Regional Management Corp (RM) 2013 Q1 法說會逐字稿

Good day, ladies and gentlemen. And welcome to the Q1 2013 Regional Management Corp. earnings conference call. My name is Kristin, and I will be your operator for today.

At this time, all participants are in listen-only mode. We will conduct a question and answer session towards the end of this conference. (Operator Instructions) As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Mr. Garrett Edson, Senior Vice President of ICR. Please proceed.

Thank you, Kristin. And good afternoon. By now, everyone should have access to our earnings announcement, which was released prior to this call. These documents may also be found on our website at RegionalManagement.com.

Before we begin our formal remarks, I need to remind everyone that part of our discussion today may include forward-looking statements, which are based on the expectations, estimates, and projections of management as of today. The forward-looking statements in our discussion are subject to various assumptions, risks, uncertainties, and other factors that are difficult to predict and which could cause actual results to differ materially from those expressed or implied in the forward-looking statements. These statements are not guarantees of future performance and, therefore, undue reliance should not be placed upon them.

We refer all of you to our recent filings with the SEC for a more detailed discussion of the risks that could impact the future operating results and financial condition of Regional Management Corp. We disclaim any intention or obligations to update or revise any forward-looking statements except to the extent required by applicable law.

Also, our discussion today may include references to certain non-GAAP measures. Reconciliation of these measures to the most comparable GAAP measure can be found within our earnings announcement and posted on our website at RegionalManagement.com. I would now like to introduce Tom Fortin, CEO of Regional Management Corp.

Well, thank you very much, Garrett, and good afternoon, everyone, and welcome to our first quarter 2013 earnings conference call. I am here with our Chief Financial Officer, Don Thomas, who will speak later about our first quarter financial results. And I am also joined by other members of our senior leadership team.

Let me start by saying that we are very pleased with our first quarter performance. We recorded total revenues of $38.6 million, up 22% from the prior year; net income of $6.9 million, and diluted earnings per share of $0.54. Finance receivables as of March 31, 2013 were $430.4 million, up some 36% from the prior year period end. And same-store sales growth remained very strong as we recorded a 14% increase in the fourth quarter.

Don is going to expand on these metrics in his remarks shortly. But broadly, as we have previously discussed, Regional conducted its first ever January and February live check direct mailings. And, overall, we were quite pleased with the response we achieved, and the information gathered during this process will certainly help us further refine and optimize next year's first quarter mailings.

While we experienced very little impact from IRS delays in tax returns, we feel that the incremental volume from our off-cycle direct mail live check programs were a net positive for us in the first quarter.

In terms of our branches, we grew our branch count at the end of March 2013 to 232 locations as we opened 11 de novo stores in the first quarter, accelerating our original plans and including our first AutoCredit Source branch in the state of Georgia. We were especially pleased with the efficient build-out in opening of our de novo branches during the first quarter.

As of today's call, we have opened 14 de novo branches thus far in 2013 and we are now projecting de novo growth of 41 branches this year. As of today we have leases signed on all 41 of these de novo branch locations, and the bulk of these branches are under construction and will be open in the second quarter.

After this -- after the first quarter ended we closed acquisition of two Georgia branches, which gave us a start in the small installment loan business in the state of Georgia. And, while this transaction is not material to our overall operations support results, it is an important symbolic step for us in a highly strategic state. Once we gain more experience in the state of Georgia, we will look forward to future expansion. And, of course, we continue to watch for additional accretive small to midsize acquisition opportunities nationwide.

From a customer account perspective, we serviced over 244,000 active accounts as of March 31, nearly comparable to the approximate 245,500 accounts that we serviced as of December 31, 2012. And let me remind you listening to the call that the first quarter is historically our slowest origination period seasonally. And we normally see a decline in customer accounts in our portfolio ledger and receivables from December 31 to March 31 as customers use their tax refunds to pay down or pay off loans.

Given this pattern, we are very pleased that we managed to keep total accounts essentially flat on a sequential basis and our portfolio is currently growing according to historical patterns.

Turning attention to our RMC retail unit, RMC retail continues to perform admirably, having crossed the $30 million receivables total during the first quarter of 2013. We now partner with more than 780 retail and furniture stores as of the end of April 2013 and we continue to steadily add new points of financing at a consistent pace to our network. While RMC Retail is indeed our lowest yielding unit, these are in fact the highest quality loans in our portfolio and the highest quality borrowers by a considerable amount.

As we have discussed in the past, RMC Retail allows us an additional channel opportunity to broaden our market approach, allows us to introduce customers to Regional generally, and to potentially cross-sell an auto loan or an installment loan to a higher credit quality consumer, thus growing our revenue base while potentially improving the quality of our loan portfolio. We're also quite pleased in the first quarter with our automobile purchase loan segment, which grew its receivables base on a sequential basis, despite the continued intense competition in the auto lending sector.

Now, in terms of the regulatory landscape, we have only a few minor updates on both the federal and the state level. At the state level, the recent proposed legislation regarding payday loans in Texas, if indeed passed and signed into law, would not have an impact on Regional.

Just yesterday in the state of North Carolina, an important potential positive bill was passed out of a Senate panel and will now be heard before the full State Senate in North Carolina that could be a positive addition to our operations in the state. On the federal level, the Consumer Financial Protection Bureau recently put out a white paper concerning payday loans and deposit advances, but there has still been no discussions concerning installment loans.

We continue to invest our own -- in our own internal compliance programs and resources so that we can provide our customers competitive, safe, and transparent consumer financial products that are a good economic value to their household.

Finally, before turning things over to Don, I do want to announce that we've made several key additions to our executive team during the first quarter. You all know, of course, at the turn of the year, Don Thomas joined us as Chief Financial Officer. And we also want to acknowledge the addition of our new Vice President and General Counsel, Brian Fisher.

Additionally, we recently reported -- we recently added as our Senior Director of Marketing, Barbara Turner, who joins us from a similar position at Springleaf Financial. These new executives functionally round out our senior leadership team and we believe position us well for future growth and performance.

And, with those comments out of the way, I'd like to now turn the call over to Don, who will discuss the details of our first quarter results. And then I will provide some closing commentary. Don?

Thank you, Tom. Good afternoon, everyone, and let's go right into our first quarter results.

For the first quarter of 2013, we reported total revenue of $38.6 million, a 22% increase from $31.5 million in the prior year period. Interest and fee income for the first quarter of 2013 was $34 million, a 26% increase from $27.1 million in the prior year period, primarily due to a 36% increase in our finance receivables.

Insurance and other income for the first quarter of 2013 was $4.5 million, a 1% increase from the prior year period. As we mentioned on our prior call, as our product mix includes more indirect loans from furniture and auto, we do expect fewer opportunities to offer insurance products with our loans.

Same-store revenue growth for the first quarter of 2013 was 14.4%. We define same-store as stores open for at least 13 months.

Finance receivables outstanding at March 31, 2013, were $430.4 million, a 36% increase from $317.5 million in the prior year period. The small, auto, and furniture categories of finance receivables increased primarily due to the addition of 38 de novo branches, successful live check campaigns, and strong customer demand for our auto and furniture products.

Our same-store finance receivables grew 28.7%. Once again, our same-store calculations use stores that have been open at least 13 months.

Composite yield for the first quarter of 2013 was 35.3%, down from 39.6% in the prior year period. Composite yield declined primarily due to the success of our back-to-school, holiday and January live check campaigns, which included testing of higher credit score customers with lower rates and larger loan amounts.

At the end of the first quarter, approximately 49% of our back-to-school, 80% of our holiday live check loans, and 94% of the January live check loans remain in our portfolio. In addition, the composite yield also declined due to the increase in automobile and RMC Retail loans, our lowest yielding product as a proportion of our product mix. We continue to take disciplined steps to idolize analyze and improve our yield, including the reduction of the use of lower rates in our live check campaigns.

As of March 31, small installment loans made up 42% of our portfolio; large installment loans made up 12% of our portfolio; automobile purchase loans were 39%, and furniture and appliance purchase loans were 7% of our portfolio.

The provision for credit losses in the first quarter of 2013 was $8.1 million versus $5.6 million in the prior year period, primarily due to growth in the portfolio. Accounts that were over 90 days contractually delinquent were 2.6%, up from a rate of 2.3% as of March 31, 2012.

A portion of the increase in accounts over 90 days are in fact accounts over 180 days contractually delinquent, which require us to provision 100% of the amount in our specific account allowance. Therefore, our overall allowance increased for the first quarter.

Net charge-offs as a percentage of average finance receivables for the first quarter of 2013 was 6.5% on an annualized basis, a slight increase from 6.4% in the prior year period.

General and administrative expenses for the quarter -- first quarter of 2013 were $16.4 million, an increase of 28% from $12.8 million in the prior year period, primarily due to increased personnel and operating costs from opening an additional 38 branches since March 31, 2012, including opening 11 new stores in the first quarter of 2013.

In addition, we have incurred incremental electronic portal costs to view a larger number of deals in a more competitive indirect auto loan environment. And certain public company costs are now included in our income statement that were not included in our 2012 first-quarter results.

Regional Management's efficiency ratio as a percentage of general and administrative expenses compared to total revenue in the first quarter of 2013 was 42.6%, 200 basis points above the 40.6% figure in the prior year period. We continue to put time and effort into managing our expenses and have successfully negotiated new contracts with certain vendors that will lower costs and future. However, the primary reason for the increase in our efficiency ratio is the decline in our composite yield, as noted above.

Net income for the first quarter of 2013 was $6.9 million, a 35% increase compared to GAAP net income of $5.1 million in the prior year period. Pro forma net income for the first quarter 2012, which excludes one-time IPO expenses and applies the proceeds from the IPO to reduce outstanding debt, was $6.8 million. Diluted earnings per share for the first quarter of 2013 was $0.54, based on a diluted share count of 12.8 million shares.

As of March 31, Regional Management had finance receivables of $430.4 million and outstanding debt of $273 million on our $325 million senior revolving credit facility. Our credit facility does have an expansion feature to grow to $400 million. I would now like to turn the call back to Tom for closing remarks.

Well, thanks, Don. And, to sum up, our first quarter was a very strong start to fiscal 2013 for Regional Management. And we generated solid growth that clearly flowed to the bottom line. Our overall growth strategy for 2013, in terms of building de novo stores and targeting live check campaigns is clearly on track, and I am quite optimistic about Regional's potential.

We are excited about entering the state of Georgia, our eighth state, and we think there are numerous opportunities for growth in that key state. And, importantly, we remain on very solid footing from a liquidity and a balance sheet perspective. I am certainly proud of the entire Regional Management team's dedication and I am certain they will keep up the good work in the coming quarters.

With that, operator, we would be delighted to take questions from participants.

(Operator Instructions) Bob Ramsey, FBR.

Good evening, guys. Nice quarter. The growth really is tremendous this quarter.

I am curious. It looks like when I look at the origination beta, the originations of the small loan product are, I guess, driving a lot of that growth. They are up something like 80% year-over-year with more modest, although still nice, increases in the other portfolios.

Is that the live check campaign that is driving most of that? Or is a lot of that the new branches? Or how do we think about the different growth drivers?

Bob, this is Don. I will take that one. And the answer is yes, that is the live check campaigns helping to grow the small loan volume. And so as we have added that element here in the first quarter and never done it before, it shows pretty nice increase.

And would it be your expectation, since you are having such success with the live check campaigns, that going forward we would continue to see, I guess, growth sort of dominated by that small installment loan portfolio?

Yes, Bob, this is Tom, and I will take that one. I think certainly we have been very encouraged by the focused Q1 live check campaigns.

Our philosophy here at Regional has always been to experiment in a controlled manner. You know, we are going to watch those portfolios of live checks that we sent in Q1 to see how they perform.

But, in terms of reaching a new market segment that prior to this quarter we'd never been involved in before, yes, I think it's very encouraging. And on a going forward basis, we are encouraged by what we have achieved. And I think you can anticipate that we will certainly participate in off-cycle mailings on a go forward basis.

And how are you thinking about the potential for loan growth in fiscal 2013?

That's a tough question, Bob.

Well, I guess it may be -- you know, this quarter I think you were up 35%, 36%. I think you had a little bit of benefit this quarter, still, from the Superior acquisition. I can't remember, but that might have been late January of last year.

So do you stay above 30% for the year? Is it something in the high 20%'s? Is that overestimating? I mean, they are big numbers, but is that a little high? How are you thinking about the potential and sort of a range?

Well, I think -- I mean, first and foremost, I mean, we really don't provide much in the way of guidance, and so I can understand why you're asking the question. You know, we have brought Barbara Johnson on for a reason, to continue to improve our live check campaigns. And so I think that we will continue to look for all the options that we can to move it forward and it will be a key part of what we do.

Bob, I will just add on to that. As I'd said in my prepared comments, I mean, this is a, from our perspective, a great start to the year. I can't imagine a scenario where we would ever slow down our trajectory. We've got plenty of room under our existing funding arrangements. The quality of the paper is very strong.

The real challenge -- the rate governing factor and the way we look at growth, is -- and we have said this consistently on a number of our previous calls -- it is people. It's having the quality of people in the field to manage branches and really keep control on the portfolio. So we are very confident with the 41 stores that we have announced that we have the right people in place to absorb that growth.

I don't anticipate us accelerating from this trajectory, but certainly we are not going to slow things down. I hate to be opaque. But, you know, as Don says, we are not offering guidance on top line growth and I think I have to be somewhat vague on that.

Okay. No, that is helpful color. Thank you, guys.

You are welcome.

David Chiaverini, BMO Capital Markets.

A couple questions for you. Starting, first, you mentioned about how you expect to open up 41 branches this year, and you have opened 14 through the first quarter. So did I hear you right that most of them, the balance, are going to be opened by the second quarter? And if that's the case, it sounds as if you're going to be pulling back a bit on new branch openings until 2014.

Well, Dave, this is Tom speaking, and good afternoon. I would say we had really targeted a midpoint of the guidance range, 35 to 45 branches. Our thinking had been 40. We have since upped that, obviously, to 41.

My preference has always been to open stores earlier in the year. The more experience we can obtain in a de novo location, the better that sets our personnel up for our busiest period, which is the fourth quarter. So our philosophy, again, has been open early and get experience under your belt.

I will say, as you have seen in the past few years, we have been highly opportunistic in terms of looking at back half of the year growth. I am not prepared to make any announcements today about what we might do that would be incremental to 41. But, with 41 de novo locations, essentially done by the end of June, that gives us a lot of latitude to really see how we are positioned midway through the year.

We have talked before on previous calls about a growing proportion of our de novo store openings being so-called backfill locations. And to remind participants on the call once again, a backfill is an existing market where one of our existing branch locations has really reached its upper limit in terms of the number of customers that we like to have in a branch for optimal control. So, by design, we'll literally self-cannibalize an existing branch and co-locate a de novo branch in proximity or adjacent to an existing branch.

So we will keep an eye on those, Dave, and I would say our perspective in the latter half of the year would be highly opportunistic. I guess the penalty would be potentially over-performing on the 41, but I won't give guidance on that right now.

Okay. Understood. And, yes, 41 in the first half of the year is remarkable. So moving on to credit quality, any signs of the economy slowing in the markets you are in?

No. I think from a demand perspective, certainly the first quarter was a good one for us. I have been asked a number of times of late, was there much impact -- noticeable impact of the delays imposed by the Internal Revenue Service on tax returns. And we did not see that in our results.

You know, in many ways, we do benefit from having the diversity of our product set as well as the marketing channels, some of which are counter-seasonal, countercyclical. The first quarter is generally, again, a period when people use tax returns to pay down or pay off small loans. But, conversely, they also tend to use tax returns to use as a down payment for automobile purchases. And given that that's 40%, 42% of our asset base, it tends to be somewhat of a mitigating factor for Regional.

I think when you layer on top of that the fact that we made, again, a concerted effort to do what we are now calling off cycle, January and February live check mailings, we saw strong demand. Don, do you want to speak about maybe the downstream quality of delinquencies and charge-offs?

Absolutely. Our slow file, which is our leading indicator, has been improving for the last several months, which is always good. It's going the other way, you start getting concerned. And so it is actually quite good at the end of March and probably one of the best readings we have seen in a long, long time, if not the very best. So we feel good about that.

You will notice in our other income line, which includes late fees, that it is down. And part of the reason it is down is because with a higher quality credit portfolio, we are not seeing the volume of late charges coming through just because of the change in the portfolio. I think downstream we have good thoughts about where we are headed.

Great. Thanks.

David Scharf, JMP Securities.

Thanks for taking my questions. Tom, I had a few follow-ups on the live check program.

First, as we look at the acceleration in same-store receivables growth, is any of that impacted by how you direct the live check mailings? I mean, these mailings ultimately have to get allocated to a particular location, correct? And is there any sort of concentration geographically, ZIP Code mailing, or patterns in response rates that are driving the same-store metric?

Yes, Dave, I mean, we are always looking to balance the number of customers across the base of branches, and I think you are actually correct. In our busiest branches, we might actually hold off on mailing to certain ZIP Codes so as to not overload a busy branch with active accounts.

The flip side to that is on our smaller locations that need the growth, we might proportionately send more checks to that particular marketplace. So at this point in time, I think we are serving something like 5500 -- almost 6000 ZIP Codes. And it's somewhat laborious to go through that every campaign, but we do attempt to balance out the mailings to how busy the branches are.

Got it. Also curious, the states that you currently operate in with a physical location, as well as the ones you are targeting, do any of those states or any future states that you are looking to enter have restrictions or limitations on live checks?

They do. Until very recently, the state of Georgia did not permit live check direct mail marketing. We are permitted under the state licenses that we have just received through this acquisition to do live check mailings, limited to the counties in which our branches are located.

We are a small participant and a new participating in Georgia, so we are taking a very disciplined and deliberate approach. In fact, we have recently submitted to the state regulator our form of a live check and we are awaiting approval. So it is somewhat of a patchwork from a regulatory perspective, but other than what I've just described in Georgia, there are no limitations beyond state-driven disclosures with respect to live checks.

Got it. And just a couple kind of cleanup, sort of modeling questions, if you will. Given your comments about the late tax refund season not really impacting you, is it fair to say that we should not be thinking about average balances trending down in April as if there were a delayed response from the typical paydown cycle in Q1? It sounds like the number you reported is kind of a real normal, seasonal March 31 number.

Absolutely. And I think that number was $2110, approximately, the average outstanding on a base of 244,000 active accounts. We have seen a slight decline in the average outstanding, David, primarily due to mix shift.

And it was noted that, in terms of driving originations, we have certainly accelerated the small loan category through some of the programs and initiatives that we have just talked about. So that is going to cause a slight decline in the average outstanding. But I wouldn't ascribe materiality to that.

Got it. And then, lastly, on the provisioning front, when I look at last year, when I look at the four quarters, the ending allowance rate as a spread above your charge-off rate in the quarter, it looked like it was, starting with Q1, 70, then 70, then 90, then 100 basis points spread. And it looks like in Q1 your provisioning rate -- your ending allowances about 100 basis points above your loss rate. Is that a good way to think about modeling the ending provision each quarter this year?

This is Don, and I will answer that. I think you can look at it that way. That's a reasonable approach to take.

Okay. But we shouldn't expect any change in that relationship based on some of these leading indicators in delinquency trends you are seeing?

Nothing significant.

Got it. Thank you very much, guys.

Thanks, David.

Daniel Furtado, Jefferies.

Good morning, everyone. Thank you for the opportunity. The first question is just kind of conceptual.

I know in the pawn and payday space, one of the -- or the payday space, there has been a big move towards the installment loan business in the sense that it is viewed to have lower regulatory risk. But then we look at your performance, and obviously at 36% year-over-year growth, it certainly feels like you are finding growth out there. Are you just not crossing paths with this other consumer? Or is the pie big enough to split amongst everybody who is operating in the space?

Well, I think both of those statements are true, Dan. You know, I would argue that we have virtually no, or very little, overlap with the payday customer by the very nature of the product. And, as you well know, with your coverage universe, big difference between the $200 or $300 loan that is a 14-day instrument at triple digit APRs and the proto-typical Regional loan, which is obviously termed out to a significant longer maturity, much bigger denomination, really a fundamentally different need on the part of the consumer.

Having said that, I guess I will circle back to my earlier comment about the breadth of the product set. And I think this is a part of the story that makes the Regional story somewhat unique in this marketplace. No reliance on one particular product or one project particular channel. And, frankly, with the bread of that -- the reach of those products, I think it allows us to tap into segments of growth that, frankly, many others in our industry have yet to really embrace.

Got you. I appreciate the color there. And then, one is really more on the modeling side. I noticed that the -- and I apologize if you talked about this, but I didn't seem to hear it. The large loans look like they were down a little bit year-over-year and that seems to be a little bit atypical just in general for the last couple of years. And I am wondering if this is something that is more on the seasonal side that you saw on the large loan or what's really explaining the movement in the large loan balance. Thanks, Tom.

Yes, thank you, Dan. I'll take the first part of that and I think what Don wants to follow-up. But, you know, you are correct. And really the reason, in my view, of the slight decline in the large installment loan category, this is the one product line out of the four in our core business model that we, frankly, just do nothing in the way of marketing.

It's really more of an accommodation to customers who might evolve and grow out of the core small installment loan product. And, again, we define that small installment loan category as a $300 to $2500 loan. Sometimes customers over time will evolve and say, I need more than $2500. But that's nothing that we actively promote or market. We certainly don't send out live checks any larger than a couple thousand dollars.

So, really through a lack of effort, other slices of the pie where we do put marketing dollars and resources to work are tending to outgrow the large installment category. You want to add anything to that, Don?

The only thing I would add to that is the acquisition last year in January of loans, and certainly the large loans were a big part of that acquisition, I believe we found that the underwriting for those loans allow just a little bit larger loan than we were accustomed to making. And so as we have gone through the renewal process for some of those customers, we have renewed them but probably a little bit less than what the original loans may have been. So that's another contributing factor and may see itself kind of tapering off.

Great. Thanks for the color on that, everybody. Take care.

Thank you.

John Hecht, Stephens.

Afternoon. Congrats on a good quarter and thanks for taking my questions. First one, if I recall, on a vintage basis, you were [treating] profitability right around the year mark -- going back a year from now when you opened a store.

With the multiproduct format that's expanding and the live check program, can you comment on any increase in productivity with the time to profitability? And then, just generally speaking, on how the vintages are doing at this part of the business cycle?

Sure, John, and this is Tom. You know, generally speaking, what we have said in past calls is that, historically, we have seen breakeven at the store level operating income line between months 8 and 12. And that certainly holds true in the most recent two years of de novo vintages.

We have seen some decline in that breakeven, which is a positive. And, again, in part, this relates back to the comments I had earlier about a so-called backfill de novo. So if you remember that concept, unlike a pure greenfield de novo where we go into a market where we have never done business, we don't know customers, customers don't know us -- in the backfill environment, we can actually seed a backfill de novo with existing current accounts from an adjacent and existing regional branch.

And it stands to reason that, if on day one we can open the doors of that backfill de novo with a few to several hundred existing accounts, it certainly accelerates the profitability of those branches. So I won't hazard a guess, but I would suggest that that is a net positive in terms of modeling the unit economics of our stores.

The other thing I would add that we have taken a concerted focus on, certainly in the last vintage, is really pre-marketing our stores prior to the opening with our live check programs. It used to be that on day one we would open the doors and start from scratch. You actually want to start 30 to 45 days before you expect to open the doors.

And we have gotten to the point with our marketing analytics where we are very precise in terms of how we really target households within our market catch basin. We want to get the doors swinging as close to grand opening day as possible. So I would simply comment, John, that that's been an added factor in helping improve time to breakeven and profitability.

With respect to these vintages, we do look back on a yearly basis. I would say we are encouraged by what we have seen of late and we continue to focus on efficient cost structure in building branches; timing in terms of opening them, and efficiency once the doors are open.

Okay. That's great color. Second question is on the topic of Georgia.

You mentioned it's a tactically important region for you to be in. You guys, generally speaking, will do a lot of demographic analysis to identify opportunities for store build and so forth. I mean, how big could Georgia be? And how important is it for, say, this year and maybe next in terms of store builds?

It's not important this year or next in terms of store builds. And, John, I said in my prepared comments, and I will reiterate here, we are a new participant to the state. As you have seen us do in other states that we have recently entered -- New Mexico, Oklahoma, and, four and five years ago, Tennessee and Alabama -- we dunk our toe in the pond; we take a very disciplined, methodical approach.

We want to make sure we fully understand unit economics, the operating environment, a brand-new regulatory and political and legislative climate, before we attempt to scale anything up. I would think that that will come certainly beyond a year, but there is no question from a demographic point of view, Georgia is a big opportunity for us. From our headquarters here in Greenville, we can reach millions of people in just the northern third of the state of Georgia.

So we are certainly doing a lot of the preparatory analytical work thinking about de novo opportunities. We are also thinking about potential small to midsize acquisitions in the state as well. But I think you will see us rolling out Georgia in the coming year or so in a very measured fashion.

Okay. And final question is, wonder if you could give us an update on the potential private securitization for the auto loan portfolio.

I really don't have any commentary on that. We expect to commence a process this month to select an agent or agents for a proposed transaction, but I am not in a position to talk about the potential scale or scope of that transaction.

I will say that the automobile securitization market remains very positive. There have been a number of recent comparable and precedent transactions that we think were well executed that profile and frame up well with what we are thinking about and, frankly, are very attractively priced. It has been a very resilient asset category and our sense is that there is strong demand on the part of institutional investors.

So we have talked and planned about this for more than a year. I hope to have more news that I can share with you within the next 30 days about our process.

I appreciate that. Just to give me a sense of -- and maybe Don could share some of this -- is from the time you select an agent until time to completion, I mean, is there any thoughts on that timeframe?

Yes, I think, just talking about averages it's easily six months to get a deal done. And a lot of things have to be completed along the way.

Okay. Great. Understood. And thanks for the color.

Thanks, John.

Bill Dezellem, Tieton Capital Management.

Thank you. You had addressed the large loans and the decline in receivable balance, and mentioned that it was the one area that you historically have not promoted or marketed.

With that in mind, do you have thoughts that are different going forward than what you have done in the past to promote that segment? Or do you believe it will continue to be a byproduct of the small installment loans?

Yes. Hi, Bill, this is Tom. I guess I will take that question. We really don't have any focused plans to actively promote the large loan category. I think your statement is correct. It is really more of a byproduct of the small installment customer who migrates up to a larger loan.

Thank you.

Sure.

David Scharf, JMP Securities.

Yes. Just a quick follow-up. Tom, are you able to provide a same-store growth figure, either sales and/or receivables, that excludes live check mailings, just to give us a sense for how the kind of traditional foot traffic customer is trending?

You know, at this time, we really (technical difficulty) -- it is mixed in with our loan management system and we don't yet have the ability to parse that out.

Got it. Thank you.

Sure.

Thank you very much. We have no further questions queuing for you. Now I'd like to turn the call over to management for closing remarks.

Well, thank you very much, and for all participants on the call, we very much appreciate your ongoing support for Regional. We are quite pleased with our first quarter. We think we are well launched for fiscal 2013 and we look forward to future quarterly calls where we can share our results with you. Thanks very much.

Thank you. Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.