Regional Management Corp (RM) 2024 Q3 法說會逐字稿

Good afternoon, and welcome to the Regional Management third-quarter 2024 earnings conference call. (Operator Instructions) Please note this event is being recorded.

下午好，歡迎參加區域管理 2024 年第三季財報電話會議。（操作員說明）請注意此事件正在被記錄。

I would now like to turn the conference over to Garrett Edson, ICR. Please go ahead.

現在我想將會議交給 ICR 的 Garrett Edson。請繼續。

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

謝謝你，下午好。到目前為止，每個人都應該可以訪問我們的收益公告和補充演示文稿，這些公告和補充演示文稿已在本次電話會議之前發布，並且可以在我們的網站 Regionalmanagement.com 上找到。

Before we begin our formal remarks, I will direct you to page 2 of our supplemental presentation, which contains important disclosures concerning forward-looking statements and the use of non-GAAP financial measures. Part of our discussion today may include forward-looking statements, which are based on management's current expectations, estimates and projections about the company's future financial performance and business prospects. These forward-looking statements speak only as of today and are subject to various assumptions, risks, uncertainties and other factors that are difficult to predict and that could cause actual results to differ materially from those expressed or implied in the forward-looking statements.

在我們開始正式發言之前，我將引導您閱讀我們補充簡報的第 2 頁，其中包含有關前瞻性陳述和非公認會計原則財務指標使用的重要揭露。我們今天討論的一部分可能包括前瞻性陳述，這些陳述是基於管理層目前對公司未來財務表現和業務前景的預期、估計和預測。這些前瞻性陳述僅代表今天的情況，並受到各種假設、風險、不確定性和其他難以預測的因素的影響，可能導致實際結果與前瞻性陳述中明示或暗示的結果有重大差異。

These statements are not guarantees of future performance, and therefore, you should not place undue reliance upon them. We refer all of you to our press release, presentation and recent filings with the SEC for a more detailed discussion of our forward-looking statements and the risks and uncertainties that could impact our future operating results and financial condition. Also, our discussion today may include references to certain non-GAAP measures. A reconciliation of these measures to the most comparable GAAP measures can be found within our earnings announcement or earnings presentation and posted on our website at regionalmanagement.com.

這些聲明並不是對未來業績的保證，因此，您不應過度依賴它們。我們請大家參閱我們的新聞稿、簡報和最近向美國證券交易委員會提交的文件，以更詳細地討論我們的前瞻性陳述以及可能影響我們未來經營業績和財務狀況的風險和不確定性。此外，我們今天的討論可能會提到某些非公認會計原則措施。這些指標與最具可比性的 GAAP 指標的調整可以在我們的收益公告或收益演示中找到，並發佈在我們的網站 Regionalmanagement.com 上。

I would now like to introduce Rob Beck, President and CEO of Regional Management Corp.

現在我想介紹一下區域管理公司總裁兼執行長 Rob Beck。

Thanks, Garrett, and welcome to our third-quarter 2024 earnings call. I'm joined today by Harp Rana, our Chief Financial Officer. On this call, we'll cover our third quarter financial and operating results, provide an update on our portfolio, our credit performance and growth, and share our expectations for the fourth quarter. However, before I discuss our results, I want to share some thoughts on the recent hurricane activity. As you know, Hurricanes Beryl, Helene, and Milton brought catastrophic wind, rain, and flooding to many areas in the Southern and Southeastern United States.

謝謝 Garrett，歡迎參加我們的 2024 年第三季財報電話會議。今天我們的財務長 Harp Rana 也加入了我的行列。在這次電話會議上，我們將介紹第三季度的財務和營運業績，提供有關我們的投資組合、信貸表現和增長的最新信息，並分享我們對第四季度的預期。然而，在討論我們的結果之前，我想分享一些關於最近颶風活動的想法。如你所知，颶風貝裡爾、海倫和米爾頓為美國南部和東南部的許多地區帶來了災難性的風、雨和洪水。

While Hurricane Milton did not affect our operations, Hurricanes Helene and Beryl did. Hurricane Helene, in particular, had a devastating impact on several communities where we operate. particularly in Western North Carolina. Our thoughts have been with all individuals in the affected areas, including our customers and team members. We're thankful for the first responders, healthcare workers, linemen, government agencies, and others who have been working tirelessly to assist and restore our communities.

雖然米爾頓颶風沒有影響我們的運營，但颶風海倫和貝裡爾影響了我們的運營。尤其是颶風海倫，對我們開展業務的幾個社區造成了毀滅性影響。特別是在北卡羅來納州西部。我們的心與受影響地區的所有人同在，包括我們的客戶和團隊成員。我們感謝急救人員、醫護人員、巡線人員、政府機構和其他人，他們一直在不懈地努力協助和恢復我們的社區。

I also want to extend a special thank you to our team members in the impacted areas, including those in our headquarters in Upstate South Carolina and others across the country who stepped up by working nights and weekends to support our customers and communities. Many of our team members were providing support to our customers while their own families were without power and dealing with the storms impact. For our impacted customers, we've offered special borrower assistance programs, including loan payment deferrals, loan modifications, and fee waivers, and we're actively helping eligible customers as they submit personal property and other credit insurance claims. For our team members, we've offered support through our Internal Care fund, a dedicated employee assistance program that provides short-term aid to team members who are experiencing a financial need due to unexpected emergencies or catastrophic events. We'll continue to be there for our customers, communities, and team members throughout the recovery process. We have a truly special team at retail, and I'm proud of how they responded to these unfortunate events.

我還要特別感謝我們在受影響地區的團隊成員，包括南卡羅來納州北部總部的團隊成員以及全國各地的其他團隊成員，他們在夜間和週末加緊工作，為我們的客戶和社區提供支援。我們的許多團隊成員正在為客戶提供支持，而他們自己的家人卻斷電並應對風暴的影響。對於受影響的客戶，我們提供了特殊的借款人援助計劃，包括貸款延期付款、貸款修改和費用減免，並且我們正在積極幫助符合條件的客戶提交個人財產和其他信用保險索賠。對於我們的團隊成員，我們透過內部關懷基金提供支持，這是一項專門的員工援助計劃，為因意外緊急情況或災難性事件而遇到財務需求的團隊成員提供短期援助。在整個恢復過程中，我們將繼續為我們的客戶、社群和團隊成員提供支援。我們擁有一支真正特殊的零售團隊，我為他們對這些不幸事件的反應感到自豪。

Now turning to our third quarter numbers. The team once again delivered strong results. We were pleased with our improved credit performance in the quarter, including a 40-basis-point decline in our net credit loss rate year-over-year despite having leaned into our higher-margin small loan business over the past several quarters. On the bottom line, we posted net income of $7.7 million and diluted EPS of $0.76.

現在轉向我們的第三季數據。球隊再次交出了強勁的成績。我們對本季信貸表現的改善感到滿意，包括儘管過去幾季我們傾向於利潤率較高的小額貸款業務，但我們的淨信貸損失率比去年同期下降了 40 個基點。總而言之，我們公佈的淨利潤為 770 萬美元，稀釋後每股收益為 0.76 美元。

Our net income and EPS results are inclusive of a $5.6 million pretax impact from the third quarter hurricane activity, primarily from the impacts of Hurricane Helene in North Carolina. We reserved $2.1 million for incremental net credit losses and $3.5 million for estimated personal property insurance claims caused by the hurricanes. While these charges created a drag on our third quarter results, we're pleased to be able to provide our customers with special borrower assistance programs and valuable personal property insurance benefits that will help them rebuild their lives. On a post-tax basis, the incremental expenses from the hurricane activity lowered net income by $4.3 million and diluted EPS by $0.42.

我們的淨利潤和每股盈餘結果包含第三季颶風活動帶來的 560 萬美元稅前影響，主要來自北卡羅來納州颶風海倫的影響。我們為增量淨信用損失預留了 210 萬美元，為颶風造成的估計個人財產保險索賠預留了 350 萬美元。雖然這些費用拖累了我們第三季的業績，但我們很高興能夠為客戶提供特殊的借款人援助計劃和寶貴的個人財產保險福利，以幫助他們重建生活。以稅後計算，颶風活動帶來的增量支出使淨利潤減少了 430 萬美元，攤薄後每股收益減少了 0.42 美元。

Despite the hurricane challenges, we grew our portfolio by $46 million sequentially or 2.6% to a record $1.82 billion, an annualized growth rate of just above 10%. Our net income results reflect the impact of this portfolio growth, which required a $4.6 million provision for credit losses or $3.5 million after tax. As a reminder, we're required to reserve for expected lifetime credit losses at origination of each loans, while the revenue benefits are recognized over the life of the loan, highlighting the impact of portfolio growth on our bottom line. As a result, we often internally measure success by our growth in pre-provision net income, which we define as net income, excluding the tax-affected impact of the provision for credit losses, but including the impact of recognized net credit losses. Year over year, we drove a meaningful increase in our pre-provision net income in the third quarter.

儘管面臨颶風的挑戰，我們的投資組合仍環比增長了 4,600 萬美元，即 2.6%，達到創紀錄的 18.2 億美元，年化增長率略高於 10%。我們的淨利潤結果反映了該投資組合成長的影響，這需要 460 萬美元的信貸損失準備金或 350 萬美元的稅後準備金。提醒一下，我們需要在每筆貸款發放時為預期的終身信用損失準備金，而收入收益則在貸款的整個期限內得到確認，這突顯了投資組合增長對我們底線的影響。因此，我們內部經常透過撥備前淨利潤的成長來衡量成功，我們將其定義為淨利潤，不包括信貸損失撥備受稅收影響的影響，但包括已確認的淨信貸損失的影響。與去年同期相比，我們第三季的撥備前淨利大幅成長。

Our quality portfolio growth drove our quarterly revenue to a record high of $146 million despite the $3.5 million charge to revenue to cover the estimated personal property insurance claims associated with the recent hurricanes. We also improved our interest and fee yield by 90 basis points year over year to 29.9%, the highest it's been in over two years from a combination of increased pricing, growth of our higher-margin small loan portfolio and improved credit performance. Meanwhile, we kept a tight grip on G&A expenses while still investing in our growth and strategic initiatives. As a result, our G&A expense increased by less than 1% year over year. We improved our operating expense ratio by 50 basis points from the prior year period to 13.9% and year-over-year revenue growth outpaced expense growth by 15 times.

儘管有 350 萬美元的收入用於支付與最近颶風相關的估計個人財產保險索賠，但我們的優質投資組合增長將我們的季度收入推至創紀錄的 1.46 億美元。由於定價提高、利潤率較高的小額貸款組合成長以及信貸績效改善，我們的利息和費用收益率也比去年同期提高了 90 個基點，達到 29.9%，這是兩年多來的最高水準。同時，我們嚴格控制一般管理費用，同時仍投資於我們的成長和策略性舉措。因此，我們的一般管理費用年增不到 1%。我們的營業費用率比去年同期提高了 50 個基點，達到 13.9%，年收入成長超過費用成長 15 倍。

We also continue to carefully manage our portfolio's credit quality and performance in the third quarter. Our credit quality has improved as we maintained a tight credit box while also increasing the growth of our higher-margin small loan business. Higher quality originations in our front book make up a larger portion of our portfolio, continue to perform in line with our expectations and are delivering at lower loss levels than our stressed back book vintages. We've also begun to observe modest improvements in roll rates in our late-stage delinquency buckets.

第三季我們也持續謹慎管理投資組合的信用品質和表現。我們的信貸品質有所改善，因為我們維持了緊縮的信貸規模，同時也加快了利潤率較高的小額貸款業務的成長。我們的前帳本中的更高品質的原產地在我們的投資組合中佔了很大一部分，繼續符合我們的預期，並且與我們壓力很大的後帳年份相比，其損失水平更低。我們也開始觀察到後期拖欠率的滾動率有所改善。

Our third quarter 2024 net credit loss rate of 10.6% was 40 basis points better than the third quarter of last year despite an estimated 30-basis-point impact from the growth in our higher rate small loan segments having APRs above 36%. As we've discussed in the past, our net credit loss rate peaked in 2023, and we've experienced gradual improvement since then. We expect continued improvement in portfolio quality and net credit loss performance in 2025.

儘管年利率高於36% 的高利率小額貸款領域的成長預計會帶來30 個基點的影響，但我們2024 年第三季的淨信貸損失率為10.6%，比去年第三季高出40個基點。正如我們過去討論的那樣，我們的淨信用損失率在 2023 年達到頂峰，此後我們經歷了逐步改善。我們預計 2025 年投資組合品質和淨信用損失表現將持續改善。

Our 30-plus day delinquency rate remained at 6.9% as of September 30, unchanged sequentially and 40 basis points better year over year. Our quarter-end delinquency rate is inclusive of an estimated 20 basis point negative impact from growth in our higher-margin small loan business and a roughly 40 basis point benefit from special borrower assistance programs offered to customers impacted by the hurricanes. Our loan loss reserve rate of 10.6% was higher than our guidance of 10.4% to 10.5% due to the impact of the incremental hurricane reserves that I discussed earlier. We've been able to improve our credit results despite the growth in our higher rate -- higher-risk small loan portfolio by maintaining an overall tighter credit box and by growing our higher-quality auto-secured book.

截至 9 月 30 日，我們的 30 多天拖欠率維持在 6.9%，與上一季持平，年增 40 個基點。我們的季末拖欠率包括由於我們的高利潤小額貸款業務增長帶來的約20 個基點的負面影響，以及為受颶風影響的客戶提供的特殊借款人援助計劃帶來的約40 個基點的收益。由於我之前討論過的增量颶風準備金的影響，我們 10.6% 的貸款損失準備金率高於 10.4% 至 10.5% 的指導。儘管我們的利率較高、風險較高的小額貸款組合有所增長，但透過維持整體收緊的信貸框架和增加我們更高品質的自動擔保帳簿，我們仍然能夠改善我們的信貸業績。

As a reminder, our current slower pace of portfolio growth negatively impacts both our delinquency rate and NCL rate as the denominator of both ratios has grown more slowly than in prior years. On a growth-adjusted basis, we're very pleased with the improvement in our delinquency and NCL rates. Of course, we have the capability to grow our portfolio more rapidly than our current pace of growth. But in light of economic conditions over the past several quarters, we believe our growth rates have appropriately reflected the need to maintain strong portfolio and credit performance. We continue to closely monitor the economy, particularly inflation, the labor market, and prevailing interest rates. We had solid sequential growth in revenue and ending receivables this quarter and we will lean further into growth when appropriate in future quarters.

提醒一下，我們目前投資組合成長速度放緩對我們的拖欠率和 NCL 率產生了負面影響，因為這兩個比率的分母成長速度比前幾年更慢。在成長調整的基礎上，我們對拖欠率和不良貸款率的改善感到非常滿意。當然，我們有能力以比目前成長更快的速度成長我們的投資組合。但鑑於過去幾季的經濟狀況，我們相信我們的成長率適當地反映了維持強勁投資組合和信貸表現的需要。我們繼續密切關注經濟，特別是通膨、勞動市場和現行利率。本季我們的營收和期末應收帳款實現了穩健的環比成長，我們將在未來幾季適當的時候進一步成長。

On our last earnings call, I talked about our strategic approach to portfolio composition and growth, including the implications of a shift in product mix to yield, net credit losses, and other key performance indicators. It's been important to our growth and our customers' financial well-being that we offer both small and large installment loan products, including auto-secured loans and loans with APRs greater than 36%. Our broad product set provides us with a competitive advantage. It uniquely positions us to offer credit access to a wide set of customers and to adjust our loan offerings to our customers as their needs evolve and credit profiles improve.

在我們上次的財報電話會議上，我談到了我們的投資組合構成和成長的策略方法，包括產品組合轉向收益率、淨信貸損失和其他關鍵績效指標的影響。我們提供小額和大額分期貸款產品，包括自動擔保貸款和年利率高於 36% 的貸款，這對我們的發展和客戶的財務狀況非常重要。我們廣泛的產品組合為我們提供了競爭優勢。它使我們能夠為廣大客戶提供信貸服務，並根據客戶需求的變化和信用狀況的改善調整我們的貸款產品。

In the third quarter, we continue to see strong demand in our higher-margin small loan segment. We grew our small loan portfolio by $51 million or 11% from the prior year period. And our portfolio of greater than 36% APR loans grew to nearly 18% of our portfolio as of quarter end compared to 15% this time last year. We have deep experience lending to small loan consumers who typically have weaker credit profiles than our large loan customers. In the third quarter, the average APR of our small loan originations was 44.9%, while the average APR at origination for our total portfolio was 36.6%, up from 36.2% in the prior year period due to growth in small loans.

第三季度，我們繼續看到利潤率較高的小額貸款領域的強勁需求。我們的小額貸款組合比去年同期增加了 5,100 萬美元，即 11%。截至季末，我們年利率超過 36% 的貸款組合已增至投資組合的近 18%，而去年同期為 15%。我們在向小額貸款消費者提供貸款方面擁有豐富的經驗，這些消費者的信用狀況通常比我們的大額貸款客戶弱。第三季度，我們的小額貸款發放的平均年利率為 44.9%，而由於小額貸款的成長，我們整個投資組合的發放平均年利率為 36.6%，高於去年同期的 36.2%。

We've been pleased with the margins of our small loan product, including the improvements we observed in recent quarters. The interest and fee yield of our small loan portfolio is up 120 basis points over the past year, while the delinquency rate of the portfolio is down 20 basis points to 9.4%, inclusive of 40 basis points of benefit from special hurricane borrower assistance programs. Our small loan delinquency rate is up year-over-year on an adjusted basis due to a 30 basis point impact from the shift within that portfolio to higher APR loans, but the higher APRs on those segments more than make up for the higher delinquency and loss rates. The smaller loan size and higher yields of our small loan products allow us to offer solutions to consumers who wouldn't otherwise have access to credit. We're comfortable lending to this credit profile because while the credit risk is greater, so are the yields and margins. Highly qualified consumers are currently driving much of the demand in this segment as fewer consumers are qualifying for sub-36% APR loans due to credit tightening across the industry.

我們對小額貸款產品的利潤率感到滿意，包括我們在最近幾季觀察到的改善。去年，我們的小額貸款組合的利息和費用收益率上升了 120 個基點，而組合的拖欠率下降了 20 個基點，至 9.4%，其中包括受益於特別颶風借款人援助計劃的 40 個基點。我們的小額貸款拖欠率在調整後同比上升，原因是該投資組合內向較高年利率貸款的轉變產生了30 個基點的影響，但這些細分市場較高的年利率足以彌補較高的拖欠率和損失率。我們的小額貸款產品較小的貸款規模和較高的收益率使我們能夠為原本無法獲得信貸的消費者提供解決方案。我們很樂意向這種信用狀況提供貸款，因為雖然信用風險較大，但收益率和利潤率也較高。目前，高素質消費者推動了這一領域的大部分需求，因為由於整個行業的信貸緊縮，有資格獲得年利率低於 36% 貸款的消費者越來越少。

Continuing to provide access to credit is essential for our small loan customers. Many of them improved their credit profiles by establishing a responsible payment history with us and ultimately qualifying to graduate to our large loan product at a lower APR, including our auto-secured product. Our auto-secured product is reserved for our higher-quality credit customers, requires auto collateral and is the lowest price of our products. This graduation strategy has resulted in higher customer satisfaction and retention as well as improved credit performance over time.

繼續為我們的小額貸款客戶提供信貸管道至關重要。他們中的許多人透過與我們建立負責任的付款歷史來改善他們的信用狀況，並最終有資格以較低的年利率升級到我們的大額貸款產品，包括我們的自動擔保產品。我們的汽車抵押產品是為我們更高品質的信貸客戶保留的，需要汽車抵押品，並且是我們產品中價格最低的。隨著時間的推移，這種畢業策略提高了客戶滿意度和保留率，並提高了信用表現。

Our auto-secured segment grew by $51 million or 35% from the prior year period. It now represents $197 million or nearly 11% of our total portfolio as of September 30, up from 8% at the end of the third quarter of last year. The growth in the auto-secured portfolio balances out the risk from the growth in our higher-margin small loan portfolio. This portfolio is performing very well with a 30-plus day delinquency rate of 2.6% at the end of the quarter and the lowest credit losses of all our products. The interest and fee yield of our total large loan portfolio, which includes auto-secured loans, is up 40 basis points over the past year, while the delinquency rate of the portfolio is down 60 basis points to 5.9%, inclusive of 40 basis points of benefit from special hurricane borrower assistance programs.

我們的汽車抵押業務比去年同期成長了 5,100 萬美元，即 35%。截至 9 月 30 日，該資產目前已達到 1.97 億美元，占我們投資組合總額的近 11%，高於去年第三季末的 8%。自動擔保投資組合的成長抵消了我們利潤率較高的小額貸款投資組合成長的風險。該投資組合表現非常好，季末 30 多天的拖欠率為 2.6%，是我們所有產品中信用損失最低的。去年，我們的大額貸款組合（包括自動擔保貸款）的利息和費用收益率上升了 40 個基點，而該組合的拖欠率下降了 60 個基點，至 5.9%（含 40 個基點）受益於特別颶風借款人援助計劃。

Our auto-secured loans generate healthy margins and will continue to be a focal point of our growth. Our diversified product offerings provide us with multiple levers that we can pull to maximize our growth and returns. We'll continue to monitor the economic environment, competitive dynamics, consumer health, and other factors as we allocate capital to grow the different pieces of our portfolio. Ultimately, we'll build our portfolio in a way that will generate strong margins that meet our return hurdles and optimize short- and long-term results while also appropriately balancing credit outcomes and customer needs.

我們的汽車擔保貸款產生了可觀的利潤，並將繼續成為我們成長的焦點。我們多樣化的產品為我們提供了多種槓桿，我們可以利用這些槓桿來最大化我們的成長和回報。當我們分配資本來發展我們投資組合的不同部分時，我們將繼續監控經濟環境、競爭動態、消費者健康和其他因素。最終，我們將以一種能夠產生強勁利潤的方式建立我們的投資組合，以滿足我們的回報障礙並優化短期和長期結果，同時適當平衡信貸結果和客戶需求。

It's important to note that we also continue to bring our valuable product set to new geographies. We've expanded to eight new states and increased our addressable market by more than 80% since 2020. As previously stated, we plan to open 10 new branches primarily within our newer states of operation in areas where we've left the addressable market largely untouched. We're on track to open seven of these branches by year-end with the remaining branches opening early next year. We're excited about this investment in new branch locations, which will drive incremental volume and revenue benefit in 2025 while leveraging our existing management structures and corporate resources.

值得注意的是，我們也將繼續將我們有價值的產品帶到新的地區。自 2020 年以來，我們已擴展到 8 個新州，目標市場增加了 80% 以上。如前所述，我們計劃主要在我們新營運的地區開設 10 家新分支機構，這些地區是我們基本上未觸及目標市場的地區。我們預計在年底前開設其中七家分行，其餘分行將於明年初開幕。我們對新分公司的投資感到興奮，這將在利用我們現有的管理結構和公司資源的同時，推動 2025 年的銷售和收入成長。

Despite the challenges we faced in 2024, including the inflationary environment and hurricanes, we've generated very strong results through the third quarter. We've done so by adjusting our strategies and pulling on various levers to improve yields and manage expenses, driving strong net income. For the full year 2024, we now expect net income of roughly $40 million. Our net income projections reflect an expectation of stronger receivable growth in the fourth quarter and into 2025, which, of course, creates a drag on earnings as we must reserve for lifetime losses under our CECL model. As we continue to grow, there will be a growth effect on our bottom line as we build for these lifetime losses, making it important to evaluate the increases in both our net income and pre-provision net income over time.

儘管我們在 2024 年面臨挑戰，包括通貨膨脹環境和颶風，但我們在第三季取得了非常強勁的業績。我們透過調整策略並利用各種槓桿來提高收益率和管理費用來實現這一目標，從而推動強勁的淨利潤。我們現在預計 2024 年全年淨利潤約為 4000 萬美元。我們的淨利潤預測反映了第四季度至 2025 年應收帳款成長強勁的預期，這當然會拖累盈利，因為我們必須根據 CECL 模型為終身損失做好準備。隨著我們不斷成長，當我們為這些終身損失而努力時，我們的底線將會產生成長效應，因此評估我們的淨利潤和撥備前淨利潤隨時間的成長非常重要。

The change in our full year net income guidance from last quarter is attributable to outperformance in the third quarter, offset by the hurricane impacts that I previously discussed. Adjusting for the hurricane impacts, our latest full year net income guidance is at the high end of our prior guidance range. Harp will provide you with line-item guidance for the fourth quarter in her remarks. Over the long term, we expect that our returns will continue to normalize with the benefits of a stable macroeconomic environment, further scaled through disciplined portfolio growth, a well-balanced product mix, and prudent expense management. As always, I'd like to thank the regional team for their hard work, dedication and superior execution, especially as the team faced unique weather events and challenges over the past several months. I continue to be impressed by the team's talent and commitment.

我們全年淨利潤指引較上季度的變化歸因於第三季度的優異表現，被我之前討論的颶風影響所抵消。調整颶風影響後，我們最新的全年淨利指引處於先前指引範圍的高端。Harp 將在她的演講中為您提供第四季度的具體指導。從長遠來看，我們預計，受益於穩定的宏觀經濟環境，我們的回報將繼續正常化，並透過嚴格的投資組合成長、均衡的產品組合和審慎的費用管理進一步擴大規模。一如既往，我要感謝區域團隊的辛勤工作、奉獻精神和卓越的執行力，特別是在過去幾個月該團隊面臨著獨特的天氣事件和挑戰的情況下。我仍然對團隊的才華和奉獻精神印象深刻。

I'll now turn the call over to Harp, who will provide more detail on our third quarter results and additional line-item guidance for the fourth quarter.

我現在將把電話轉給 Harp，他將提供有關我們第三季業績的更多詳細資訊以及第四季度的其他專案指導。

Thank you, Rob, and hello, everyone. I'll now take you through our third quarter results in more detail and provide you with an updated outlook for the fourth quarter of 2024. On page 4 of the supplemental presentation, we provide our third quarter financial highlights. As Rob noted, we posted net income of $7.7 million and diluted earnings per share of $0.76. Third quarter 2024 net income included $4.3 million of impact from Hurricanes Beryl and Helene. Excluding the impact from the hurricanes, our results exceeded our expectations in our third quarter 2023 results, a testament to our solid revenue growth, healthy credit profile, expense discipline, and strong balance sheet.

謝謝你，羅布，大家好。現在，我將帶您更詳細地了解我們第三季的業績，並向您提供 2024 年第四季的最新展望。在補充簡報的第 4 頁上，我們提供了第三季的財務亮點。正如 Rob 指出的，我們公佈的淨利潤為 770 萬美元，攤薄後每股收益為 0.76 美元。 2024 年第三季淨利包括颶風 Beryl 和 Helene 造成的 430 萬美元的影響。排除颶風的影響，我們的 2023 年第三季業績超出了我們的預期，證明了我們穩健的收入成長、健康的信用狀況、支出紀律和強勁的資產負債表。

Turning to page 5. We continue to grow our portfolio in a controlled manner with originations focused on our higher-margin segments. Total originations were up slightly year over year. Branch originations were up 5.3% and digital originations were roughly flat compared to the prior year period, while direct mail originations were down 9.1% as we deemphasized large loan convenience check offers to new borrowers as a part of our credit tightening. We continue to be comfortable prioritizing credit quality and margin over more aggressive loan growth. As a result, we remain selective in originating loans within our tight credit box.

翻到第5頁。我們繼續以可控的方式擴大我們的投資組合，並將重點放在利潤率較高的細分市場上。總發源量較去年同期略有上升。與去年同期相比，分行發放量增加了5.3%，數位發放量大致持平，而直郵發放量下降了9.1%，因為我們在信貸緊縮政策中不再強調向新借款人提供大額貸款便利支票優惠。我們仍然放心地優先考慮信貸品質和利潤率，而不是更積極的貸款成長。因此，我們仍然在嚴格的信貸框架內選擇性地發放貸款。

Page 6 displays our portfolio growth and product mix through the third quarter. We closed the quarter with net finance receivables of $1.82 billion, up $46 million from the prior quarter end. Our small loan portfolio increased 11% year over year. And at the end of the quarter, nearly 18% of our portfolio carried an APR greater than 36%, up from 15% a year ago.

第 6 頁顯示了我們第三季的投資組合成長和產品組合。本季末，我們的財務應收帳款淨額為 18.2 億美元，比上一季末增加 4,600 萬美元。我們的小額貸款組合年增 11%。截至本季末，我們近 18% 的投資組合的年利率超過 36%，高於一年前的 15%。

As Rob has noted, we purposefully leaned into growth of our higher-margin small loans in recent quarters, and we expect to continue growing our small loan book in a measured way in future quarters. This portfolio drives higher revenue yields, which offset moderately higher funding costs and exceed our return hurdles despite higher expected net credit losses on this particular segment.

正如羅布所指出的，我們有目的地在最近幾季傾向於提高利潤率小額貸款的成長，並且我們預計在未來幾季將繼續以有節制的方式增加我們的小額貸款帳目。儘管這一特定領域的預期淨信貸損失較高，但該投資組合帶來了更高的收入收益率，抵消了適度較高的融資成本，並超越了我們的回報障礙。

Looking ahead, we expect an even stronger quarter for originations in the fourth quarter as we take further advantage of high levels of consumer demand to drive quality portfolio growth while remaining selective in approving borrowers. We expect our ending net receivables to increase approximately $65 million to $70 million sequentially by the end of the year, driving average net receivables for the fourth quarter up roughly $63.5 million, a continued acceleration of our rate of growth from the third quarter.

展望未來，我們預計第四季度的貸款發放將更加強勁，因為我們將進一步利用高水準的消費者需求來推動優質投資組合成長，同時在批准借款人方面保持選擇性。我們預計，到今年年底，我們的期末應收帳款淨額將環比增加約6500 萬美元至7000 萬美元，推動第四季度的平均應收賬款淨額增長約6350 萬美元，與第三季度相比，我們的成長率持續加快。

As always, we'll continue to monitor the economy and focus on originating loans that maximize our margins and bottom line results. Depending on market conditions, we can quickly tighten our underwriting or lean further into growth, either of which would impact receivables growth in the quarter.

像往常一樣，我們將繼續監控經濟並專注於發放貸款，以最大限度地提高我們的利潤和底線結果。根據市場狀況，我們可以迅速收緊承保或進一步傾向於成長，這兩者都會影響本季的應收帳款成長。

Turning to page 7. Total revenue grew to $146 million in the third quarter, up 4% from the prior year period. Our total revenue yield and interest and fee yield were 32.6% and 29.9%, respectively. Our quarterly revenue reached record levels despite a $3.5 million negative impact on insurance income due to personal property insurance claims and reserves associated with the third quarter hurricane activity.

翻到第7頁。第三季總營收增至 1.46 億美元，比去年同期成長 4%。我們的總收入收益率和利息及費用收益率分別為32.6%和29.9%。儘管第三季颶風活動相關的個人財產保險索賠和準備金對保險收入造成了 350 萬美元的負面影響，但我們的季度收入仍達到了創紀錄的水平。

Third quarter interest and fee yield was up 90 basis points year-over-year from pricing changes, growth in our higher-margin small loan business, and improved credit performance. However, total revenue yield was down 10 basis points year-over-year due to an 80 basis point negative impact from the incremental personal property insurance claims and reserves established for estimated hurricane claims. Total revenue yield will rebound in the fourth quarter with an expected increase of 60 basis points sequentially.

由於定價變化、利潤率較高的小額貸款業務的成長以及信貸績效的改善，第三季利息和費用收益率年增 90 個基點。然而，由於個人財產保險索賠增量和為預計颶風索賠建立的準備金帶來了 80 個基點的負面影響，總收入收益率同比下降了 10 個基點。第四季總營收收益率將反彈，預計季增 60 個基點。

Moving to page 8. Our credit performance has improved as our front book continues to perform in line with our expectations. Our 30-plus day delinquency rate as of quarter end was 6.9%, flat sequentially, and a 40 basis point improvement year over year. Our net credit losses of $47.6 million were in line with our outlook, and our annualized net credit loss rate of 10.6% was 40 basis points better than last year.

移至第 8 頁。由於我們的前台表現持續符合我們的預期，我們的信用表現有所改善。截至季末，我們的 30 多天拖欠率為 6.9%，與上一季持平，年增 40 個基點。我們的淨信用損失為 4,760 萬美元，與我們的預期相符，年化淨信用損失率為 10.6%，比去年好 40 個基點。

Page 9 provides additional information on the performance of our front book and back book portfolios. The front book ended the quarter at 86% of our total book compared to 83% at the end of the second quarter. The front book carries a 6.5% delinquency rate compared to 10% on the back book. The back book accounted for 17.2% of our 30-plus day delinquency despite representing only 12% of the portfolio at quarter end. Our front book and back book reserve rates are 10.2% and 13.4%, respectively.

第 9 頁提供了有關我們前書和後書投資組合績效的更多資訊。本季末，正面圖書佔總圖書的 86%，而第二季末為 83%。正面帳簿的拖欠率為 6.5%，而背面帳簿的拖欠率為 10%。儘管截至季末僅佔投資組合的 12%，但帳簿卻占我們 30 多天拖欠的 17.2%。我們的帳面和帳面準備率分別為 10.2% 和 13.4%。

We continue to be pleased with the way that our front book is performing. Compared to the back book, the front book continues to season at a lower level of loss despite the growth in our higher rate small loan business, which should benefit our 2025 results.

我們仍然對我們封面的表現感到滿意。與後台帳簿相比，儘管我們的高利率小額貸款業務有所增長，但前台帳簿繼續以較低水平損失，這應該有利於我們 2025 年的業績。

Overall, we continue to see benefits of our prudent underwriting and our credit metrics. In the fourth quarter, we expect our delinquency rate to rise in line with normal fourth quarter seasonal patterns. In addition, we anticipate that our net credit losses will be approximately $50.5 million in the fourth quarter as receivables growth and normal seasonality will offset the benefit from our diminishing back book.

總體而言，我們繼續看到審慎承保和信用指標的好處。在第四季度，我們預期拖欠率將按照正常的第四季季節性模式上升。此外，我們預計第四季度的淨信貸損失將約為 5,050 萬美元，因為應收帳款成長和正常的季節性將抵消我們減少的回帳的好處。

Turning to page 10. Our third quarter allowance for credit losses reserve rate increased to 10.6% due to the impact of the special reserves for credit losses associated with third quarter hurricane activity. Our strong receivables growth also required us to increase our reserves by $4.6 million as we reserve for lifetime losses upon origination.

翻到第10頁。由於與第三季颶風活動相關的信用損失特別準備金的影響，我們第三季的信用損失準備率提高至 10.6%。我們強勁的應收帳款成長也要求我們將準備金增加 460 萬美元，作為我們為發起時的終身損失準備金。

As of quarter end, the allowance was $192 million and assumed a 2025 year-end unemployment rate of 5%. Looking to the fourth quarter, as a reminder, higher receivables growth requires higher provisioning for loan losses. While loan loss provisioning for growth is a near-term drag on earnings, it will lead to stronger performance in 2025. Subject to economic conditions and portfolio performance, we expect our loan loss reserve rate to decline to 10.5% at the end of the fourth quarter, inclusive of an estimated 10 basis points for the reserves for credit losses from third quarter hurricane activity.

截至季末，津貼為 1.92 億美元，假設 2025 年底失業率為 5%。展望第四季度，提醒一下，應收帳款成長的加快需要更高的貸款損失撥備。雖然成長貸款損失準備金短期內會拖累獲利，但它將帶來 2025 年更強勁的業績。根據經濟狀況和投資組合表現，我們預計第四季度末貸款損失準備金率將降至 10.5%，其中包括估計第三季颶風活動造成的信貸損失準備金 10 個基點。

Flipping to page 11, we continue to closely manage our spending while still investing in our growth capabilities and strategic initiatives. Our G&A expenses of $62.5 million in the third quarter were up only 0.6% year-over-year and were better than our outlook due in part to the continued aggressive management of our personnel expense. Our annualized operating expense ratio was 13.9% in the third quarter, 50 basis points better than the prior year period. In the fourth quarter, we expect G&A expenses to increase to roughly $65.5 million. The increase in G&A expense is attributable to our further investments in growth and strategic initiatives as well as the timing of expenses associated with our incentive plans, which are weighted towards the second half of the year due to seasonality and the timing of equity grants.

翻到第 11 頁，我們繼續密切管理我們的支出，同時仍投資於我們的成長能力和策略性舉措。第三季我們的一般管理費用為 6,250 萬美元，年比僅成長 0.6%，優於我們的預期，部分原因是我們對人員費用的持續積極管理。第三季我們的年化營業費用率為13.9%，比去年同期好50個基點。我們預計第四季的一般管理費用將增加至約 6,550 萬美元。一般及行政費用的增加歸因於我們對成長和策略性舉措的進一步投資以及與我們的激勵計劃相關的費用時間，由於季節性和股權授予的時間，這些費用偏向下半年。

Our growth investments include the new branch openings that Rob discussed and increased expenses from higher portfolio growth and servicing a larger number of accounts. We also continue to invest in technology and data initiatives to benefit future performance. Moving forward, we'll continue to meticulously manage expenses while also investing in our core business in ways that improve our operating efficiency over time and ensure our long-term success and profitability.

我們的成長投資包括羅布討論過的新分行的開設，以及因更高的投資組合增長和為更多帳戶提供服務而增加的費用。我們也繼續投資於技術和數據計劃，以提高未來的績效。展望未來，我們將繼續精心管理費用，同時投資於我們的核心業務，以隨著時間的推移提高我們的營運效率並確保我們的長期成功和盈利能力。

Turning to pages 12 and 13. Our interest expense for the third quarter was $19.4 million or 4.3% of average net receivables on an annualized basis, better than our outlook on lower average debt and lower rates. As of September 30, 82% of our debt was fixed rate with a weighted average coupon of 4.3% and a weighted average revolving duration of 1.1 year.

翻到第12頁和第13頁。我們第三季的利息支出為 1,940 萬美元，佔年化平均應收帳款淨額的 4.3%，優於我們對較低平均債務和較低利率的預期。截至9月30日，我們82%的負債為固定利率，加權平均票面利率為4.3%，加權平均循環期限為1.1年。

In the fourth quarter, we expect interest expense to be approximately $20.5 million or 4.4% of average net receivables. As our overall fixed rate funding matures and we continue to grow using variable rate debt, our interest expense will increase as a percentage of average net receivables. In addition, our balance sheet remains strong, and we continue to maintain ample liquidity to fund our growth. We have $192 million of lifetime loan loss reserves as well as $353 million of stockholders' equity or approximately $34.72 in book value per share.

我們預計第四季的利息支出約為 2,050 萬美元，佔平均應收帳款淨額的 4.4%。隨著我們整體固定利率融資的成熟以及我們利用浮動利率債務的持續增長，我們的利息支出占平均應收帳款淨額的百分比將會增加。此外，我們的資產負債表仍然強勁，我們繼續保持充足的流動性，為我們的成長提供資金。我們擁有 1.92 億美元的終身貸款損失準備金以及 3.53 億美元的股東權益，即每股帳面價值約 34.72 美元。

We will continue to maintain a strong balance sheet with ample liquidity and borrowing capacity, diversified and staggered funding sources and a sensible interest rate management strategy. We've incurred an effective tax rate of 24.6% in the third quarter. And for the fourth quarter, we expect an effective tax rate of roughly 24.5% prior to discrete items. We also continue to return capital to our shareholders. Our Board of Directors declared a dividend of $0.30 per common share for the fourth quarter.

我們將繼續保持穩健的資產負債表、充足的流動性和借貸能力、多元化、交錯的資金來源以及合理的利率管理策略。第三季我們的有效稅率為 24.6%。對於第四季度，我們預計不計離散項目的有效稅率約為 24.5%。我們也繼續向股東返還資本。我們的董事會宣布第四季每股普通股股息為 0.30 美元。

The dividend will be paid on December 11, 2024, to shareholders of record as of the close of business on November 21, 2024. Finally, I'll note that we provide a summary of our fourth quarter 2024 guidance on page 14 of our earnings supplement.

該股將於2024年12月11日支付給截至2024年11月21日收盤時在冊的股東。最後，我要指出的是，我們在收益補充資料的第 14 頁上提供了 2024 年第四季指引的摘要。

That concludes my remarks. I'll now turn the call back over to Rob.

我的發言到此結束。我現在將把電話轉回給羅布。

Thanks, Harp. In summary, we're very pleased with our third quarter results and our team's execution, particularly in reaction to the third quarter hurricane events. Our portfolio credit quality and performance have continued to improve even as we've leaned into growth of our higher-margin small loan book. We've begun to accelerate our portfolio growth, and our yields and revenues are increasing. Our team is also doing an excellent job of prudently managing our G&A expenses as we continue to grow.

謝謝，豎琴。總之，我們對第三季的業績和團隊的執行力感到非常滿意，特別是對第三季颶風事件的反應。儘管我們傾向於提高利潤率較高的小額貸款帳簿的成長，但我們的投資組合信貸品質和績效仍在持續改善。我們已經開始加速我們的投資組合成長，我們的收益率和收入正在增加。隨著我們的不斷發展，我們的團隊在審慎管理一般行政費用方面也做得非常出色。

We're very optimistic about our recent P&L and credit trends as well as the momentum that the business is carrying forward to the fourth quarter and 2025. We're well-positioned to continue our improvement in our bottom line results and to deliver attractive returns to our shareholders.

我們對最近的損益和信貸趨勢以及業務延​​續到第四季度和 2025 年的勢頭非常樂觀。我們處於有利位置，可以繼續改善我們的利潤，並為我們的股東帶來有吸引力的回報。

Thank you again for your time and interest. I'll now open up the call for questions. Operator, could you please open the line?

再次感謝您的時間和興趣。我現在開始提問。接線員，您能開通線路嗎？

(Operator Instructions) John Hecht, Jefferies.

（操作員說明）John Hecht，Jefferies。

Hey, guys. Thanks very much for taking my questions. First one is, I guess, just related to the quarter. How do we think of -- you have the provision tied to the hurricane activities. How much of that is really kind of a one-off tied to increased losses from the hurricane? And how much of that maybe could be just a pull forward of losses that would have occurred in later quarters?

嘿，夥計們。非常感謝您回答我的問題。我想，第一個與本季有關。我們如何看待——你們有與颶風活動相關的規定。其中有多少確實是一次性的，與颶風造成的損失增加有關？其中有多少可能只是後面幾季可能發生的損失的前移？

John, it's Harp. I'll answer that question. So the $2.1 million incremental reserve that we took in this quarter is very much due to the hurricane activity. So that -- those losses would be coming in over the next several months. So what we did is -- and we don't exactly know the timing of those depending upon who's impacted and where they are in terms of being impacted. So that $2.1 million was specifically due to the hurricane activity reserves.

約翰，我是豎琴。我來回答這個問題。因此，我們本季增加的 210 萬美元儲備金很大程度上是由於颶風活動造成的。因此，這些損失將在接下來的幾個月內出現。所以我們所做的是 - 我們並不確切知道這些影響的時間取決於誰受到影響以及他們受到影響的程度。因此，210 萬美元專門用於颶風活動儲備金。

Yeah. In the personal property insurance, John, the $3.8 million there -- sorry, $3.5 million pretax there, $1 million of that already has gone through that was Hurricane Beryl that hit the Texas area. Those claims have been paid. The rest of that reserve, the $2.5 million is anticipated with over half in the Asheville area, Western North Carolina, and that's our best estimate based on what we saw with Beryl and going through various actuarial work. Now interesting enough, those insurance claims write-off the balance of the loan and any excess value of the insurance goes to the consumer.

是的。約翰，在個人財產保險方面，380 萬美元——抱歉，稅前 350 萬美元，其中 100 萬美元已經用於襲擊德克薩斯州地區的颶風“貝裡爾”。這些索賠已得到支付。該儲備金的其餘部分，即 250 萬美元，預計其中一半以上將位於北卡羅來納州西部的阿什維爾地區，這是我們根據 Beryl 的情況和各種精算工作得出的最佳估計。現在很有趣的是，這些保險索賠沖銷了貸款餘額，保險的任何超額價值都歸消費者所有。

So from a consumer standpoint, it helps the consumer kind of get back on track and maybe borrow more money to get back on their feet. But it also pays off the outstanding balance, some of which is delinquent and some of which may go to losses. But at this point in time, that's kind of hard to predict which of those loans are going to be covered by insurance.

因此，從消費者的角度來看，它可以幫助消費者回到正軌，並可能藉更多的錢來重新站起來。但它也還清了未清餘額，其中一些是拖欠的，一些可能會造成損失。但目前，很難預測哪些貸款將由保險承保。

Okay. That's good color. Thanks. And then I know you gave some near-term kind of discussions for pricing. And generally speaking, the pricing has gone up. I think a little bit of mix shift, but also at the product level.

好的。這顏色真好啊謝謝。然後我知道您就定價進行了一些近期討論。一般來說，價格上漲了。我認為有一點混合轉變，而且是在產品層面。

I'm wondering kind of to what extent can you -- will you -- can you keep taking pricing up? And how does lower kind of benchmark rates impact the opportunity -- or I guess, competitive factors impact that opportunity?

我想知道你能在多大程度上繼續提高價格？較低的基準利率如何影響這個機會——或者我猜，競爭因素會影響這個機會？

Yeah. I think that we put through pricing changes over the last year. I think what you're seeing going forward really is that mix shift to the higher rate business. That greater than 36% business went up from what was it 15% of the portfolio last year to 18%. And so when you look at our interest and fee yields for small loans, it's up 120 basis points year on year.

是的。我認為我們去年進行了定價調整。我認為你所看到的未來​​實際上是向更高利率業務的混合轉變。超過 36% 的業務從去年佔投資組合的 15% 上升到 18%。因此，當您查看我們的小額貸款利息和費用收益率時，您會發現它同比增長了 120 個基點。

I think if you looked at that on a year-to-date basis in the press release, I think it's up 230 basis points, Harp? So that's the benefit of the mix shift where, look, there's not a lot of competitors in that space. We're able to be pretty selective which customers we want to put on. And of course, we balance that out with the growth in our auto-secured book, our barbell strategy so that we kind of improve yields across the overall portfolio but manage the risk side of it because we're putting on more of the lower-risk auto-secured loans.

我想，如果你在新聞稿中查看年初至今的數據，我認為它上漲了 230 個基點，Harp？這就是混合轉變的好處，你看，這個領域沒有很多競爭對手。我們能夠非常有選擇性地選擇我們想要吸引的客戶。當然，我們會透過自動擔保帳簿和槓鈴策略的成長來平衡這一點，這樣我們就可以提高整個投資組合的收益率，同時管理其風險面，因為我們投入了更多的低風險資金。貸款。

All right. And then the last question is what's -- is there a long-term kind of target mix between large and small loans that we should be thinking about? And I guess, and maybe some of the auto-backed loans as well?

好的。最後一個問題是——大額貸款和小額貸款之間是否存在我們應該考慮的長期目標組合？我想，也許還有一些汽車抵押貸款？

Look, I think that really gets to when we give guidance for 2025. I mean, based on what we're seeing now in terms of the success of our barbell strategy, which maybe I'll just cover it now rather than at the end, I think we're going to continue to lean into the small loan higher rate business. We're going to lean into the auto-secured business. So let me give you an example of why we feel it's working very well. Our small loans are up, I guess, in the quarter versus last year by $51 million or 11%.

聽著，我認為當我們給出 2025 年指導時，這才是真正重要的。我的意思是，根據我們現在所看到的槓鈴策略的成功，也許我會現在而不是最後再介紹它，我認為我們將繼續傾向於小額貸款費率較高的業務。我們將專注於汽車擔保業務。讓我舉一個例子來說明為什麼我們認為它運作得很好。我猜想，本季我們的小額貸款比去年增加了 5,100 萬美元，即 11%。

Our auto-secured volumes actually increased by the exact same amount, $51 million versus prior year or 35% -- and so -- but with that, what I think is telling is our interest and fee revenues are up 90 basis points in total with the higher rate small loans up 120 basis points. And at the same time, NCLs are down 40 basis points versus last year, and that's inclusive of a 30 basis point drag, if you will, from the higher rate small loan growth. So the benefit of the barbell strategy is we get a higher yield based on the mix, and we get a mitigate on the NCL side because of the auto-secured business, which sure it has some lower pricing on it, but the credit performance is very good. That strategy is the path going forward unless we see some reason why we want to tighten up from a risk standpoint on any parts of the portfolio. To the degree we shift that mix around, I think, is very much driven by what we see is happening with the customer inflation and all the other things we're looking at.

我們的自動擔保交易量實際上增加了完全相同的金額，比前一年增加了 5,100 萬美元，即 35%，等等，但我認為這表明我們的利息和費用收入總共增加了 90 個基點小額貸款利率較高，調高120個基點。與此同時，NCL 比去年下降了 40 個基點，其中包括較高利率小額貸款成長帶來的 30 個基點的拖累（如果你願意的話）。因此，槓鈴策略的好處是，我們根據組合獲得了更高的收益率，並且由於汽車擔保業務，我們在 NCL 方面得到了緩解，這肯定會帶來一些較低的定價，但信用表現非常好。該策略是前進的道路，除非我們從風險的角度看到我們想要收緊投資組合任何部分的某種原因。我認為，我們改變這種組合的程度很大程度上是由我們所看到的客戶通膨和我們正在關注的所有其他事情所發生的情況所驅動的。

But at this point in time, given where our funding model is, the expectation of rates still continuing to drop and who knows the exact path of that. But in that environment with our funding structure, it's -- these assets are producing very attractive margins and returns.

但目前，考慮到我們的融資模式，利率預期仍在繼續下降，誰知道具體的路徑。但在我們的融資結構環境下，這些資產正在產生非常有吸引力的利潤和回報。

Great, that's very helpful. Thanks, guys.

太好了，這非常有幫助。謝謝，夥計們。

(Operator Instructions) Vincent Caintic, BTIG.

（操作員說明）Vincent Caintic，BTIG。

Hey, good afternoon. Thanks for taking my questions. First one, following up on the hurricanes. Just wondering if there are any other impacts that we should be expecting, if there's anything else in terms of fourth quarter impacts with that? And if there's anything timing from the third quarter that I don't know if it gets reversed or anything in later quarters? Just wanted to understand that. Thank you.

嘿，下午好。感謝您回答我的問題。第一個是跟蹤颶風。只是想知道我們是否應該期待任何其他影響，第四季的影響是否有其他影響？如果第三季有什麼時間安排，我不知道它是否會逆轉，或者在後面的幾季會發生什麼？只是想了解這一點。謝謝。

No, I think the only thing on the reserves, if there were to be less losses, obviously, that could have an impact. I mean we're establishing those reserves based on the best information we have at the time and based on our historical experience, not just -- only with Hurricane Beryl, but Harvey several years ago. So I would say it really depends on how it all plays out. And of course, there's the timing aspect, as Harp said, where the timing of those losses will come in over the next several months and bleed into early next year. And so the reserves associated with those losses get released when that happens. But nothing that you should expect in the fourth quarter that more than what we've disclosed here.

不，我認為儲備金上唯一的事情是，如果損失減少，顯然，這可能會產生影響。我的意思是，我們正在根據我們當時掌握的最佳資訊和我們的歷史經驗建立這些儲備，不僅是貝裡爾颶風，而且是幾年前的哈維。所以我想說這實際上取決於一切如何進行。當然，正如哈普所說，還有時間方面的問題，這些損失的時間將在未來幾個月內出現，並持續到明年初。因此，當這種情況發生時，與這些損失相關的準備金就會被釋放。但你對第四季的期望不會比我們在這裡披露的更多。

Okay. Thank you for that. And then a broader question, but -- so you outlined all the different kind of mix shift and the success you're having with small dollar loans. I'm just wondering if you can maybe expand on once we sort of reach a level set for the mix of small dollars that you're planning to grow to, what sort of the credit reserve rates, maybe the net interest margin or the asset yields that we should be expecting once we reach that normal state? Thank you.

好的。謝謝你。然後是一個更廣泛的問題，但是——所以你概述了所有不同類型的混合轉變以及你在小額貸款方面所取得的成功。我只是想知道，一旦我們達到了為您計劃增長的小額美元組合設定的水平，您是否可以擴展，信貸準備金率是多少，也許是淨息差或資產一旦我們達到正常狀態，我們應該期望的產量是多少？謝謝。

Yeah. I think I'm going to punt on that one because that kind of starts to get into guidance next year. But -- and we're also thinking through whether maybe some future disclosures may be required or not required, may be helpful on the greater than 36% business. But what I can tell you is we're getting very attractive risk-adjusted returns on that higher rate business. And our -- we're in the middle of budget season now and thinking through what our mix is going to look like next year. As I said to John's question, we're going to continue to leverage this strategy because it's a very powerful strategy to drive the top line and also manage the NCL rate associated with putting on the higher rate loans, which have higher risk, but mitigating that through our auto-secured business.

是的。我想我會押注這一點，因為明年這種情況就會開始成為指導。但是，我們也在考慮未來是否需要披露一些信息，這可能對超過 36% 的業務有所幫助。但我可以告訴你的是，我們在較高利率的業務上獲得了非常有吸引力的風險調整回報。我們現在正處於預算季節中期，正在考慮明年的組合。正如我在回答約翰的問題時所說，我們將繼續利用這一策略，因為這是一個非常強大的策略，可以推動收入，並管理與發放高利率貸款相關的NCL 利率，這些貸款風險較高，但可以減輕風險透過我們的自動擔保業務。

And Vincent, you should see that same impact on the reserve that Rob just talked about in terms of credit. So those higher rate small loans because they have higher NCLs will require a higher reserve. However, that will be balanced out by the lower credit losses on the auto and on large loans, which will also be reflected in the reserve. So really, the barbell strategy, it works on yields, it will work on losses, and it will also work on the reserves.

文森特，你應該看到羅布剛才談到的信貸方面對儲備的同樣影響。因此，那些利率較高的小額貸款因為不良信用貸款較高，因此需要更高的準備金。然而，這將被汽車和大額貸款信貸損失的降低所抵消，這也將反映在準備金中。所以實際上，槓鈴策略對收益率有效，對損失有效，對儲備也有效。

Okay. Thank you. And then last one from me. Just the competitive environment and in particular, just some of the fintech companies that we cover this earnings season so far have talked about growth because of private credit funds that have been investing in them. I'm just wondering if you're seeing anything in terms of the competitive environment and the players in your space there are being rational. Thank you.

好的。謝謝。然後是我的最後一張。只是競爭環境，特別是我們迄今為止在本財報季報道的一些金融科技公司都談到了成長，因為私人信貸基金一直在投資它們。我只是想知道您是否看到競爭環境以及您所在領域的參與者是否理性。謝謝。

We're not really seeing that. I mean our constraint on growth is really self-constrained in terms of how much we're willing to invest in the near term and looking at the macro environment and not really seeing that kind of competitiveness coming through the fintechs. Look, they obviously are getting some higher rate money to fund them and maybe they're going to take on more risk. Look, we've been doing the small loan business for decades, and I think we feel really good about our ability to add those assets on the books at attractive returns. And there is a lot of, I should say, opportunity out there. So a little bit more competition coming in there. I don't think it is, at this point in time, something we're seeing as a threat.

我們並沒有真正看到這一點。我的意思是，我們對成長的限制實際上是自我約束的，也就是我們願意在短期內投資多少，並著眼於宏觀環境，而沒有真正看到金融科技帶來的那種競爭力。看，他們顯然正在獲得一些更高利率的資金來資助他們，也許他們將承擔更多的風險。看，我們從事小額貸款業務已經有幾十年了，我認為我們對以有吸引力的回報將這些資產記入賬簿的能力感到非常滿意。我應該說，那裡有很多機會。因此，那裡會有更多的競爭。我認為，目前我們並不將其視為威脅。

Okay, great. Very helpful. Thank you.

好的，太好了。非常有幫助。謝謝。

Thank you, Vincent.

謝謝你，文森。

Bill Dezellem, Tieton Capital.

比爾·德澤勒姆，泰頓資本。

Thank you. Would you please circle back to the small loan yield being up 120 basis points. I don't think that either I heard your explanation or that I understand why that yield grew like it did.

謝謝。請您回過頭來說一下小額貸款收益率上升了120個基點。我不認為我聽到了你的解釋，也不明白為什麼產量會如此成長。

Yeah. Bill, how are you doing? No, so what we've been putting on our growth over the last year in that small loan business, which I said was up $51 million or 11%. We've been putting on higher rate small loan business. And so when you look at the mix of that, so I'm just going to give you a number. Let's say you're at 38% and you go up and you start putting on 40% business, right?

是的。比爾，你好嗎？不，所以我們去年在小額貸款業務上的成長，我說的是成長了 5,100 萬美元，即 11%。我們一直在進行利率較高的小額貸款業務。所以當你看到這些的組合時，我只想給你一個數字。假設你的業務量為 38%，然後你的業務量上升，開始投入 40% 的業務，對吧？

And that's just an example. I think our average small loan is around 44% or so, but Harp can confirm that with me. And the point is as you go up that higher rate, higher risk part of the lending side, you're increasing your yields. And so the 120 basis points versus last year third quarter and the 230 basis points year-to-date in aggregate, besides some repricing of existing book is driven by putting on those higher rate, higher risk small loans, which from a margin standpoint are very attractive parts of our portfolio.

這只是一個例子。我認為我們的平均小額貸款約為 44% 左右，但 Harp 可以向我證實這一點。關鍵是，當你提高貸款方利率較高、風險較高的部分時，你的收益率就會提高。因此，與去年第三季相比上漲了120 個基點，今年迄今總計上漲了230 個基點，此外，現有帳簿的一些重新定價是由那些利率更高、風險更高的小額貸款推動的，從保證金的角度來看，這些貸款是我們的產品組合中非常有吸引力的部分。

Okay. To make sure I'm fully clear here, within the small loan bucket, you are identifying lower credit quality consumers and therefore, the higher rate. Now you ultimately expect to get a higher return on those because of the higher rate, even though charge-offs may be a bit higher. And so that's what's happening as opposed to just raising rates. Is that correct or a bit of both?

好的。為了確保我在這裡完全清楚，在小額貸款類別中，您正在識別信用品質較低的消費者，因此利率較高。現在，由於利率較高，您最終期望獲得更高的回報，儘管沖銷可能會更高一些。這就是正在發生的事情，而不僅僅是升息。這是正確的還是兩者兼具？

Yeah. Well, look, I think what you're seeing here is that mix shift. Now, we have -- like others in the industry, and we've talked about this in prior quarters, we have repriced our large loans and parts of our small loans portfolio selectively in states. But the driver here that we're talking about and calling out is that mix shift.

是的。嗯，看，我想你在這裡看到的是混合轉變。現在，我們和業內其他人一樣，我們在前幾個季度已經討論過這一點，我們有選擇地在各州重新定價了我們的大額貸款和部分小額貸款組合。但我們在這裡談論和呼籲的驅動因素是混合換檔。

And look, you can see it in the supplement on page 6, kind of what the ENR below 36% or conversely above 36%. I mean, we've now kind of reversed the course. We were growing large loans sub 36%, particularly in a credit environment that wasn't necessarily that attractive at the time. We're very familiar with doing this business. We used to have an even much larger small loan business as a percentage of the portfolio.

你看，你可以在第 6 頁的補充中看到，ENR 低於 36% 或相反高於 36%。我的意思是，我們現在已經扭轉了方向。我們的大額貸款成長率低於 36%，特別是在當時不一定具有吸引力的信貸環境下。我們對這項業務非常熟悉。我們過去的小額貸款業務佔投資組合的比例更大。

We started off as a small loan company. So what we're doing right now is just optimizing our P&L and our bottom line to drive greater profitability by leaning back into that smaller loan business a little bit more, while also balancing that off of the barbell strategy on the auto-secured business. And remember, the small loan business is what's fueled our large loan growth. We take those customers. We -- based on how they perform on us, we're able to then graduate them to a larger loan and on average, drop their APR by around 12%.

我們最初是一家小額貸款公司。因此，我們現在正在做的只是優化我們的損益表和利潤，透過更多地依靠規模較小的貸款業務來提高獲利能力，同時平衡汽車抵押業務的槓鈴策略。請記住，小額貸款業務推動了我們大額貸款的成長。我們接受這些客戶。我們—根據他們對我們的表現，我們可以為他們提供更大的貸款，平均年利率下降約 12%。

So this is a really important part of our growth story is that graduation strategy, that feeder business of the small loan business. So going back a little bit more aggressively in the small loan business, as you said, the higher rate and higher risk business, that gives us further opportunity in the future to take those best customers and move them into larger loans.

因此，我們的成長故事中非常重要的一部分是畢業策略，即小額貸款業務的支線業務。因此，正如您所說，在小額貸款業務上更加積極地回歸，更高的利率和更高的風險業務，這使我們在未來有更多的機會吸引那些最好的客戶並將他們轉移到更大的貸款中。

And Bill, just to add some more stats around that, our small loan mix in third quarter of 2024 was roughly 29%. In third quarter of 2022, we were at roughly 30%, was our mix. So in terms of leaning into the small loans, I mean, we've been at this mix before. Rob talked about moving up in the continuum of the higher rate loans. So that's taken our yields from 36.6% up to the 37.8%. But I also want to point out on small loans where delinquencies have come down from the 9.6% to the 9.4% on a reported basis. So we're managing all of the things in terms of the delinquency, the mix, and the rate when it comes to the small loans.

Bill，我想補充一些更多的統計數據，我們 2024 年第三季的小額貸款組合約為 29%。2022 年第三季度，我們的佔比約為 30%。因此，就傾向於小額貸款而言，我的意思是，我們以前一直在這種組合中。羅布談到了在高利率貸款的連續過程中向上發展。這樣我們的收益率就從 36.6% 提高到了 37.8%。但我還想指出，小額貸款的拖欠率已從報告的 9.6% 降至 9.4%。因此，當涉及小額貸款時，我們正在管理拖欠、組合和利率方面的所有事情。

Great. That's very helpful. And I think, Rob, you actually mentioned this in your response that the small loans have historically been the feeder, if you will, to the large loan category and -- because they graduate. Because you are adding a bit lower credit quality in the small loans, does that imply less chance of these loans or those consumers in this slightly higher credit band or slightly higher risk credit band not graduating to the large loans? Or have you -- do you have enough data to know yet?

偉大的。這非常有幫助。我想，羅布，你在回覆中實際上提到了這一點，如果你願意的話，小額貸款歷來都是大額貸款類別的來源，而且——因為它們會畢業。因為您在小額貸款中添加了稍低的信用質量，這是否意味著這些貸款或處於稍高信用等級或略高風險信用等級的消費者不升級到大額貸款的可能性較小？或者你有——你有足夠的數據可以知道嗎？

No. Yeah, look, we have very granular data by state. And you got to remember, some states are capped at 36% and some aren't. So a large part of the greater than 36% small loan shift in mix is in those states that are uncapped. But what it means when you go to a graduation strategy is you're graduating -- again, those that are paying and onus behavior is such that they warrant an increased loan.

不。是的，看，我們有按州劃分的非常精細的數據。您必須記住，有些州的上限為 36%，有些則沒有。因此，超過 36% 的小額貸款組合變化很大一部分發生在那些沒有上限的州。但當你採取畢業策略時，這意味著你即將畢業——同樣，那些支付和承擔責任的行為意味著他們需要增加貸款。

We have the option to give them a larger small loan at a lower rate or we have the option to put them into a larger loan at a lower rate, and we can price according to the risk, which is what I think you would expect us to do.

我們可以選擇以較低的利率向他們提供較大的小額貸款，或者我們可以選擇以較低的利率向他們提供較大的貸款，並且我們可以根據風險定價，這就是我認為您所期望的去做。

Right. No, that's very reasonable. And then one additional question, please. So as -- if there is a point you choose to lean into growth and start ticking your originations up just on a more consistent basis, make sure we understand the provisioning correctly, that would be an immediate penalty to earnings if and when you choose to do that as when the rate of -- when the total level of originations increases versus the comparable. Is that correct?

正確的。不，這是非常有道理的。請再提一個問題。因此，如果您選擇在某個時刻轉向增長並開始在更一致的基礎上提高您的收入，請確保我們正確理解撥備，如果您選擇這樣做，這將立即對您的收入造成懲罰當起源總水平相對於可比水平增加時，就這樣做。這是正確的嗎？

Yeah. It's not the originations, it will be the ending net receivables. So for example, this quarter, we grew the portfolio by $46 million. So with a CECL rate of 10.5%, that basically translated to $4.8 million.

是的。這不是起源，而是期末應收帳款淨額。例如，本季度，我們的投資組合增加了 4,600 萬美元。因此，如果 CECL 率為 10.5%，則基本上相當於 480 萬美元。

$4.6 million --

4.6 美元百萬 -

Or $4.6 million of pretax CECL reserves we had to put on the books, right? Next quarter, and we are ramping up our growth. So next quarter, we're giving guidance of $65 million to $70 million. And look, some of that is seasonal, but if your reserve rate is at that 10.5% rate, if you will, which it will be because we're still hanging on to some hurricane reserves, that's going to translate depending on where you are in that, call it, $6.5 million to $7 million of pretax provisions for the growth. Now the revenue associated with that comes in the future. So from a capital standpoint, you're generating significant capital, but that's just the growth effect of the CECL reserving policy.

或者我們必須記入帳簿的 460 萬美元稅前 CECL 儲備金，對吧？下個季度，我們將加快成長。因此，下個季度，我們給出的指導值為 6500 萬至 7000 萬美元。看，其中一些是季節性的，但如果你的儲備金率是 10.5%，如果你願意的話，這將是因為我們仍然持有一些颶風儲備金，這將根據你所在的位置進行轉換其中，可以稱之為650 萬至700 萬美元的稅前成長準備金。現在，與此相關的收入將在未來到來。因此，從資本的角度來看，您正在產生大量資本，但這只是 CECL 準備金政策的成長效應。

Great. Thank you for walking through the math and the correction on originations versus any receivables. Good quarter and thanks for the time.

偉大的。感謝您完成數學計算以及起源與任何應收款的更正。很好的季​​節，感謝您抽出時間。

Great. Thanks, Bill.

偉大的。謝謝，比爾。

This concludes our question-and-answer session. I would like to turn the conference back over to Rob Beck for any closing remarks.

我們的問答環節到此結束。我想將會議轉回給羅布·貝克（Rob Beck）發表閉幕詞。

Yeah. Thank you, everyone, for joining today. Look, I'd just like to thank the regional team again. Their response to the hurricane was truly impressive. And the things we've done for our customers, I will tell you, goes a long way with them and creates a lot of customer loyalty.

是的。謝謝大家今天的加入。聽著，我想再次感謝區域團隊。他們對颶風的反應確實令人印象深刻。我會告訴你，我們為客戶所做的事情對他們有很大幫助，並建立了很高的客戶忠誠度。

And so you got to be there in difficult times, and that helps them get through those difficult times and be long-term customers with us. So really an exceptional job by the team. We exceeded our earnings expectations by a wide margin before the impact of the hurricane. So we're very happy about that, and we are well positioned for growth going into 2025.

因此，您必須在困難時期出現，這可以幫助他們度過這些困難時期並成為我們的長期客戶。所以團隊的工作確實非常出色。在颶風影響之前，我們的獲利大幅超出預期。因此，我們對此感到非常高興，並且我們已為 2025 年的成長做好了充分準備。

I think it's evident. Credit continues to improve. We're maintaining a tight control of expenses. And as I indicated earlier, we'll see higher growth in the fourth quarter than we did in the third quarter as we get more comfortable leaning back into growth.

我認為這是顯而易見的。信用持續改善。我們正在嚴格控制開支。正如我之前指出的，隨著我們更輕鬆地恢復成長，第四季的成長將高於第三季。

And then just to recap that barbell strategy, I mean, it's working exceedingly well for us that we're able to grow the higher rate, higher-yielding business with strong margins on one end, the auto-secured with somewhat lower yields but much better credit on the other end and produce out of that an overall business where the yields have been improving and the NCLs are -- kept coming down. So we feel really good about how the business is positioned, and we're just continuing to execute on it. So thanks again for joining.

然後回顧槓鈴策略，我的意思是，它對我們來說非常有效，我們能夠發展利率更高、收益更高、利潤率更高的業務，而汽車擔保業務的收益率稍低，但收益更高另一方面，信用狀況改善，並由此產生整體業務，收益率一直在提高，而非信用貸款持續下降。因此，我們對業務的定位非常滿意，並且我們將繼續執行它。再次感謝您的加入。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。