Geographic concentration of our loan portfolio may increase the risk of loss. Any concentration of our loan portfolio in a state or region may present unique risk concentrations. Our branches in South Carolina, Texas, and North Carolina accounted for 11%, 34%, and 15%, respectively, of our finance receivables as of December 31, 2022.
Geographic concentration of our loan portfolio may increase the risk of loss. Any concentration of our loan portfolio in a state or region may present unique risk concentrations. Our branches in Texas, North Carolina, and South Carolina accounted for 32%, 16%, and 10%, respectively, of our finance receivables as of December 31, 2023.
We train our employees individually onsite in the branch or at a centralized location and through online training modules to make loans that Regional Management Corp. | 2022 Annual Report on Form 10-K | 15 conform to our underwriting standards. Such training includes critical aspects of state and federal regulatory compliance, cash handling, account management, and customer relations.
We train our employees individually onsite in the branch or at a centralized location and through online training modules to make loans that conform to our underwriting standards. Such training includes critical aspects of state and federal regulatory compliance, cash handling, account management, and customer relations.
Under standards established by the Public Company Accounting Oversight Board, a material weakness is a deficiency, or a combination of deficiencies, in internal control over financial Regional Management Corp. | 2022 Annual Report on Form 10-K | 24 reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis.
Under standards established by the Public Company Accounting Oversight Board, a material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis.
Accordingly, our sales of loans could expose us to lawsuits or fines by regulators if we do not have sufficient documentation to support and verify the validity and amount of the loans Regional Management Corp. | 2022 Annual Report on Form 10-K | 33 underlying the transactions, or if we or purchasers of our loans use collection methods that are viewed as unfair, deceptive, or abusive , or if purchasers of our loans fail to obtain or maintain proper licenses .
Accordingly, our sales of loans could expose us to lawsuits or fines by regulators if we do not have sufficient documentation to support and verify the validity and amount of the loans underlying the transactions, or if we or purchasers of our loans use collection methods that are viewed as unfair, deceptive, or abusive, or if purchasers of our loans fail to obtain or maintain proper licenses.
Moreover, the effect of any product change on the results of our business may not be fully ascertainable until the change has been in effect for some time, and by that time it may be too late to make further modifications to such product without causing further harm to our business, financial condition , and results of operations .
Moreover, the effect of any product change on the results of our business may not be fully ascertainable until the change has been in effect for some time, and by that time it may be too late to Regional Management Corp. | 2023 Annual Report on Form 10-K | 17 make further modifications to such product without causing further harm to our business, financial condition, and results of operations.
Our information systems and administrative and management processes are primarily provided to our branches from this centralized location. Our primary data center facility is located in Northern Virginia, and our backup data center is located in Ohio .
Our administrative and management processes are primarily provided to our branches from this centralized location. Our primary data center facilities are located in Northern Virginia, and our backup data centers are located in Ohio.
In addition, our existing insurance policies would not reimburse us for all of the damages that we might incur as a result of a breach. A security breach or cyber-attack on our computer systems could interrupt or damage our operations or harm our reputation.
In addition, our existing insurance policies would not reimburse us for all of the damages that we might incur as a result of a breach. Regional Management Corp. | 2023 Annual Report on Form 10-K | 20 A security breach or cyber-attack on our computer systems could interrupt or damage our operations or harm our reputation.
As of December 31, 2021, our allowance for credit losses was $159.3 million, and we had net credit losses of $130.1 million during fiscal year 2022 that related to our portfolio as of December 31, 2021. As of December 31, 2022, our allowance for credit losses was $178.8 million.
As of December 31, 2022, our allowance for credit losses was $178.8 million, and we had net credit losses of $181.8 million during fiscal year 2023 that related to our portfolio as of December 31, 2022.
These supervisors have significant experience with our company and within our industry, and would be difficult to replace. If we lose a district supervisor to a competitor, we could also be at risk of losing other employees and customers.
These supervisors have significant experience with our company and within our industry, and would be difficult to replace. If we lose a district supervisor to a competitor, we could also be at risk of losing other employees and customers. A nationwide labor shortage may impede our ability to identify and hire new employees.
If we are unable to promote, relocate, or recruit suitable managers, oversee their activities effectively, maintain our underwriting and loan servicing standards, and otherwise appropriately Regional Management Corp. | 2022 Annual Report on Form 10-K | 13 and effectively staff our branches, our delinquency and credit loss rates may increase and our overall results of operations may be adversely impacted.
If we are unable to promote, relocate, or recruit suitable managers, oversee their activities effectively, maintain our underwriting and loan servicing standards, and otherwise appropriately and effectively staff our branches, our delinquency and credit loss rates may increase and our overall results of operations may be adversely impacted.
We face significant risks in implementing our growth strategy, some of which are outside of our control. We intend to continue our growth strategy, which is based on opening and acquiring branches in existing and new markets, introducing new products and channels, and increasing the finance receivable portfolios of our existing branches.
We intend to continue our growth strategy, which is based on opening and acquiring branches in existing and new markets, introducing new products and channels, and increasing the finance receivable portfolios of our existing branches.
Rating agencies may also affect our ability to execute a securitization transaction or increase the costs we expect to incur from executing securitization transactions, not only by deciding not to issue ratings for our securitization transactions, but also by altering the processes and criteria they follow in issuing ratings.
Regional Management Corp. | 2023 Annual Report on Form 10-K | 26 Rating agencies may also affect our ability to execute a securitization transaction or increase the costs we expect to incur from executing securitization transactions, not only by deciding not to issue ratings for our securitization transactions, but also by altering the processes and criteria they follow in issuing ratings.
If we are required to repurchase Receivables that we have sold or pledged, it could adversely affect our results of operations, financial condition, and liquidity. Regional Management Corp. | 2022 Annual Report on Form 10-K | 27 We are subject to interest rate risk resulting from general economic conditions and policies of various governmental and regulatory agencies.
If we are required to repurchase Receivables that we have sold or pledged, it could adversely affect our results of operations, financial condition, and liquidity. We are subject to interest rate risk resulting from general economic conditions and policies of various governmental and regulatory agencies.
Financial regulatory reform has created uncertainty and could negatively impact our business, financial condition, and results of operations. In response to the financial crisis in 2008, the Dodd-Frank Act was signed into law on July 21, 2010.
Regional Management Corp. | 2023 Annual Report on Form 10-K | 31 Financial regulatory reform has created uncertainty and could negatively impact our business, financial condition, and results of operations. In response to the financial crisis in 2008, the Dodd-Frank Act was signed into law on July 21, 2010.
Although many of the regulations implementing portions of the Dodd-Frank Act have been promulgated, we are still unable to predict how this significant legislation may be interpreted and enforced or the full extent to which implementing regulations and supervisory policies may affect it.
Although many of the regulations implementing portions of the Dodd-Frank Act have been promulgated, we are still unable to predict how this significant legislation may be interpreted and enforced or the full extent to which implementing regulations and Regional Management Corp. | 2023 Annual Report on Form 10-K | 32 supervisory policies may affect it.
We have 772,038 shares available for issuance under the 2015 Plan, as of February 22, 2023. In addition, our Board may recommend in the future that our stockholders approve new stock plans.
We have 308,182 shares available for issuance under the 2015 Plan, as of February 20, 2024. In addition, our Board may recommend in the future that our stockholders approve new stock plans.
Although we maintain insurance that is intended to cover certain losses from such events, there can be no assurance that such insurance will be adequate or available. Pandemics, epidemics, and similar public health crises, including the emergence of new novel coronavirus (COVID-19) variants that result in another pandemic, could adversely impact our business, liquidity, financial condition, and results of operations.
Although we maintain insurance that is intended to cover certain losses from such events, there can be no assurance that such insurance will be adequate or available. Pandemics, epidemics, and similar public health crises could adversely impact our business, liquidity, financial condition, and results of operations.
The unaffiliated insurance company cedes to our wholly-owned insurance subsidiary, RMC Reinsurance, Ltd., all of these insurance policies, the related net insurance premium revenue and the associated insurance claims liability for such insurance products, including the non-file insurance that we purchase.
The Regional Management Corp. | 2023 Annual Report on Form 10-K | 16 unaffiliated insurance company cedes to our wholly-owned insurance subsidiary, RMC Reinsurance, Ltd., all of these insurance policies, the related net insurance premium revenue and the associated insurance claims liability for such insurance products, including the non-file insurance that we purchase.
Regional Management Corp. | 2022 Annual Report on Form 10-K | 19 Any failure of the Nortridge platform or any other third-party software vendor product systems due to any of these causes, if it is not supported by our disaster recovery plan, could cause an interruption in operations.
Any failure of the Nortridge platform or any other third-party software vendor product systems due to any of these causes, if it is not supported by our disaster recovery plan, could cause an interruption in operations.
No prediction can be made and no assurance can be given as to the effect of economic conditions on the rate of delinquencies, prepayments, or losses on our loan portfolio with respect to any part of our geographic footprint.
No prediction can be made and no Regional Management Corp. | 2023 Annual Report on Form 10-K | 18 assurance can be given as to the effect of economic conditions on the rate of delinquencies, prepayments, or losses on our loan portfolio with respect to any part of our geographic footprint.
In addition, rising interest rates will increase our cost of capital by influencing the amount of interest we pay on our senior revolving credit facility, our revolving warehouse credit facilities, or any other floating interest rate obligations that we may incur, which would increase our operating costs and decrease our operating margins.
Regional Management Corp. | 2023 Annual Report on Form 10-K | 27 In addition, elevated interest rates increase our cost of capital by influencing the amount of interest we pay on our senior revolving credit facility, our revolving warehouse credit facilities, or any other floating interest rate obligations that we may incur, which would increase our operating costs and decrease our operating margins.
Future court decisions, alternative dispute resolution awards, business expansion, or legislative activity may increase our exposure to litigation and regulatory investigations. In some cases, substantial non-economic remedies or punitive damages may be Regional Management Corp. | 2022 Annual Report on Form 10-K | 34 sought.
Future court decisions, alternative dispute resolution awards, business expansion, or legislative activity may increase our exposure to litigation and regulatory investigations. In some cases, substantial non-economic remedies or punitive damages may be sought.
Additionally, the Dodd-Frank Act established the CFPB, as a consumer protection regulator tasked with regulating consumer financial services and products. Since its creation, the CFPB has been the subject of lawsuits challenging its authority. Currently of note, a writ of certiorari has been filed with the U.S.
Additionally, the Dodd-Frank Act established the CFPB, as a consumer protection regulator tasked with regulating consumer financial services and products. Since its creation, the CFPB has been the subject of lawsuits challenging its authority. Currently of note, the case of Community Financial Services Association of America, Limited v.
These factors may increase our credit losses, which would have a material adverse effect on our results of operations and financial condition. Regional Management Corp. | 2022 Annual Report on Form 10-K | 16 Our insurance operations are subject to a number of risks and uncertainties.
These factors may increase our credit losses, which would have a material adverse effect on our results of operations and financial condition. Our insurance operations are subject to a number of risks and uncertainties.
With respect to our managed portfolio of loan products , during fiscal year 2022, approximately 15% (by dollar amount) of our loan payments were made by cash or check and received in branch, although in the future we may direct borrowers to remit payments through one or more lockboxes.
With respect to our managed portfolio of loan products, during fiscal year 2023, approximately 13% (by dollar amount) of our loan payments were made by cash or check and received in branch, although in the future we may direct borrowers to remit payments through one or more Regional Management Corp. | 2023 Annual Report on Form 10-K | 22 lockboxes.
We have experienced substantial growth in recent years, increasing the size of our finance receivable portfolio from $834.0 million at the beginning of 2018 to $1.7 billion at the end of 2022, a compound annual growth rate of 15.3%. We intend to continue our growth strategy in the future.
We have experienced substantial growth in recent years, increasing the size of our finance receivable portfolio from $951.2 million at the beginning of 2019 to $1.8 billion at the end of 2023, a compound annual growth rate of 13.2%. We intend to continue our growth strategy in the future.
Any violations of these laws and regulations may require us to change our business practices or operational structure, and could subject us to legal claims, monetary penalties, sanctions, and the obligation to indemnify and/or notify customers or take other remedial actions. Federal or state laws issued in response to the COVID-19 pandemic could have an adverse impact on our company.
Any violations of these laws and regulations may require us to change our business practices or operational structure, and could subject us to legal claims, monetary penalties, sanctions, and the obligation to indemnify and/or notify customers or take other remedial actions.
Elevated inflation, increasing interest rates, and changing U.S. consumer spending patterns are contributing to this change and uncertainty. Inflation hit a 40-year high in June 2022 at 9.1%, while the U.S. annual inflation rate was 6.5% for the twelve months ended December 31, 2022.
Elevated inflation and interest rates, as well as changing U.S. consumer spending patterns are contributing to this change and uncertainty. Inflation hit a 40-year high in June 2022 at 9.1%. While the U.S. annual inflation rate was 3.4% for the twelve months ended December 31, 2023, inflation remains above the Federal Reserve Board's target of 2.0%.
These critics frequently characterize such alternative financial services providers as predatory or abusive toward consumers. If these persons were to criticize the products that we offer, it could result in further regulation of our business and could negatively impact our relationships with existing borrowers and efforts to attract new borrowers.
If these persons were to criticize the products that we offer, it could result in further regulation of our business and could negatively impact our relationships with existing borrowers and efforts to attract new borrowers.
Supreme Court in the case of Community Financial Services Association of America, Limited v. Consumer Financial Protection Bureau , which involves whether the Fifth Circuit Court of Appeals erred in holding that the statute providing funding to the CFPB violates the appropriations clause of the Constitution.
Consumer Financial Protection Bureau , which involves whether the Fifth Circuit Court of Appeals erred in holding that the statute providing funding to the CFPB violates the appropriations clause of the Constitution, is awaiting decision by the U.S. Supreme Court.
Regional Management Corp. currently acts as the servicer (in such capacity, the “ Servicer ”) with respect to each securitization. If the Servicer defaults in its servicing obligations, an early amortization event could occur under each securitization and the Servicer could be replaced as servicer.
If the Servicer defaults in its servicing obligations, an early amortization event could occur under each securitization and the Servicer could be replaced as servicer.
Any disruption of or interference with our use of the Amazon Web Services and VMWare products and services would negatively impact our operations and adversely affect our business. Amazon Web Services (“ AWS ”) and VMWare, Inc. (“ VMWare ”) provide the technology infrastructure we use to run our business operations.
We rely on Amazon Web Services, Microsoft Azure, and VMWare for our computing, storage, networking, and similar services. Any disruption of or interference with our use of the Amazon Web Services, Microsoft Azure, and VMWare products and services would negatively impact our operations and adversely affect our business. Amazon Web Services (“ AWS ”), Microsoft Azure, and VMWare, Inc.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur branches have an average branch size of approximately 1,738 square feet. In the opinion of management, our properties have been well-maintained, are in sound operating condition, and contain all equipment and facilities necessary to operate at present levels. We believe that all of our facilities are suitable and adequate for our present purposes.
Biggest changeOur branches have an average branch size of approximately 1,853 square feet. Regional Management Corp. | 2023 Annual Report on Form 10-K | 37 In the opinion of management, our properties have been well-maintained, are in sound operating condition, and contain all equipment and facilities necessary to operate at present levels.
ITEM 2. PROPERTIES. Our headquarters operations are located in an approximately 51,700 square foot leased facility in Greer, South Carolina, a town located outside of Greenville, South Carolina. As of February 22, 2023, each of our 346 branches, which are located in 18 states throughout the United States, is leased under a fixed-term lease agreement.
ITEM 2. PR OPERTIES. Our headquarters operations are located in an approximately 51,700 square foot leased facility in Greer, South Carolina, a town located outside of Greenville, South Carolina. As of February 20, 2024, each of our 343 branches, which are located in 19 states throughout the United States, is leased under a fixed-term lease agreement.
Our only reportable segment, which is our consumer finance segment, uses the properties described in this Part I, Item 2, “Properties.”
We believe that all of our facilities are suitable and adequate for our present purposes. Our only reportable segment, which is our consumer finance segment, uses the properties described in this Part I, Item 2, “Properties.”

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 4. MINE SAFETY DISCLOSURES. Not applicable. Regional Management Corp. | 2022 Annual Report on Form 10-K | 38 Part II
Biggest changeITEM 4. MINE SAFE TY DISCLOSURES. Not applicable. Regional Management Corp. | 2023 Annual Report on Form 10-K | 38 Part II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. Mine Safety Disclosures 38 PART II ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 39 ITEM 6. Reserved 41 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 42 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 57 ITEM 8.
Biggest changeITEM 4. Mine Safety Disclosures 38 PART II ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 39 ITEM 6. [Reserved] 41 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 42 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 54 ITEM 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table sets forth the dividends declared and paid for the periods indicated: Period Declaration Date Record Date Payment Date Dividends Declared Per Common Share 1Q 22 February 9, 2022 February 23, 2022 March 16, 2022 $ 0.30 2Q 22 May 4, 2022 May 25, 2022 June 15, 2022 $ 0.30 3Q 22 August 3, 2022 August 24, 2022 September 15, 2022 $ 0.30 4Q 22 November 1, 2022 November 23, 2022 December 14, 2022 $ 0.30 Total $ 1.20 On February 8, 2023, the Board of Directors declared a quarterly dividend of $0.30, payable on March 15, 2023, to stockholders of record on February 22, 2023.
Biggest changeThe following table sets forth the dividends declared and paid for the periods indicated: Period Declaration Date Record Date Payment Date Dividends Declared Per Common Share 1Q 23 February 8, 2023 February 22, 2023 March 15, 2023 $ 0.30 2Q 23 May 3, 2023 May 24, 2023 June 14, 2023 $ 0.30 3Q 23 August 2, 2023 August 23, 2023 September 14, 2023 $ 0.30 4Q 23 November 1, 2023 November 22, 2023 December 13, 2023 $ 0.30 Total $ 1.20 On February 7, 2024, the Board declared a quarterly dividend of $0.30, payable on March 14, 2024, to stockholders of record on February 22, 2024.
Our Board of Directors may take into account general and economic conditions; our financial condition and results of operations; our available cash and current and anticipated cash needs; capital requirements; contractual, legal, tax, and regulatory restrictions and implications on the payment of cash dividends by us to our stockholders or by our subsidiaries to us; and such other factors as our Board of Directors may deem relevant.
Our Board may take into account general and economic conditions; our financial condition and results of operations; our available cash and current and anticipated cash needs; capital requirements; contractual, legal, tax, and regulatory restrictions and implications on the payment of cash dividends by us to our stockholders or by our subsidiaries to us; and such other factors as our Board may deem relevant.
Regional Management Corp. | 2022 Annual Report on Form 10-K | 39 Stock Performance Graph This performance graph shall not be deemed “soliciting material” or to be “filed” with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933.
Regional Management Corp. | 2023 Annual Report on Form 10-K | 39 Stock Performance Graph This performance graph shall not be deemed “soliciting material” or to be “filed” with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933.
Non-Affiliate Ownership For purposes of calculating the aggregate market value of shares of our common stock held by non-affiliates, as set forth on the cover page of this Annual Report on Form 10-K, we have assumed that all outstanding shares are held by non-affiliates, except for shares held by each of our executive officers, directors, and 5% or greater stockholders as of June 30, 2022.
Non-Affiliate Ownership For purposes of calculating the aggregate market value of shares of our common stock held by non-affiliates, as set forth on the cover page of this Annual Report on Form 10-K, we have assumed that all outstanding shares are held by non-affiliates, except for shares held by each of our executive officers, directors, and 5% or greater stockholders as of June 30, 2023.
The declaration, amount, and payment of any future cash dividends on shares of common stock will be at the discretion of our Board of Directors.
The declaration, amount, and payment of any future cash dividends on shares of common stock will be at the discretion of our Board.
The graph assumes that $100 was invested at the market close on December 31, 2017, in the common stock of the Company, the NYSE Composite Index, and the NYSE Financial Index, and data for each assumes reinvestments of dividends. The stock price performance of the following graph is not necessarily indicative of future stock price performance.
The graph assumes that $100 was invested at the market close on December 31, 2018, in the common stock of the Company, the NYSE Composite Index, and the NYSE Financial Index, and data for each assumes reinvestments of dividends. The stock price performance of the following graph is not necessarily indicative of future stock price performance.
Further information concerning shareholdings of our officers, directors, and principal stockholders is incorporated by reference in Part III, Item 12, “ Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Annual Report on Form 10-K. Dividends In October 2020, we announced that our Board of Directors initiated and declared a quarterly cash dividend program.
Further information concerning shareholdings of our officers, directors, and principal stockholders is incorporated by reference in Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Annual Report on Form 10-K. Dividends In October 2020, we announced that our Board initiated and declared a quarterly cash dividend program.
The following graph shows a comparison of the cumulative total return for our common stock, the NYSE Composite Index, and the NYSE Financial Index for the five years ended December 31, 2022.
The following graph shows a comparison of the cumulative total return for our common stock, the NYSE Composite Index, and the NYSE Financial Index for the five years ended December 31, 2023.
Because many of the shares of our common stock are held by brokers and other institutions on behalf of stockholders, we are unable to determine the exact number of beneficial stockholders represented by those record holders, but we believe that there were approximately 4,452 beneficial owners of our common stock as of February 16, 2023.
Because many of the shares of our common stock are held by brokers and other institutions on behalf of stockholders, we are unable to determine the exact number of beneficial stockholders represented by those record holders, but we believe that there were approximately 3,480 beneficial owners of our common stock as of February 16, 2024.
Regional Management Corp. | 2022 Annual Report on Form 10-K | 40
Regional Management Corp. | 2023 Annual Report on Form 10-K | 40
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information Our common stock is listed on the New York Stock Exchange (the “ NYSE ”) under the symbol “RM.” Holders As of February 16, 2023, there were 17 registered holders of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOC KHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information Our common stock is listed on the New York Stock Exchange (the “ NYSE ”) under the symbol “RM.” Holders As of February 20, 2024, there were 15 registered holders of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

91 edited+14 added−86 removed46 unchanged
Biggest changeRegional Management Corp. | 2022 Annual Report on Form 10-K | 45 Results of Operations The following table summarizes our results of operations, both in dollars and as a percentage of average net finance receivables: Year Ended December 31, 2022 2021 2020 Dollars in thousands Amount % of Average Net Finance Receivables Amount % of Average Net Finance Receivables Amount % of Average Net Finance Receivables Revenue Interest and fee income $ 450,854 29.5 % $ 382,544 31.5 % $ 335,215 31.2 % Insurance income, net 43,502 2.8 % 35,482 2.9 % 28,349 2.6 % Other income 12,831 0.8 % 10,325 0.9 % 10,342 1.0 % Total revenue 507,187 33.1 % 428,351 35.3 % 373,906 34.8 % Expenses Provision for credit losses 185,115 12.1 % 89,015 7.3 % 123,810 11.5 % Personnel 141,243 9.2 % 119,833 9.9 % 109,560 10.2 % Occupancy 23,809 1.6 % 24,126 2.0 % 22,629 2.1 % Marketing 15,378 1.0 % 14,405 1.2 % 10,357 1.0 % Other 42,098 2.7 % 37,150 3.0 % 33,770 3.1 % Total general and administrative 222,528 14.5 % 195,514 16.1 % 176,316 16.4 % Interest expense 34,223 2.2 % 31,349 2.6 % 37,852 3.6 % Income before income taxes 65,321 4.3 % 112,473 9.3 % 35,928 3.3 % Income taxes 14,097 1.0 % 23,786 2.0 % 9,198 0.8 % Net income $ 51,224 3.3 % $ 88,687 7.3 % $ 26,730 2.5 % Information explaining the changes in our results of operations from year-to-year is provided in the following pages.
Biggest changeRegional Management Corp. | 2023 Annual Report on Form 10-K | 45 Results of Operations The following table summarizes our results of operations, both in dollars and as a percentage of average net finance receivables: Year Ended December 31, 2023 2022 2021 Dollars in thousands Amount % of Average Net Finance Receivables Amount % of Average Net Finance Receivables Amount % of Average Net Finance Receivables Revenue Interest and fee income $ 489,698 28.6 % $ 450,854 29.5 % $ 382,544 31.5 % Insurance income, net 44,529 2.6 % 43,502 2.8 % 35,482 2.9 % Other income 17,172 1.0 % 12,831 0.8 % 10,325 0.9 % Total revenue 551,399 32.2 % 507,187 33.1 % 428,351 35.3 % Expenses Provision for credit losses 220,034 12.9 % 185,115 12.1 % 89,015 7.3 % Personnel 156,872 9.2 % 141,243 9.2 % 119,833 9.9 % Occupancy 25,029 1.5 % 23,809 1.6 % 24,126 2.0 % Marketing 15,774 0.9 % 15,378 1.0 % 14,405 1.2 % Other 45,444 2.6 % 42,098 2.7 % 37,150 3.0 % Total general and administrative 243,119 14.2 % 222,528 14.5 % 195,514 16.1 % Interest expense 67,463 3.9 % 34,223 2.2 % 31,349 2.6 % Income before income taxes 20,783 1.2 % 65,321 4.3 % 112,473 9.3 % Income taxes 4,825 0.3 % 14,097 1.0 % 23,786 2.0 % Net income $ 15,958 0.9 % $ 51,224 3.3 % $ 88,687 7.3 % Information explaining the changes in our results of operations from year-to-year is provided in the following pages.
We operate an integrated branch model in which nearly all loans, regardless of origination channel, are serviced through our branch network with the support of centralized sales, underwriting, service, collections, and administrative teams. This provides us with frequent contact with our customers, which we believe improves our credit performance and customer loyalty.
We operate an integrated branch model in which nearly all loans, regardless of origination channel, are serviced through our branch network with the support of centralized sales, underwriting, service, collections, and administrative teams. This model provides us with frequent contact with our customers, which we believe improves our credit performance and customer loyalty.
Small and large installment loans are our core products and will be the drivers of future growth. We ceased accepting applications for our retail loan product offering in November 2022, to focus on growing our core loan portfolio. We will continue to own and service our existing portfolio of retail loans.
Small and large installment loans are our core products and will be the drivers of future growth. We ceased accepting applications for our retail loan product offering in November 2022, to focus on growing our core loan portfolio. We continue to own and service our existing portfolio of retail loans.
Our other income consists primarily of late charges assessed on customers who fail to make a payment within a specified number of days following the due date of the payment.
Other Income. Our other income consists primarily of late charges assessed on customers who fail to make a payment within a specified number of days following the due date of the payment.
Our marketing expenses consist primarily of costs associated with our direct mail campaigns (including postage and costs associated with selecting recipients), digital marketing, maintaining our consumer website, and some local marketing by branches. These costs are expensed as incurred.
Our marketing expenses consist primarily of costs associated with our direct mail campaigns (including postage and costs associated with selecting recipients), digital marketing, maintaining our consumer website, and local marketing by branches. These costs are expensed as incurred.
For additional information regarding our business operations, see Part I, Item 1, “Business.” Regional Management Corp. | 2022 Annual Report on Form 10-K | 42 Outlook We continually assess the macroeconomic environment in which we operate in order to appropriately and timely adapt to current market conditions.
For additional information regarding our business operations, see Part I, Item 1, “Business.” Regional Management Corp. | 2023 Annual Report on Form 10-K | 42 Outlook We continually assess the macroeconomic environment in which we operate in order to appropriately and timely adapt to current market conditions.
We selected a static pool Probability of Default (“ PD ”) / Loss Given Default (“ LGD ”) model to estimate our base allowance for credit losses, in which the estimated loss is equal to the product of PD and LGD.
We selected a Probability of Default (“ PD ”) / Loss Given Default (“ LGD ”) model to estimate our base allowance for credit losses, in which the estimated loss is equal to the product of PD and LGD.
The non-performing loan sale allowed us to dispose of a distressed portion of our portfolio at an attractive price and enabled us to re-focus our personnel on earlier-stage delinquent accounts as we enter the first quarter tax season, which seasonally is our best quarter for collections.
The non-performing loan sale allowed us to dispose of a distressed portion of our portfolio at an attractive price and enabled us to re-focus our personnel on earlier-stage delinquent accounts as we enter the first quarter, which historically has been our best quarter for collections.
We continue to seek ways to diversify our funding sources. As of December 31, 2022, we had a funded debt-to-equity ratio (debt divided by total stockholders’ equity) of 4.4 to 1.0 and a stockholders’ equity ratio (total stockholders’ equity as a percentage of total assets) of 17.9%.
We continue to seek ways to diversify our funding sources. As of December 31, 2023, we had a funded debt-to-equity ratio (debt divided by total stockholders’ equity) of 4.3 to 1.0 and a stockholders’ equity ratio (total stockholders’ equity as a percentage of total assets) of 18.0%.
Overview We are a diversified consumer finance company that provides installment loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies, and other lenders. As of December 31, 2022, we operate under the name “Regional Finance” online and in 345 branch locations in 18 states across the United States, serving 517,700 active accounts.
Overview We are a diversified consumer finance company that provides installment loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies, and other lenders. As of December 31, 2023, we operate under the name “Regional Finance” online and in 346 branch locations in 19 states across the United States, serving 538,400 active accounts.
Comparison of the Year Ended December 31, 2021, Versus the Year Ended December 31, 2020 For a comparison of our results of operations for the years ended December 31, 2021 and December 31, 2020, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (which was filed with the Securities and Exchange Commission on March 4, 2022), which is incorporated by reference herein.
Regional Management Corp. | 2023 Annual Report on Form 10-K | 49 Comparison of the Year Ended December 31, 2022, Versus the Year Ended December 31, 2021 For a comparison of our results of operations for the years ended December 31, 2022 and December 31, 2021, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (which was filed with the Securities and Exchange Commission on February 24, 2023), which is incorporated by reference herein.
Our goal is to consistently grow our finance receivables and to soundly manage our portfolio risk, while providing our customers with attractive and easy-to-understand loan products that serve their varied financial needs. Our products include: • Small Loans (≤$2,500) – As of December 31, 2022, we had 287.0 thousand small installment loans outstanding, representing $481.6 million in net finance receivables.
Our goal is to consistently grow our finance receivables and to soundly manage our portfolio risk, while providing our customers with attractive and easy-to-understand loan products that serve their varied financial needs. Our products include: • Small Loans (≤$2,500) – As of December 31, 2023, we had 289.3 thousand small installment loans outstanding, representing $493.5 million in net finance receivables.
See Note 4, “Finance Receivables, Credit Quality Information, and Allowance for Credit Losses” of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary Data,” for additional information regarding our allowance for credit losses. Net Credit Losses. Net credit losses increased $85.9 million, or 107.8%, to $165.6 million in 2022, from $79.7 million in 2021.
See Note 4, “Finance Receivables, Credit Quality Information, and Allowance for Credit Losses” of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary Data,” for additional information regarding our allowance for credit losses. Net Credit Losses. Net credit losses increased $45.8 million, or 27.7%, to $211.4 million in 2023, from $165.6 million in 2022.
The credit quality of our loan portfolio is the result of our ability to enforce sound underwriting standards, maintain diligent servicing of the portfolio, and respond to changing economic conditions as we grow our loan portfolio.
Our results of operations are highly dependent upon the credit quality of our loan portfolio. The credit quality of our loan portfolio is the result of our ability to enforce sound underwriting standards, maintain diligent servicing of the portfolio, and respond to changing economic conditions as we grow our loan portfolio.
Our dividend payments may change from time to time, and the Board may choose not to continue to declare dividends in the future. Cash Flow. Operating Activities. Net cash provided by operating activities in 2022 was $224.3 million, compared to $189.0 million provided by operating activities in 2021, an increase of $35.3 million.
Our dividend payments may change from time to time, and the Board may choose not to continue to declare dividends in the future. Cash Flow. Operating Activities. Net cash provided by operating activities in 2023 was $249.2 million, compared to $224.3 million provided by operating activities in 2022, an increase of $24.8 million.
Due to the judgment and uncertainty in estimating the expected credit losses, we may experience changes to the macroeconomic assumptions within our forecast, as well as changes to our credit loss performance outlook, both of which could lead to further changes in our allowance for credit losses, allowance as a percentage of net finance receivables, and provision for credit losses.
Regional Management Corp. | 2023 Annual Report on Form 10-K | 52 Due to the judgment and uncertainty in estimating the expected credit losses, we may experience changes to the macroeconomic assumptions within our forecast, as well as changes to our credit loss performance outlook, both of which could lead to further changes in our allowance for credit losses, allowance as a percentage of net finance receivables, and provision for credit losses.
The following table sets forth the dividends declared and paid for 2022: Period Declaration Date Record Date Payment Date Dividends Declared Per Common Share 1Q 22 February 9, 2022 February 23, 2022 March 16, 2022 $ 0.30 2Q 22 May 4, 2022 May 25, 2022 June 15, 2022 $ 0.30 3Q 22 August 3, 2022 August 24, 2022 September 15, 2022 $ 0.30 4Q 22 November 1, 2022 November 23, 2022 December 14, 2022 $ 0.30 Total $ 1.20 The Board declared and paid $11.8 million of cash dividends on our common stock during 2022.
The following table sets forth the dividends declared and paid for 2023: Period Declaration Date Record Date Payment Date Dividends Declared Per Common Share 1Q 23 February 8, 2023 February 22, 2023 March 15, 2023 $ 0.30 2Q 23 May 3, 2023 May 24, 2023 June 14, 2023 $ 0.30 3Q 23 August 2, 2023 August 23, 2023 September 14, 2023 $ 0.30 4Q 23 November 1, 2023 November 22, 2023 December 13, 2023 $ 0.30 Total $ 1.20 Regional Management Corp. | 2023 Annual Report on Form 10-K | 50 The Board declared and paid $11.9 million of cash dividends on our common stock during 2023.
To demonstrate the sensitivity of forecasting macroeconomic conditions, we stressed our macroeconomic model with 10% increased weighting towards moderate recession that would have increased our reserves as of December 31, 2022 by $0.9 million. The macroeconomic scenarios are highly influenced by timing, severity, and duration of changes in the underlying economic factors.
To demonstrate the sensitivity of forecasting macroeconomic conditions, we stressed our macroeconomic model with 10% increased weighting towards slower near-term growth that would have increased our reserves as of December 31, 2023 by $1.2 million. The macroeconomic scenarios are highly influenced by timing, severity, and duration of changes in the underlying economic factors.
Our general and administrative expenses are comprised of four categories: personnel, occupancy, marketing, and other. We measure our general and administrative expenses as a percentage of average net finance receivables, which we refer to as our operating expense ratio.
Those costs are included in general and administrative expenses within our consolidated statements of comprehensive income. Our general and administrative expenses are comprised of four categories: personnel, occupancy, marketing, and other. We measure our general and administrative expenses as a percentage of average net finance receivables, which we refer to as our operating expense ratio.
Comparison of December 31, 2022, Versus December 31, 2021 The following discussion and table describe the changes in finance receivables by product type: • Small Loans (≤$2,500) – Small loans outstanding increased by $36.6 million, or 8.2%, to $481.6 million at December 31, 2022, from $445.0 million at December 31, 2021.
Comparison of December 31, 2023, Versus December 31, 2022 The following discussion and table describe the changes in finance receivables by product type: • Small Loans (≤$2,500) – Small loans outstanding increased by $11.9 million, or 2.5%, to $493.5 million at December 31, 2023, from $481.6 million at December 31, 2022.
Additionally, we often experience increases in other expenses including legal and settlement expenses, external fraud, collections expense, bank fees, and certain professional expenses as we grow our loan portfolio and expand our market footprint. Operating Expense Ratio. Our operating expense ratio decreased by 1.6% to 14.5% during 2022, from 16.1% during 2021.
Additionally, we often experience increases in other expenses including legal expenses, collections expense, bank fees, and certain professional expenses as we grow our loan portfolio and expand our market footprint. Operating Expense Ratio. Our operating expense ratio decreased by 0.3% to 14.2% during 2023, from 14.5% during 2022.
The loan sale impact on total revenue was a decrease of $2.2 million from revenue reversals, and the impact on the provision for credit losses was an increase of $1.3 million. The loan sale resulted in additional net credit losses of $13.1 million.
The loan sale impact on total revenue was a decrease of $1.9 million from revenue reversals, and the impact on the provision for credit losses was an increase of $3.1 million. The loan sale resulted in additional net credit losses of $13.9 million. Our allowance for credit losses decreased $10.8 million as a result of the loan sale.
This included 40.6 thousand large loan convenience checks, representing $140.7 million in net finance receivables. • Retail Loans – As of December 31, 2022, we had 5.1 thousand retail purchase loans outstanding, representing $9.6 million in net finance receivables. • Optional Insurance Products – We offer optional payment and collateral protection insurance to our direct loan customers.
This included 61.9 thousand large loan convenience checks, representing $194.3 million in net finance receivables. • Retail Loans – As of December 31, 2023, we had 2.5 thousand retail purchase loans outstanding, representing $3.8 million in net finance receivables. • Optional Insurance Products – We offer optional payment and collateral protection insurance to our direct loan customers.
Therefore, this hypothetical analysis is not intended to represent our expectation of changes in our estimate of expected credit losses due to a change in the macroeconomic environment, nor does it consider management’s judgment of other quantitative and qualitative information which could increase or decrease the estimate. Regional Management Corp. | 2022 Annual Report on Form 10-K | 56
Therefore, this hypothetical analysis is not intended to represent our expectation of changes in our estimate of expected credit losses due to a change in the macroeconomic environment, nor does it consider management’s judgment of other quantitative and qualitative information which could increase or decrease the estimate. Regulatory Developments.
We also consider the need to adjust historical information to reflect the extent to which current conditions differ from the conditions Regional Management Corp. | 2022 Annual Report on Form 10-K | 55 that existed for the period over which historical information was evaluated. These adjustments to historical loss information may be qualitative or quantitative in nature.
We also consider the need to adjust historical information to reflect the extent to which current conditions differ from the conditions that existed for the period over which historical information was evaluated. These adjustments to historical loss information may be qualitative or quantitative in nature.
Cash and cash equivalents decreased to $3.9 million as of December 31, 2022, from $10.5 million as of December 31, 2021. As of December 31, 2022 and December 31, 2021 we had $97.6 million and $199.2 million, respectively, of immediate availability to draw down cash from our revolving credit facilities.
Cash and cash equivalents increased to $4.5 million as of December 31, 2023, from $3.9 million as of December 31, 2022. As of December 31, 2023 and December 31, 2022 we had $108.1 million and $97.6 million, respectively, of immediate availability to draw down cash from our revolving credit facilities.
This included 151.0 thousand small loan convenience checks, representing $217.8 million in net finance receivables. • Large Loans (>$2,500) – As of December 31, 2022, we had 225.6 thousand large installment loans outstanding, representing $1.2 billion in net finance receivables.
This included 148.9 thousand small loan convenience checks, representing $221.8 million in net finance receivables. • Large Loans (>$2,500) – As of December 31, 2023, we had 246.6 thousand large installment loans outstanding, representing $1.3 billion in net finance receivables.
The largest component of general and administrative expenses is personnel expense, which increased $21.4 million, or 17.9%, to $141.2 million in 2022, from $119.8 million in 2021. We had several offsetting increases and decreases in personnel expenses during 2022. Labor expenses and incentive costs increased $24.8 million and $0.6 million, respectively, compared to 2021.
The largest component of general and administrative expenses is personnel expense, which increased $15.6 million, or 11.1%, to $156.9 million in 2023, from $141.2 million in 2022. We had several offsetting increases and decreases in personnel expenses during 2023. Labor expenses and incentive costs increased $14.9 million and $1.7 million, respectively, compared to 2022.
We evaluate delinquency and losses in each of our loan products in establishing the allowance for credit losses.
The increase in the provision for credit losses is explained in greater detail below. Allowance for Credit Losses. We evaluate delinquency and losses in each of our loan products in establishing the allowance for credit losses.
Our unused capacity on our revolving credit facilities (subject to the borrowing base) was $555.1 million and $556.8 million as of December 31, 2022 and 2021, respectively. Our total debt increased to $1.4 billion as of December 31, 2022, from $1.1 billion as of December 31, 2021.
Our unused capacity on our revolving credit facilities (subject to the borrowing base) was $551.5 million and $555.1 million as of December 31, 2023 and December 31, 2022, respectively. Our total debt was $1.4 billion as of both December 31, 2023 and the prior year-end.
In 2022, net cash provided by financing activities was $205.6 million, compared to net cash provided by financing activities of $243.4 million in 2021, a decrease of $37.8 million.
Net cash provided by financing activities in 2023 was $26.4 million, compared to $205.6 million in 2022, a decrease of $179.1 million.
As a result of the loan sale, our net income was negatively impacted by $2.7 million in 2022, but net income will be positively impacted by a similar amount in 2023.
As a result of the loan sale, our net income was negatively impacted by $3.9 million in 2023, but net income will be positively impacted by between $2.0 million and $3.0 million in 2024.
The increase was due to new growth initiatives, increased marketing, and the transition of small loan customers to large loans, partially offset by credit tightening for disciplined growth. • Retail Loans – Retail loans outstanding decreased $0.9 million, or 8.9%, to $9.6 million at December 31, 2022, from $10.5 million at December 31, 2021.
The increase was due to the growth of receivables in branches opened during 2022 and 2023 and from the transition of small loan customers to large loans, partially offset by credit tightening for disciplined growth. • Retail Loans – Retail loans outstanding decreased $5.8 million, or 60.4%, to $3.8 million at December 31, 2023, from $9.6 million at December 31, 2022.
Factors Affecting Our Results of Operations Our business is impacted by several factors affecting our revenues, costs, and results of operations, including the following: Quarterly Information and Seasonality . Our loan volume and contractual delinquency follow seasonal trends.
We believe our liquidity position provides substantial runway to support the fundamental operations of our business and to fund future growth. Factors Affecting Our Results of Operations Our business is impacted by several factors affecting our revenues, costs, and results of operations, including the following: Quarterly Information and Seasonality . Our loan volume and contractual delinquency follow seasonal trends.
The decrease was due to an increase in provision for credit losses of $96.1 million, an increase in general and administrative expenses of $27.0 million, and an increase in interest expense of $2.9 million, partially offset by an increase in revenue of $78.8 million and a decrease in income taxes of $9.7 million. Revenue.
The decrease was due to increases in provision for credit losses of $34.9 million, interest expense of $33.2 million, and general and administrative expenses of $20.6 million, partially offset by an increase in revenue of $44.2 million and a decrease in income taxes of $9.3 million. Revenue.
Going forward, we may experience changes to the macroeconomic assumptions within our forecast and changes to our credit loss performance outlook, both of which could lead to further changes in our allowance for credit losses, reserve rate, and provision for credit losses expense.
Going forward, we may experience changes to the macroeconomic assumptions within our forecast and to our credit loss performance outlook, either of which could lead to further changes in our allowance for credit losses, reserve rate, and provision for credit losses expense. We proactively diversified our funding over the past few years and continue to maintain a strong liquidity profile.
The fees may or may not be refundable to the customer in the event of an early payoff, depending on state law. Fees are recognized as income over the life of the loan on the constant yield method. Insurance Income, Net. Our insurance operations are a material part of our overall business and are integral to our lending activities.
Fees are recognized as income over the life of the loan on the constant yield method. Insurance Income, Net. Our insurance operations are a material part of our overall business and are integral to our lending activities.
Substantial adjustments to the allowance may be necessary if there are significant changes in forecasted economic conditions or loan portfolio performance. General and Administrative Expenses. Our financial results are impacted by the costs of operations and head office functions. Those costs are included in general and administrative expenses within our consolidated statements of comprehensive income.
Substantial adjustments to the allowance may be necessary if there are significant changes in forecasted economic conditions or loan portfolio performance. Regional Management Corp. | 2023 Annual Report on Form 10-K | 44 General and Administrative Expenses. Our financial results are impacted by the costs of operations and head office functions.
See Note 19, “Subsequent Events” of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary Data,” for information regarding the addition of a revolving credit facility following the end of the fiscal year.
See Note 19, “Subsequent Events” of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary Data,” for information regarding the amendment of the senior revolving credit facility following the end of the fiscal year. Dividends. The Board may in its discretion declare and pay cash dividends on our common stock.
To enhance the precision of the allowance for credit loss estimate, we evaluate our finance receivable portfolio on a pool basis and segment each pool of finance receivables with similar credit risk characteristics.
Historical net finance receivables are tracked over the term of the pools to identify the incidences of loss (PDs) and the average severity of losses (LGDs). To enhance the precision of the allowance for credit loss estimate, we evaluate our finance receivable portfolio on a pool basis and segment each pool of finance receivables with similar credit risk characteristics.
Macroeconomic factors, including, but not limited to, inflationary pressures, rising interest rates, and impacts from current geopolitical events outside the U.S., may affect our business, liquidity, financial condition, and results of operations. Current inflationary pressures and rising interest rates have created economic uncertainty and diminished consumer confidence.
Macroeconomic factors, including, but not limited to, inflationary pressures, interest rate trends, and impacts from current geopolitical events outside the U.S., may affect our business, liquidity, financial condition, and results of operations. Ongoing inflationary pressures and interest rate trends have continued to create economic uncertainty. Recent geopolitical events outside of the U.S. have also contributed to volatility in U.S. markets.
Increasing the number of loans per branch and growing our state footprint allows us to increase the number of customers that we are able to serve. We grew our state footprint from 13 to 1 8 states during 2022, expanding our operations to Mississippi, Indiana, California , Louisiana , and Idaho.
Increasing the number of loans per branch and growing our state footprint allows us to increase the number of customers we are able to serve. We grew our state footprint from 18 to 19 states during 2023, expanding our operations to Arizona.
Our general and administrative expenses increased $27.0 million, or 13.8%, to $222.5 million in 2022 from $195.5 million in 2021. The absolute dollar increase in general and administrative expenses is explained in greater detail below. Personnel.
Our general and administrative expenses increased $20.6 million, or 9.3%, to $243.1 million in 2023 from $222.5 million in 2022. The absolute dollar increase in general and administrative expenses is explained in greater detail below. Personnel.
Other expenses increased $4.9 million, or 13.3%, to $42.1 million in 2022, from $37.2 million in 2021, primarily due to increased investment in digital and technological capabilities of $2.4 million and increased travel expenses of $0.9 million.
Marketing expenses increased $0.4 million, or 2.6%, to $15.8 million in 2023, from $15.4 million in 2022 primarily due to higher digital marketing costs of $0.3 million. Other Expenses. Other expenses increased $3.3 million, or 7.9%, to $45.4 million in 2023, from $42.1 million in 2022, primarily due to increased investment in digital and technological capabilities of $2.4 million.
As a component of our strategy to manage the interest rate risk associated with future interest payments on our variable-rate debt, a majority of our funding was held at a fixed rate as of December 31, 2022, representing 88% of total debt.
As a component of our strategy to manage the interest rate risk associated with future interest payments on our variable-rate debt, a majority of our funding was held at a fixed rate as of December 31, 2023, representing 82% of total debt. Operating Costs. Our financial results are impacted by the costs of operations and head office functions.
As reinsurer, we maintain restricted reserves comprised of restricted cash and restricted available-for-sale investments for life insurance claims in an amount determined by the unaffiliated insurance company.
As reinsurer, we maintain restricted reserves comprised of restricted cash and restricted available-for-sale investments for life insurance claims in an amount determined by the unaffiliated insurance company. As of December 31, 2023, the restricted reserves consisted of $21.9 million of unearned premium reserves and $1.2 million of unpaid claims reserves. The unaffiliated insurance company maintains the reserves for non-life claims.
Average net finance receivables were $1.5 billion in 2022 and $1.2 billion in 2021. We source our loans through our Regional Management Corp. | 2022 Annual Report on Form 10-K | 43 branches, centrally-managed direct mail program, digital partners, and our consumer website. Nearly all loans , regardless of origination channel, are serviced through our branches .
Average net finance receivables were $1.7 billion in 2023 and $1.5 billion in 2022. We source our loans through our branches, centrally-managed direct mail program, digital partners, and our consumer website. The majority of our loans, regardless of origination channel, are serviced through our branches.
The increase was primarily due to the growth in our business described above, which produced an increase in net income, before provision for credit losses. Investing Activities. Investing activities consist of originations and repayments of finance receivables, purchases of intangible assets, and purchases of property and equipment for new and existing branches.
The increase was primarily due to the growth of our loan portfolio. Investing Activities. Investing activities consist of originations and repayments of finance receivables, purchases of intangible assets, and purchases of property and equipment for new and existing branches.
As of December 31, 2022 and December 31, 2021, we had $20.7 million and $17.0 million in macroeconomic reserves, respectively. Potential macroeconomic changes have created conditions that increase the level of uncertainty associated with our estimate of the amount and timing of future credit losses from our loan portfolio. Macroeconomic Sensitivity.
Potential macroeconomic changes have created conditions that increase the level of uncertainty associated with our estimate of the amount and timing of future credit losses from our loan portfolio. Macroeconomic Sensitivity.
Accrual of interest income on finance receivables is suspended when an account becomes 90 days delinquent. If the account is charged off, the accrued interest income is reversed as a reduction of interest and fee income. Most states allow certain fees in connection with lending activities, such as loan origination fees, acquisition fees, and maintenance fees.
If the account is charged off, the accrued interest income is reversed as a reduction of interest and fee income. Most states allow certain fees in connection with lending activities, such as loan origination fees, acquisition fees, and maintenance fees. Some states allow for higher fees while keeping interest rates lower.
Our effective tax rate increased to 21.6% in 2022, compared to 21.1% in 2021. Fiscal 2022 was impacted by tax benefits from the exercise and vesting of share-based awards and a research and development tax credit.
Fiscal 2023 was impacted by discrete tax deficiencies from the exercise and vesting of share-based awards. The effective tax rate for 2022 was impacted by the tax benefits from the exercise and vesting of share-based awards and a research and development tax credit.
Total revenue increased $78.8 million, or 18.4%, to $507.2 million in 2022, from $428.4 million in 2021. The components of revenue are explained in greater detail below. Interest and Fee Income . Interest and fee income increased $68.3 million, or 17.9%, to $450.9 million in 2022, from $382.5 million in 2021.
Total revenue increased $44.2 million, or 8.7%, to $551.4 million in 2023, from $507.2 million in 2022. The components of revenue are explained in greater detail below. Interest and Fee Income . Interest and fee income increased $38.8 million, or 8.6%, to $489.7 million in 2023, from $450.9 million in 2022.
Our contractual delinquency as a percentage of net finance receivables was 7.1% as of December 31, 2022, up from 6.0% as of December 31, 2021.
Our allowance for credit losses was 10.6% of net finance receivables as of December 31, 2023. Our contractual delinquency as a percentage of net finance receivables was 6.9% as of December 31, 2023, down from 7.1% as of December 31, 2022.
The increase was primarily due to a 26.1% increase in average net finance receivables, offset by a 2.0% decrease in average yield. Interest accrual reversal of charged-off loans from the loan sale decreased interest and fee income by $1.9 million, which contributed 10 basis points to the decrease in average yield.
The increase was due to an 11.8% increase in average net finance receivables, offset by a 0.9% decrease in average yield. Interest accrual reversals of charged-off loans from the 2023 and 2022 loan sales increased 2023 interest and fee income by $0.1 million on a net basis.
The following tables include delinquency balances by aging category and by product: Contractual Delinquency by Aging Dollars in thousands December 31, 2022 December 31, 2021 Current $ 1,431,502 84.2 % $ 1,237,165 86.7 % 1 to 29 days past due 148,048 8.7 % 104,201 7.3 % Delinquent accounts: 30 to 59 days 36,208 2.2 % 25,283 1.9 % 60 to 89 days 31,352 1.8 % 20,395 1.4 % 90 to 119 days 24,293 1.4 % 15,962 1.0 % 120 to 149 days 16,257 1.0 % 12,466 0.9 % 150 to 179 days 11,733 0.7 % 10,785 0.8 % Total contractual delinquency $ 119,843 7.1 % $ 84,891 6.0 % Total net finance receivables $ 1,699,393 100.0 % $ 1,426,257 100.0 % Contractual Delinquency by Product Dollars in thousands December 31, 2022 December 31, 2021 Small loans $ 43,703 9.1 % $ 39,794 8.9 % Large loans 75,349 6.2 % 44,348 4.6 % Retail loans 791 8.2 % 749 7.1 % Total contractual delinquency $ 119,843 7.1 % $ 84,891 6.0 % General and Administrative Expenses.
Regional Management Corp. | 2023 Annual Report on Form 10-K | 48 The following tables include delinquency balances by aging category and by product: Contractual Delinquency by Aging Dollars in thousands December 31, 2023 December 31, 2022 Current $ 1,493,341 84.3 % $ 1,431,502 84.2 % 1 to 29 days past due 155,196 8.8 % 148,048 8.7 % Delinquent accounts: 30 to 59 days 34,756 1.9 % 36,208 2.2 % 60 to 89 days 31,212 1.8 % 31,352 1.8 % 90 to 119 days 27,107 1.5 % 24,293 1.4 % 120 to 149 days 15,317 0.9 % 16,257 1.0 % 150 to 179 days 14,481 0.8 % 11,733 0.7 % Total contractual delinquency $ 122,873 6.9 % $ 119,843 7.1 % Total net finance receivables $ 1,771,410 100.0 % $ 1,699,393 100.0 % Contractual Delinquency by Product Dollars in thousands December 31, 2023 December 31, 2022 Small loans $ 42,151 8.5 % $ 43,703 9.1 % Large loans 80,136 6.3 % 75,349 6.2 % Retail loans 586 15.4 % 791 8.2 % Total contractual delinquency $ 122,873 6.9 % $ 119,843 7.1 % General and Administrative Expenses.
Collections are remitted to a restricted cash collection account, which totaled $17.2 million as of December 31, 2022. RMC Reinsurance. Our wholly-owned subsidiary, RMC Reinsurance, Ltd., is required to maintain reserves against life insurance policies ceded to it, as determined by the ceding company. As of December 31, 2022, cash reserves for reinsurance were $1.9 million.
RMC Reinsurance. Our wholly-owned subsidiary, RMC Reinsurance, Ltd., is required to maintain reserves against life insurance policies ceded to it, as determined by the ceding company. These reserves are comprised of restricted cash and restricted available-for-sale investments, which totaled $0.3 million and $22.7 million, respectively, as of December 31, 2023.
The increase was primarily due to higher average net finance receivables, credit normalization, the impact of inflation on our customers, and the net credit losses attributable to the loan sale. Net credit losses as a percentage of average net finance receivables were 10.8% in 2022, compared to 6.6% in 2021.
The increase was primarily due to higher average net finance receivables and the macroeconomic environment, partially offset by the net impact of the 2022 and 2023 loan sales. Net credit losses as a percentage of average net finance receivables were 12.4% in 2023, compared to 10.8% in 2022.
Our financial results are impacted by the costs of operations and head office functions. Those costs are included in general and administrative expenses within our consolidated statements of comprehensive income. Components of Results of Operations Interest and Fee Income. Our interest and fee income consists primarily of interest earned on outstanding loans.
Those costs are included in general and administrative expenses within our consolidated statements of comprehensive income. Components of Results of Operations Interest and Fee Income. Our interest and fee income consists primarily of interest earned on outstanding loans. Accrual of interest income on finance receivables is suspended when an account becomes 90 days delinquent.
The increase in earned premiums was primarily due to portfolio growth. The decrease in claims, reserves, and certain direct expenses compared to 2021 was primarily due to decreases in life insurance claims. Other Income .
The decrease in earned premiums was primarily due to fewer active policies. The decrease in claims, reserves, and certain direct expenses was primarily due to a decrease in claims reserves. Other Income .
Net Finance Receivables by Product Dollars in thousands December 31, 2022 December 31, 2021 YoY $ Inc (Dec) YoY % Inc (Dec) Small loans $ 481,605 $ 445,023 $ 36,582 8.2 % Large loans 1,208,185 970,694 237,491 24.5 % Retail loans 9,603 10,540 (937 ) (8.9 )% Total net finance receivables $ 1,699,393 $ 1,426,257 $ 273,136 19.2 % Number of branches at period end 345 350 (5 ) (1.4 )% Net finance receivables per branch $ 4,926 $ 4,075 $ 851 20.9 % Regional Management Corp. | 2022 Annual Report on Form 10-K | 46 Comparison of the Year Ended December 31, 2022, Versus the Year Ended December 31, 2021 Net Income.
Net Finance Receivables by Product Dollars in thousands December 31, 2023 December 31, 2022 YoY $ Inc (Dec) YoY % Inc (Dec) Small loans $ 493,473 $ 481,605 $ 11,868 2.5 % Large loans 1,274,137 1,208,185 65,952 5.5 % Retail loans 3,800 9,603 (5,803 ) (60.4 )% Total net finance receivables $ 1,771,410 $ 1,699,393 $ 72,017 4.2 % Number of branches at period end 346 345 1 0.3 % Net finance receivables per branch $ 5,120 $ 4,926 $ 194 3.9 % Regional Management Corp. | 2023 Annual Report on Form 10-K | 46 Comparison of the Year Ended December 31, 2023, Versus the Year Ended December 31, 2022 Net Income.
Net cash used in investing activities in 2022 was $447.3 million, compared to $355.1 million in 2021, an increase in cash used of $92.2 million. The increase in cash used was primarily due to increased originations of finance receivables and the purchase of restricted available-for-sale investments. Financing Activities. Financing activities consist of borrowings and payments on our outstanding indebtedness.
Net cash used in investing activities in 2023 was $278.7 million, compared to $447.3 million in 2022, a decrease of $168.6 million. The decrease was primarily due to decreased originations of finance receivables. Financing Activities. Financing activities consist of borrowings and payments on our outstanding indebtedness.
The increase was the result of new growth initiatives, and increased marketing, partially offset by credit tightening for disciplined growth. • Large Loans (>$2,500) – Large loans outstanding increased by $237.5 million, or 24.5%, to $1.2 billion at December 31, 2022, from $970.7 million at December 31, 2021.
The increase was due to the growth of receivables in branches opened during 2022 and 2023, partially offset by credit tightening for disciplined growth and the transition of small loan customers to large loans. • Large Loans (>$2,500) – Large loans outstanding increased by $66.0 million, or 5.5%, to $1.3 billion at December 31, 2023, from $1.2 billion at December 31, 2022.
In addition, the revolving period maturities of our securitizations and warehouse credit facilities (each as described below within “Financing Arrangements”) range from March 2023 to September 2026. There can be no assurance that we will be able to secure an extension of the warehouse credit facilities or close additional securitization transactions if and when needed in the future .
As of December 31, 2023, we did not exercise our right to redeem the notes of our RMIT 2020-1 securitization, for which the revolving period ended in September 2023. There can be no assurance that we will be able to secure an extension of the warehouse credit facilities or close additional securitization transactions if and when needed in the future.
This branch optimization is consistent with our omni-channel strategy and builds upon our recent successes in entering new states with a lighter branch footprint, while still providing customers with best-in-class service. We plan to add additional branches in new and existing states where it is favorable for us to conduct business. Product Mix.
We continue to assess our legacy branch network for clear opportunities to consolidate operations into larger branches within close geographic proximity. This branch optimization is consistent with our omni-channel strategy and builds upon our recent successes in entering new states with a lighter branch footprint, while still providing customers with best-in-class service.
The following table sets forth the average net finance receivables balance and average yield for our loan products: Average Net Finance Receivables for the Year Ended Average Yields for the Year Ended Dollars in thousands December 31, 2022 December 31, 2021 YoY % Inc (Dec) December 31, 2022 December 31, 2021 YoY % Inc (Dec) Small loans $ 456,141 $ 394,394 15.7 % 35.2 % 38.2 % (3.0 )% Large loans 1,063,365 808,230 31.6 % 27.1 % 28.4 % (1.3 )% Retail loans 10,737 11,259 (4.6 )% 17.9 % 18.3 % (0.4 )% Total interest and fee yield $ 1,530,243 $ 1,213,883 26.1 % 29.5 % 31.5 % (2.0 )% Small and large loan yields decreased 3.0% and 1.3%, respectively, in 2022 compared to 2021 primarily due to normalization of credit performance across the portfolio, the economic environment, credit tightening on higher-rate loans, and our portfolio composition shift toward larger, higher-credit quality customers with lower interest rates.
The following table sets forth the average net finance receivables balance and average yield for our loan products: Average Net Finance Receivables for the Year Ended Average Yields for the Year Ended Dollars in thousands December 31, 2023 December 31, 2022 YoY % Inc (Dec) December 31, 2023 December 31, 2022 YoY % Inc (Dec) Small loans $ 462,116 $ 456,141 1.3 % 35.6 % 35.2 % 0.4 % Large loans 1,242,529 1,063,365 16.8 % 26.1 % 27.1 % (1.0 )% Retail loans 6,522 10,737 (39.3 )% 17.3 % 17.9 % (0.6 )% Total interest and fee yield $ 1,711,167 $ 1,530,243 11.8 % 28.6 % 29.5 % (0.9 )% Total originations decreased to $1.5 billion in 2023, from $1.6 billion in 2022, due to credit-tightening actions and the re-allocation of labor to collections in 2023.
In both 2022 and 2021, personal property insurance premiums represented the largest component of aggregate earned insurance premiums, and life insurance claims expense represented the largest component of direct insurance expenses.
Insurance income, net increased $1.0 million, or 2.4%, to $44.5 million in 2023, from $43.5 million in 2022. In both 2023 and 2022, personal property insurance premiums represented the largest component of aggregate earned insurance premiums, and life insurance claims expense represented the largest component of direct insurance expenses.
A summary of the future material financial obligations requiring repayments as of December 31, 2022 is as follows: Future Material Financial Obligations by Period Dollars in thousands Next Twelve Months Beyond Twelve Months Total Principal payments on debt obligations $ 32,174 $ 1,320,129 $ 1,352,303 Interest payments on debt obligations 59,092 97,328 156,420 Operating lease obligations 8,525 35,055 43,580 Total $ 99,791 $ 1,452,512 $ 1,552,303 Based upon anticipated cash flows, we believe that cash flows from operations and our various financing alternatives will provide sufficient financing for debt maturities and operations over the next twelve months, as well as into the future.
A summary of the future material financial obligations requiring repayments as of December 31, 2023 is as follows: Future Material Financial Obligations by Period Dollars in thousands Next Twelve Months Beyond Twelve Months Total Principal payments on debt obligations $ 441,290 $ 954,733 $ 1,396,023 Interest payments on debt obligations 59,250 66,154 125,404 Operating lease obligations 9,681 33,285 42,966 Total $ 510,221 $ 1,054,172 $ 1,564,393 Based upon anticipated cash flows, we believe that cash flows from operations and our various financing alternatives will provide sufficient financing for debt maturities and operations over the next twelve months, as well as into the future.
Provision for Credit Losses. Our provision for credit losses increased $96.1 million, or 108.0%, to $185.1 million in 2022, from $89.0 million in 2021. The increase was due to an increase in net credit losses of $85.9 million and an increase in the allowance for credit losses of $10.2 million compared to the prior-year period.
Our provision for credit losses increased $34.9 million, or 18.9%, to $220.0 million in 2023, from $185.1 million in 2022. The increase was due to an increase in net credit losses of $45.8 million, partially offset by a lower build in the allowance for credit losses of $10.9 million compared to 2022.
The following table summarizes the components of insurance income, net: Insurance Premiums and Direct Expenses for the Year Ended Dollars in thousands December 31, 2022 December 31, 2021 YoY $ B(W) YoY % B(W) Earned premiums $ 60,190 $ 53,218 $ 6,972 13.1 % Claims, reserves, and certain direct expenses (16,688 ) (17,736 ) 1,048 5.9 % Insurance income, net $ 43,502 $ 35,482 $ 8,020 22.6 % Earned premiums during 2022 increased by $7.0 million, and claims, reserves, and certain direct expenses decreased by $1.0 million compared to 2021.
Regional Management Corp. | 2023 Annual Report on Form 10-K | 47 The following table summarizes the components of insurance income, net: Insurance Premiums and Direct Expenses for the Year Ended Dollars in thousands December 31, 2023 December 31, 2022 YoY $ B(W) YoY % B(W) Earned premiums $ 59,830 $ 60,190 $ (360 ) (0.6 )% Claims, reserves, and certain direct expenses (15,301 ) (16,688 ) 1,387 8.3 % Insurance income, net $ 44,529 $ 43,502 $ 1,027 2.4 % Earned premiums during 2023 decreased by $0.4 million, and claims, reserves, and certain direct expenses decreased by $1.4 million compared to 2022.
The debt arrangements described below are issued by our wholly-owned, bankruptcy-remote, SPEs, which are considered VIEs under GAAP and are consolidated into the financial statements of their primary beneficiary. These debts are supported by the expected cash flows from the underlying collateralized finance receivables.
Our debt arrangements described below, other than our senior revolving credit facility, are issued by each of our Regional Management Receivables (“ RMR ”) and Regional Management Issuance Trust (“ RMIT ”) SPEs, which are considered VIEs under GAAP. These debts are supported by the expected cash flows from the underlying collateralized finance receivables.
The average balance of our debt facilities increased to $1.2 billion during 2022, from $873.2 million during 2021. Income Taxes. Income taxes decreased $9.7 million, or 40.7%, to $14.1 million in 2022, from $23.8 million in 2021. The decrease was primarily due to a $47.2 million decrease in income before taxes compared to 2021.
Income taxes decreased $9.3 million, or 65.8%, to $4.8 million in 2023, from $14.1 million in 2022. The decrease was primarily due to a $44.5 million decrease in income before taxes compared to 2022. Our effective tax rate increased to 23.2% in 2023, compared to 21.6% in 2022.
The decrease in cash provided was the result of a $92.9 million net decrease in advances on debt instruments and an increase in cash dividends of $1.8 million, partially offset by a decrease in the repurchase of common stock of $46.8 million, a decrease in taxes paid of $7.0 million, and a decrease in payments for debt issuance costs of $3.3 million.
The decrease in cash provided was the result of a decrease in net advances on debt instruments of $202.5 million, partially offset by a decrease in the repurchases of common stock of $20.6 million and a decrease in payments for debt issuance costs of $2.9 million. Financing Arrangements and Restricted Cash Reserve Accounts.
Some states allow for higher fees while keeping interest rates lower. Loan fees are additional charges to the customer and generally are included in the annual percentage rate shown in the Truth in Lending disclosure that we make to our customers.
Loan fees are additional charges to the customer and generally are included in the annual percentage rate shown in the Truth in Lending disclosure that we make to our customers. The fees may or may not be refundable to the customer in the event of an early payoff, depending on state law.
We proactively diversified our funding over the past few years and continue to maintain a strong liquidity profile. As of December 31, 2022, we had $101.4 million of available liquidity, comprised of unrestricted cash on hand and immediate availability to draw down cash from our revolving credit facilities.
As of December 31, 2023, we had $112.6 million of available liquidity, comprised of unrestricted cash on hand and immediate availability to draw down cash from our revolving credit facilities. In addition, we had $551.5 million of unused capacity on our revolving credit facilities (subject to the borrowing base) as of December 31, 2023.
The in crease was primarily due to an increase in the average balance of our debt facilities, partially offset by a decrease in our average cost of debt.
The increase was primarily due to an increase in our average cost of debt as well as an increase in the average balance of our debt facilities. The average cost of debt increased to 5.00% in 2023, from 2.89% in 2022.
We are exposed to different credit risks and charge different interest rates and fees with respect to the various types of loans we offer. Our product mix also varies to some extent by state, and we may further diversify our product mix in the future.
We plan to add additional branches in new and existing states where it is favorable for us to conduct business. Product Mix. We are exposed to different credit risks and charge different interest rates and fees with respect to the various types of loans we offer.
We have principally focused on tightening certain higher-risk, higher-rate customer segments that have been particularly adversely impacted by a more challenging economic environment. In early 2022, we eliminated one higher-risk, higher-rate digital affiliate and two higher-risk, higher-rate segments within our direct mail program.
As inflation accelerated and geopolitical stability began to deteriorate in the fourth quarter of 2021, we began to proactively tighten our credit models. Through 2023, we have principally focused on tightening certain higher-risk, higher-rate customer segments that have been particularly adversely impacted by a more challenging economic environment.
Net income decreased $37.5 million, or 42.2%, to $51.2 million in 2022, from $88.7 million in 2021.
Net income decreased $35.3 million, or 68.8%, to $16.0 million in 2023, from $51.2 million in 2022.
Marketing expenses increased $1.0 million, or 6.8%, to $15.4 million in 2022, from $14.4 million in 2021. The increase was primarily due to higher digital marketing costs of $0.9 million and increased activity in our direct mail campaigns of $0.2 million to support growth. Other Expenses.
Occupancy expenses increased $1.2 million, or 5.1%, to $25.0 million in 2023, from $23.8 million in 2022. The increase was primarily due to the growth of our state footprint and the addition of new branches since 2022. Marketing.
Our operating expense ratio has declined as we have grown our loan portfolio and controlled expense growth. Regional Management Corp. | 2022 Annual Report on Form 10-K | 49 Interest Expense. Interest expense on debt increase d $2.9 million , or 9.2% , to $34.2 million in 2022 , from $31.3 million in 2021 .
Our operating expense ratio has improved as we have grown our loan portfolio and controlled expense growth. Interest Expense. Interest expense increased $33.2 million, or 97.1%, to $67.5 million in 2023, compared to $34.2 million in 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−5 removed2 unchanged
Biggest changeAt December 31, 2022, the balances and key terms of the credit facilities were as follows: Revolving Credit Facility Balance (in thousands) Interest Payment Frequency Rate Type Floor Benchmark Adjustment Margin Effective Interest Rate Senior $ 147,547 Monthly 1-month SOFR 0.50 % 0.10 % 3.00 % 7.22 % RMR II Warehouse 189 Monthly 3-month SOFR 0.25 % 0.25 % 2.35 % 7.00 % RMR IV Warehouse 18,144 Monthly 1-month SOFR — 0.10 % 2.35 % 6.57 % RMR V Warehouse 286 Monthly Conduit — — 2.75 % 7.62 % Total $ 166,166 We previously purchased interest rate caps to manage the risk associated with LIBOR-based borrowings.
Biggest changeAs of December 31, 2023, the balances and key terms of the credit facilities were as follows: Revolving Credit Facility Balance (in thousands) Interest Payment Frequency Rate Type Floor Margin Effective Interest Rate Senior $ 195,462 Monthly 1-month SOFR 0.50 % 3.00 % 8.44 % RMR IV warehouse 3,197 Monthly 1-month SOFR — 2.80 % 8.24 % RMR V warehouse 26,718 Monthly Conduit — 2.75 % 8.34 % RMR VI warehouse 15,953 Monthly 1-month SOFR — 2.50 % 7.94 % RMR VII warehouse 4,216 Monthly 1-month SOFR — 3.00 % 8.44 % Total $ 245,546 Based on the underlying rates and the outstanding balances as of December 31, 2023, an increase of 100 basis points in the rates of our revolving credit facilities would result in approximately $2.5 million of increased interest expense on an annual basis, in the aggregate, under these borrowings.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Interest Rate Risk Interest rate risk arises from the possibility that changes in interest rates will affect our results of operations and financial condition. We originate finance receivables either at prevailing market rates or at statutory limits. Our finance receivables are structured on a fixed-rate, fixed-term basis.
ITEM 7A. QUANTITATIVE AND QUALITATI VE DISCLOSURES ABOUT MARKET RISK. Interest Rate Risk Interest rate risk arises from the possibility that changes in interest rates will affect our results of operations and financial condition. We originate finance receivables either at prevailing market rates or at statutory limits. Our finance receivables are structured on a fixed-rate, fixed-term basis.
The nature and amount of our debt may vary as a result of future business requirements, market conditions, and other factors. Regional Management Corp. | 2022 Annual Report on Form 10-K | 57
The nature and amount of our debt may vary as a result of future business requirements, market conditions, and other factors. Regional Management Corp. | 2023 Annual Report on Form 10-K | 54
As of December 31, 2022, the interest rates on 88% of our debt (the securitizations) were fixed. We maintain liquidity and fund our business operations in part through variable-rate borrowings under a senior revolving credit facility and three revolving warehouse credit facilities.
As of December 31, 2023, the interest rates on 82% of our debt (the securitizations) were fixed. We maintain liquidity and fund our business operations in part through variable-rate borrowings under a senior revolving credit facility and multiple revolving warehouse credit facilities.
Removed
In September 2022, we amended and restated our senior, RMR II warehouse, and RMR IV warehouse revolving credit facilities, transitioning the benchmark rate for the calculation of interest with a forward-looking term rate from LIBOR to SOFR, effective on October 1, 2022.
Removed
See Note 11, “Debt” of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary Data,” for information regarding the September 2022 amendments and transition of the benchmark rates.
Removed
These interest rate caps were based on the one-month LIBOR and reimbursed us for the difference when the one-month LIBOR exceeded the strike rate. In April 2022, we collateralized our interest rate caps. Subsequently, we sold our shorter-duration interest rate cap contracts with a fair value of $14.7 million.
Removed
These sold interest rate caps had an aggregate notional principal amount of $450.0 million and maturity dates ranging from March 2023 through June 2024. In August 2022, we sold our remaining interest rate caps with a fair value of $5.0 million, having an aggregate notional principal amount of $100.0 million and maturing in 2026.
Removed
As of December 31, 2022, we no longer maintained interest rate cap protection. Based on the underlying rates and the outstanding balances at December 31, 2022, an increase of 100 basis points in the rates of our revolving credit facilities would result in approximately $1.7 million of increased interest expense on an annual basis, in the aggregate, under these borrowings.

Other RM 10-K year-over-year comparisons