Q1 2020 Earnings Call
Right right you will be with you. Shortly please be advised that your information will be treated in accordance with the Canadian personal information protection acts.
[music].
Hello Conference Center, how can I hope you.
Hi, just slight to be connected to regional management.
Absolutely I imagine nameplates.
Okay.
Name is Ken Sena DNA.
Thank you Ken your phone number please.
Non one 780 58496.
Thank you and finally your company now.
Era, Hey, I.E.R.A.
Hey are.
Perfect all kind of through the original.
Hi, Thanks, Yeah. Thank you for like.
Okay.
[laughter].
Customers face hardship to lower their interest rates and extend loan terms in order to lower their monthly payments.
In addition to support our customers, we've enhanced our system capabilities to process. These programs electronically over the phone in the branches by appointment and through our centralized teams.
More recently to make our customers feel more comfortable in interacting with US we've launched curbside service, which allows our customers to close loans made cast check electronic payments and execute payment deferral agreements without having to enter the branch.
Later this month, we plan to roll out a new program that will allow customers to close their lungs remotely.
We're also supporting our team members throughout the crisis, including by providing continued pay to those team members directly impacted by the virus and by expanding our paid time off policy, allowing team members the necessary flexibility to take care of their families and other personal needs. During these difficult times.
Our proven operating model, new custom credit score cards experience managing through natural disasters and support of our customers employees contributed to solid credit performance through the end of April building on a stable 30, plus day delinquency position of 6.6% as of March 30, Onest, we lowered our delinquency.
By 120 basis points in April ending a month with a 30 plus day delinquency rate of 5.4%.
We attribute the April delinquency reduction to our borrowers assistant programs as well as the government stimulus programs that have taken effect, while it's difficult to calculate the precise impacts attributable to these programs. We believe they are acting as an important bridge for our customers.
Approximately 5.6% on loans at our portfolio at the end of April had been renewed or deferred during the month under our borrower assistant programs up from an average of approximately 2.2% over the prior 12 months.
We specifically tailored our borrowers assistance programs to help our customers manage their debt obligations and maintain their credit worthiness during the health crisis.
At the same time in order to qualify for our borrower assistance programs. We also require that our customers remain engaged and active in repaying their loans, including for example by requiring at least one loan payment in the prior two months to qualify for a deferral.
The credit quality of our portfolio is clearly are Paramount focus during these challenging times and we are constantly monitoring the changing economic environment. While we've continued to originate new loans, we've done so with appropriately tightened lending criteria, we proactively tightened underwriting standards to reduce our exposure to high risk lending so.
Segments as the Kogan 19 crisis developed we are using our experience and leveraging proprietary data to serve our customers while maintaining at appropriately conservative portfolio risk management program.
In terms of new lending, we experienced a clear slowdown in demand in the branches from mid March into April as customers stayed home. However branch originations have begun to stabilize and we are beginning to see slight improvements off the lows in some states.
As indicated in the business update that we published in late March be paused, our direct mail and digital programs in the wake of rising unemployment claims and uncertainty around the level of government stimulus. We've since begun to test back into these channels at the higher end of our credit score card models, where we have significant room to absorb incremental law.
Mrs and still deliver acceptable risk adjusted returns.
Despite efforts by states to begin to reopen their economies, we expect our finance receivables to further liquidate in the second quarter.
Our financial position entering the crisis was never better we have a strong balance sheet. We continue to operate with a conservative leverage ratio and we have substantial capacity to absorb losses, while still maintaining positive stockholders' equity.
As of March 30, Onest are funded debt to equity and funded debt to tangible equity ratios were 3.09, and 3.21 to one respectively, combining our stockholders equity of 251.4 million and our allowance for credit losses of 142.4 million provides us with.
393.8 million of capacity to absorb losses on our portfolio.
This equates to 36% of our portfolio as of March 30 Onest.
In addition, our business model generates additional margin to absorb further losses over the past 12 months, our margin, which we defined as total revenue less general and administrative expenses and interest expense totaled 164.4 million or roughly 15% of our outstanding portfolio as of March 30 Onest.
This compares to a trailing 12 month NCL rate of 9.5%, providing us additional loss protection.
Additionally, we proactively diversified our funding over the past few years in anticipation of credit cycle shift and continue to maintain a strong liquidity profile.
As of May 4th we had 110 million of immediate liquidity, including 50 million of cash on hand, and 60 million of immediate availability to drawdown cash from our revolving credit facilities.
We believe we have enough liquidity to get us through all of 2021 without needing to access the securitization market.
In addition, as of quarter end, we had approximately 400 million of unused capacity on our various credit facilities subject to the borrowing base, allowing us substantial runway to fund future growth in some we believe we have more than adequate capacity to support the fundamental operations of our business throughout the coven 19 pandemic.
Turning back to the first quarter the fundamentals of our business remains strong both receivables in revenue increased by double digits compared to the first quarter of 2019.
Net finance receivables grew by 18.4% year over year, while revenues grew by 17.5% from the prior year period.
Credit performance remained relatively benign in the first quarter with an annualized net credit loss rate of 10.5% compared to 10.7% in the first quarter of 2019.
Our 30, plus day delinquency rate was a stable 6.6% as of March 30, Onest compared to 6.9% at the end of the first quarter last year.
Offsetting the solid topline was 23.9 million in additional provision for credit losses related to covert 19, as well, it's $1.3 million of additional unemployment insurance reserves, the latter which is reflected in our revenues. We based our koby 19 reserve provision on our own customized stress scenario.
That assumes unemployment will peak at 20% and a 34% drop in GDP from peak to trough in the second quarter with an economic recovery beginning sometime in the second half of the year.
The scenario also assumes that unemployment gradually improves dropping to 7% by mid 2021.
Our reserves also some modest benefits from our borrower assistance programs and from the impact of the government stimulus programs. The degree of offset from the latter remains to be seen but given the level of direct stimulus and expanded unemployment benefits. We believe most individuals who are receiving unemployment will on average are in the annualized equivalent of 35.
1000 per year over 39 weeks of unemployment for many of our borrowers we expect the expanded unemployment benefits that they will receive won't be as much as or more than the wages. They earned while working.
We believe the stimulus is an important bridge for our clients and for regional as a meaningful portion of our customers earn less than 35000 a year.
Given our strong balance sheet and liquidity position as well as our enhanced infrastructure, including custom scorecards and centralized collections. We remain confident in our overall business. We believe that we are well equipped to navigate through these challenging times.
Looking ahead, while we know that there will be some near term impacts to our business and the entire U.S. economy. As a result to covert 19, we continue to believe we have a bright future. Once the pandemic has passed and we returned to a semblance of normalcy, we expect to be well positioned to take advantage of the longer term opportunities that we.
Continued to see.
Namely to further enhance our customer experience, while continuing to grow our top and bottom lines in the meantime, we're keenly focused on credit and supporting our customers through this unprecedented challenge with that I'll now turn the call over to Mike to provide additional color on our financials.
Thanks, Rob and Hello, everyone I Hope you in your families are all safe and healthy.
I've been with regional since 2013 and over the past few weeks I've had the opportunity to catch up with all members of our management team as well as many of our shareholders and the investment community.
I look forward to working with all of you.
Continuing to contribute to regionals long term success.
First quarter results were a continuation of the strong financial performance achieved over the past five years.
I plan to discuss our GAAP financial results for the first quarter relative to the prior year I.
I also plan to present results adjusted for curve in 19 or non operating items.
We'll provide color on the transition to seasonal accounting and shared a key underlying macro economic assumptions used to build the curve at 19 portion of the reserves.
Lastly, I will drill down on our first quarter financial performance for loan growth revenue and expenses.
On page seven of the supplemental presentation, we provide the first quarter financial highlights.
Page eight illustrates results adjusted for Cobot, 19, and non operating items.
We generated a GAAP net loss of 6.3 million.
56 cents per diluted share.
Excluding cobot 19 reserves executive transition costs in the financial impact of our system outage in January regenerated, adjusted net income or 12.8 million or $1.14 cents per diluted share.
Looking to page 10.
We share a year over year comparison of each line item of RPL.
Clearly the 25.2 million of additional curve at 19 reserves had the largest impact on our financial results along with the 4.8 million non operating items.
Excluding covered 19, the increase in our provision for credit losses.
Roughly aligned with our year over year increase and finance receivables.
Page 11 displays our net finance receivables as of March 31st.
Year over year, our core loan products grew 22% or 192 million compared to the prior year period.
Average loans grew 39% and represented 57% of our total loan portfolio, while small loans grew 3% and made up 40% of the portfolio.
On a sequential basis total portfolio. So just under 3% liquidation, which is typical seasonality for the first quarter.
Although we had another quarter of consecutive year over year double digit portfolio growth April originations were well below prior year levels.
That's covered 19 began to affect the country in March we acted quickly to tighten underwriting and temporary pause direct mail and digital originations.
These prudent actions coupled with lower loan demand will lead to further portfolio liquidation in the second quarter.
As Rob mentioned, we had begun testing back into the direct mail and digital channels.
The higher end of our credit score card models.
Turning to page 12.
Total revenue increased 17% compared to the prior year period, driven by a 19% increase in average net finance receivables.
Interest and fee yield decreased 50 basis points from the prior year period as large loan growth outpaced higher yielding small loan growth, which is consistent with our market opportunity and our product mix strategy.
In the second quarter, we expect interest and fee yield to be approximately 150 basis points lower than the prior year period based on the ongoing change in the mix of our portfolio.
It's worth noting that 78% of our total portfolio has an if you are at or below 36% as of March 31st.
Total revenue yield decreased 40 basis points from the prior year period, primarily due to a 1.3 million dollar reserve for our unemployment insurance products related to elevated unemployment claims in late March.
Approximately 12% of the portfolio is covered by optional involuntary unemployment insurance.
Customers purchase this credit insurance product from us to help keep their loan payments on track even during an unforeseen unemployment event.
While our unemployment insurance claims are expected to remain elevated during 2020, the product does provide and offsetting benefit of reduced net credit losses and provides a bridge for our customers during or unemployment period.
Moving to page 13.
Our annualized net credit losses as a percentage of average finance receivables was 10.5% for the first quarter of 22 warning and improvement of 20 basis points from the prior year period.
We expect to see the impact from Cobot 19 on our net credit loss rate more prominently in the second half 2020.
Looking to page 14.
On the delinquency front or 30, plus day delinquency level at March 31st stood at 6.6%, a 30 basis point decline from the prior year period.
As of April Thirtyth, our 30, plus day delinquencies reduce further to 5.4% an incremental 120 basis point improvement from March.
Implementation of custom scorecards has positioned our portfolio to be resilient throughout economic cycles, and 69% of our core loan portfolio has now passed our scorecard underwriting criteria.
Internal borrower assistance programs, which had been part of our business for decades and the benefits of the federal stimulus have also contributed to low delinquency levels and solid credit performance and thus far.
In the near term we.
We continue to focus intently on servicing our existing portfolio and on tighter underwriting of originations.
Turning to page 15.
We ended 2019 with an allowance for credit losses of 62.2 million or 5.5% finance receivables.
We implemented Cecil accounting on January Onest, and increase the allowance to 122.3 million or 10.8% of net finance receivables.
During the first quarter of 2020, the allowance increased by 20.1 million, which included a 23.9 million allowance for credit losses related to the economic impact of over 19.
We ran several macro economic stress scenarios and our final Cecil forecast contemplated the following.
34% peak to trough GDP decline in the second quarter of 2020.
And unemployment increasing to 20% in the second quarter a 2020.
The declined to 7% by mid 2021.
The macroeconomic scenario was then adjusted for the potential benefits of the federal stimulus and internal borrower assistance programs.
Flipping to page 16, DNA expenses, a 46.2 million in the first quarter of 2020 were 8.1 million higher than in the prior year period, which was inline with our expectations.
The first quarter 2020 included 3.8 million of executive transition and system outage costs, along with increased expenses to support 2019 account growth and de Novo expansion.
Even with our ongoing investments in digital capabilities Denovo expansion and the corresponding account growth, we continue to perform well and managing our expenses as evidenced by the improvements in our operating expense and efficiency ratios.
As we anticipated additional portfolio liquidation in the second quarter, we proactively and prudently reduced branch in home office costs and indexed our expense base were portfolio changes during the economic disruption.
Including those cuts we expect DNA expenses in the second quarter to be about $5.5 million to $6 million higher year over year.
Most of the increases related to lower loan origination cost deferrals and higher expenses from 2019 account growth and de Novo expansion.
We expect that our second quarter operating expense ratio will increase by approximately 50 basis points compared to the prior year period.
Turning to page 17.
Interest expense of 10.2 million was 400000 higher in the first quarter of 2020, then in the prior year period, primarily reflecting higher average levels outstanding debt used to finance the strong growth in receivables offset by a lower cost of funds.
First quarter interest expense as a percentage of average net finance receivables was 3.6% a 50 basis point improvement from the prior year period, primarily due to reductions in the fed funds rate.
We are forecasting interest expense as a percentage of average finance receivables to be flat sequentially and expect interest expense to approximate 9.6 million in the second quarter.
Hey, Jason as a reminder of our strong funding profile.
The $130 million securitization that we completed in October 2019 added borrowing capacity and fixed rate funding at a weighted average coupon rate of 3.17% our best execution to date.
We are forecasting sufficient liquidity to get us through all of 2021 without needing to access the securitization market.
As of March 31st we had approximately 400 million unused capacity on our various credit facilities to fund future growth.
Our first quarter funded debt to equity ratio was 3.09 to one.
And as of May 4th we held 110 million of immediate liquidity.
Including 50 million of cash on hand, and 60 million of immediate availability to draw down cash from our revolving credit facilities.
That concludes my remarks, I'll now turn the call back over to Rob to wrap up.
Thanks, Mike.
We are grateful for all of our team members incredible effort as we manage through this unprecedented period now more than ever regional is playing an indispensable role for our customers to help guide them economically three this pandemic and as a nation begins to reopen in the weeks ahead, we will continue to be there for our customers and our communities.
We believe that the enhancements made to our balance sheet and our infrastructure over the last few years have made us more resilient and should ensure that we were able to navigate through the challenges provide our customers with the experience they have come to expect and ultimately emerge position to rebound quickly when the economy turns around.
Thank you again for your time in interest I'll now open up the call for questions. Operator could you. Please open the line.
Certainly we will now begin the question and answer session.
She joined the question Q you May Press Star then one on your telephone keypad you what was your tone acknowledging your request. If you are using a speakerphone. Please pick up your handset for pressing any keys to withdraw. Your question. Please press Star then Q well posture momentous colors join the queue.
Our first question comes from David Scharf JMP Securities. Please go ahead.
Yeah. Good afternoon. Thanks.
For taking my questions and.
And we appreciate all of the a disclosure, particularly the underlying assumptions behind the reserve levels.
HM.
Just wondering.
Obviously, there is an idea you know they're 99 unknowns for every one known at this point [laughter]. So we respect kind of the limits forecasting, but but but I am curious.
Yeah, just given where you are geographically concentrated.
Are you see you know we're under no illusions about obviously origination volumes returning in the second quarter, but nevertheless, I'm I'm curious are there any different behavioral patterns.
In terms of.
Inbound credit applications or.
Even people you know being willing to kind of switch to electronic payments more from from state to state and in particular.
It may be early but I'm curious if George is kind of experiment of opening up really has resulted in any discernible behavioral differences among those customers versus maybe some other markets you're in.
Yeah, Thanks, David and Great question, So we're monitoring our activity local level.
Knowing that the state you're going to open up on a uneven pace and even within stage. Some some local counties are going to open up it at a different pay so we're actually have the analytics to to look at that activity at the moment, it's still very early to trying to point to any trends you know we.
We did say obviously in the in the call here that we saw some early green shoots from the bottom in terms of originations in the second week of April it's too early to say, whether that's a trend.
We have seen the electronic payments or pick up versus where we were pretty crisis, which is indicative customers wanting to interact with us digitally.
So it's it's just too early to tell me now obviously, our two largest states or South Carolina, Texas and they seem to me a seem to be moving pretty quickly to open up.
So it's something we're going to be watching as we as we look forward going into though through the second quarter and third quarter, and obviously with strong analytic capabilities.
Hoping that we can see the trends emerging quickly and be able to take advantage of those opportunities.
As we said the economy's open up.
Okay got it and understood and maybe a follow up on the delinquency.
Performance.
From March to April I know.
You explain that it was in large part driven by both you know.
Stimulus kicking in as well as some of your assistance programs.
Just wanted to make sure I'm I'm clear.
In terms of the way the 30 plus day delinquency rate is presented.
In in your eyes is this should we be viewing this as a.
Hundred 20 basis point monthly reduction sequentially.
I I did that sort of normalized or as part of it just the fact that once you know some deferrals kick in programs.
No. That's there's a fair number of people that are in the early stage bucket that normally would've.
Well, the 30 plus will be across all buckets. So if you look at our deferral program, which as you can see from the percentages the amount of customers that are taking advantage of various borrow assistance programs, including deferrals is at 5.6% up from 2.2% on average.
Last year, so those deferral programs, some portion or in the pretty delinquency bucket, but the majority or in the 30 plus delinquency buckets. So that would bring you know customers back to a to current if they took advantage of those deferral programs. Similarly, you could government stimulus.
And it's hard to be very scientific as to what is driven you know the drop in delinquencies because as we asked for or except a deferral to keep the the customer engage they have to make at least one payment in two months now their ability to make that payment could be driven impart by the government.
Stimulus and that's the kind of science, it's a little hard to break apart as to where we are in terms of how much was due to government stimulus versus how much to the deferral program, but as of a point in time at the end of a month.
Our 30, plus delinquency buckets stood at the 5.4%.
Got it got it in NIM, Hey, you know what would just one last quick question on it in terms of.
Loan modifications, if if there are any or are there any permanent changes.
To the effective rates.
On any of the loans as part of the borrower assistance.
And should that impact so we.
Yeah. So we do you know some you know a loan modifications you know we did more deferrals in loan modifications in.
The month of April might may have more clarity on on the specifics, but in general we lowered the interest rate or extend the terms you know, it's it's to reduce the payment for for the customer might do you want to add anything.
Sure. Thanks for the question, David we have multiple borrower assistance programs and delinquent renewals are one of those programs and in many cases and more hardship circumstances, those delinquent renewals do come with rate modifications and term extensions to help the custom.
Immerse through certain time periods.
If the customer is revitalized overtime and they renew the loan they will go back into traditional market based loan terms, but we do carry a certain portion of the portfolio.
In all cases that have term extensions and rate modifications at the.
More of the stressed and of our modification programs.
Got it yeah, David I would just to add to this.
These programs are well oiled in time tested here at regional we obviously deploy them, particularly during times of the natural disasters and Hurricanes and yeah and they are proven to not only bridge the customer through difficult times, but also to reduce losses for for regional.
Understood great. Thank you very much.
[laughter].
Our next question comes from Ryan card with Jefferies. Please go ahead.
Hi, Good afternoon, guys and thanks for taking my question.
And so you just curious though in the bearing assistance programs that have gone into place over the past several weeks in mind said, you know that percentage of your loans have been modified or anything else programs.
And then beyond that you know you had noted and actually even thinking that stimulus small, namely a lot of your customers are under that annualized amount of but they'd be earning two day.
Today the carry back then so I'm curious you know what impacts are you seeing from the stimulus date. You noted the delinquencies are down 120 basis points, none of them up in April but.
Do you foresee an impact on origination by moving boarding you know what have you seen today just giving.
Consumer maybe flush with cash and that they're going to be reduced need.
I just didn't hear your change how you thought them trends going forward.
Yeah. Thanks, Ryan appreciate that so you know the percentage of our portfolio in terms of number of loans is 5.6% that have taken advantage of.
The borrowing assistance programs. So you know that's that's up as I said from a little over 2% historically in terms of the way forward and the impact of the stimulus you know look we saw like many others did when the initial Chuck said some increase in payments, but we do.
Didn't see from an overall standpoint through April year to date, and I'm really much of the material impact in payments hirschmann versus what we would have expected I'm now as we go forward and we think about loan demand you know there's a lot of factors that go into that that make it harder to judge you know what the trends are going to look like clearly.
You know first and foremost is you know stage starting to open up their economies.
Consumer confidence is starting to rebound those are all going to be factors like you know the government stimulus clearly is a benefit disagree. We don't know we're still evaluating how that stimulus is coming through in impacting on the credit line.
We believe it's having an impact but to the degree. It is it's you know it's going to [noise].
It's more art over science at this point in time.
Will that impact demand going forward is also difficult to say and there's just a lot of factors and a lot of unknown right now to to figure out how how that might impact demand I would say the biggest impact demand right. Now is is really just you know consumer confidence the economy's being shut down in.
People, you know not entering the branches or or seeking lending no loans at this time.
Yeah, no follow up to that you know you noted that.
Each loan and good things in terms of what you modify whether it'd be interesting reduction or extending the Tina.
And you know were then law on how do you how did the out of the customers request. The it modifications to the loan can they do it online portal I'd like you see with some banks or M&A.
The next call yielding they did acknowledge that branch all men and women lot as well like how do you make that decision.
Change changes.
Well. So you know, we we contact parent client claims through phone calls tax emails as well as one or on our customer portal to let them know what customer assistance programs are available to them. So.
So you know that that real life contact with them, particularly when we get them on the phone.
We assess what their needs are and you know what program a best fit their needs.
We're able to do the deferrals over the phone so they don't have to come into the branches.
And as indicated you know in ours or earlier in our call is we're starting to do remote loan closings for borrowers that are one of our new So you know we've got we've got the tools in place to to meet those needs of of the customers through these programs.
Thank you guys I very much for answering the question.
Thanks.
Our next question comes through John Rowan with Janney Montgomery Scott. Please go ahead.
Good afternoon guys.
Just two questions.
If in the absence of loan originations how fast is your long portfolio amortize down.
Yeah, that's not something we've ever disclosed in terms of the duration of the bar of our assets you know the tenor of the loans when we put them on at origination.
For small loans average 21 months in for large loans 44 months is the average at origination.
Okay. So it's safe to assume that the effective duration as well over a year than for the portfolio.
Yeah, I mean, that's that's sounds about right.
Okay.
I appreciate the information you guys gave about your your unemployment assumptions and it does it does seem as if you your assumptions are more aggressive than some of your peers, who have come out in basically said that they were using a 9% assumption would because that's what Moody's was forecasting at the time. They close their box can you give us an idea, but when you made that assumption how how.
Have you know how is that projection.
Changed because it does seem like you guys have included frankly, a later or more of this pandemic into the reserve here in Twoq. You then like said what we've seen from some of your peers and that's all for me if I do.
Yeah, I don't want to you know how speculate as to what decisions. Other made others made and clearly large banks or were similar in that range. You know the way we've looked at it is over the last six weeks, there's been 30 million of unemployment claims filed and if you just look at the trajectory.
That you're already heading towards the high teens on an unemployment rate and from a credibility standpoint, given that we're announcing earnings at six weeks after that level of filings. Yeah. I. Just don't think you know it would be prudent numerous do.
Not reflective reserve that is indicative of that level of unemployment at least at a at or near term pig.
Okay. Thank you.
Our next question comes from D., I know, but now with BTK research. Please go ahead.
Oh, good afternoon, and thank you for taking my questions.
Starting out on the the commentary that you made around the unemployment benefits being up about $39000 versus your yeah.
For your portfolio income rates being closer to 35 do you know are you looking at that on your state exposure on a nationwide business.
Yes, so on that one be the number that we're we've been referring to 35000 annualized is the average a unemployment benefit at the state level plus the special $600 kicker for the first 16 weeks at the federal level.
Plus the $1200 stimulus Jack if you're an individual and obviously if you're a married couple or family for that stimulus check comes out, but we didn't factor that in.
When you analyze annualize that number I think it's 29000 it comes to 35000 annualized and as we said in a meaningful portion of our our customer base earns less than 35000. So some portion we aren't going to make more than if they were employed.
That makes a lot since then thinking about on the origination side.
Obviously, you give great April data.
Within April are you seeing yard inflection and there was any kind of trajectory on a week to week basis as you kind of exit April April versus earlier in the month.
What I'd tell you is you know as I said earlier that you know the second week of April was probably the low point we've seen.
Some improvement in the second half of April.
You know the how that looks going forward as as I said depends on a lot of different factors now one thing that you know we noted is we did pause our direct mail a program and digital originations.
We have now restarted those programs after adjusting to the higher credit scores for mailing and still achieving appropriate risk you know risk adjusted returns.
So we should see those channels pick back up you can tell in April it was and is very small for those channels.
So that should provide some.
Some tailwind for us.
Obviously, we're not we're not mailing it's the same level as we would've been in the past because we've tightened credit box, but but that'll be part of the opportunity and we're going to learn from those mailings and from those digital originations and so as we see learnings from that we'll have opportunities 'em. We expect later in years.
Let me picks up.
That makes a lot of sensors have one minor follow up to that <unk> is there a good sense of thinking. It was you know you actually tightened your credit box do you have a sense of how much of your originations in kind of the normalized environment before this cycle would have been cut out buyer.
Tightening versus the demand.
Yeah, we're not putting a a number on that what I would say is we're just being prudent to make sure that you know where we tightened a we're doing in a way that what we are originating is gonna do whatever you know appropriate risk adjusted returns given the distressed environment.
That makes a lot of sensible thanks for taking the time answering my questions I will jump back if you felt thanks.
Appreciate it.
Our next question comes from Bill Dezellem with T. a time. Please go ahead.
Oh, Thank you a group of questions and I'd like to start with the 30 million a branch originations in a in April I do those include renewals or are those all new loans.
[noise] now that would be that would be renewals as well.
Okay. Thank you and then the approval rate that you have a experienced in April of this year versus April of last year, how does that compare.
Yeah, It's bill so that's something we we've historically disclosed I don't think we're seeing a material change in an approval rates as much is just.
Lower demand at this point.
So your your tighten credit standards, having to haven't had a meaningful impact in and reducing originations then.
Well I think you've got to look into two different ways right. So on the digital side and the and and the direct mail program clearly.
It was a let me call Oh, you know real direct tight many because we actually those space until we could recalibrate decide how we wanted to enter back yet on the branch side.
You know the tightening started you know a in the month of of April. So you may not see the full impact out of the tightening at this point in time.
That's a that's helpful and then I'd like you know pontificate, if you would on onto your one day overdo it.
They are down at the end of.
As of March.
And the question is is do you think that there's anything to do with customer simply being unemployed and home.
And therefore, more attentive to their bills and less distracted.
And and actually paying on time for that reason and if it's something different why do you think youre out here, one day and over past dues.
Phil.
Look I think it can be a couple of things right. There were some deferrals in the a one to 29 day bucket I think it can be you know as I said earlier. The government stimulus you can have people that now are more flush with cash in and pay down a in didnt slip.
Further like they might have done historically, there's there's probably lots of factors going into that that you know we're still analyzing.
Great. Thanks for taking the questions.
Great. Thanks, Phil.
This concludes the question and answer session.
We'd like to turn the conference back over to Rod back for any closing remarks.
No I'm a thanks, thanks, operator, and thanks, everyone for joining as I said earlier, you know resolves never been in a stronger position entering in to this crisis with our our strong balance sheet and strong liquidity profile, we do see you know.
Well plenty of opportunities post the the crisis. We are you know focused on all the things we've talked about our customer collections credit quality, managing our cost and ultimately preserving capital, but we are investing in digital and looking to position ourselves for the phone.
This crisis when the economy rebounds so.
I appreciate all your questions and.
Look forward to talking further again.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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