Q1 2024 Regional Management Corp Earnings Call
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Operator: Greetings and welcome to the Regional Management First Quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Garrett Edson. Please go ahead.
Greetings and welcome to the regional management first quarter 'twenty 'twenty four earnings call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star Zero I can tell.
Phone keypad as a reminder, this conference is being recorded it is now my pleasure to introduce your host Garrett Edson. Please go ahead.
Garrett Edson: 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. 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.
Garrett Edson: 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 may be found on our website at regional management Dot com before we begin our formal remarks I will direct you to page two of our supplemental presentation, which contains important disclosures concerning forward looking statements and the use of non-GAAP financial measures part of our discussion.
Garrett Edson: They 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.
Garrett Edson: 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 statement. 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 on 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.
Garrett Edson: Payments are not guarantees of future performance and therefore, you should not place undue reliance upon them were for 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 reconciliation of these measures to the most.
Garrett Edson: Also, our discussion today may include references to certain non-GAAP measures. 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. I would now like to introduce Rob Beck, President and CEO of Regional Management Corp.
Garrett Edson: Operable GAAP measures can be found within our earnings announcement or earnings presentation and posted on our website at regional management Dot Com I would now like to introduce Rob Beck, President and CEO of regional Management Corp.
Garrett Edson: Thanks, Garrett, and welcome to our first quarter 2024 earnings call. I'm joined today by Harpreet Rana, our Chief Financial Officer.
Robert William Beck: Thanks, Garrett and welcome to our first quarter 2024 earnings call I'm joined today by <unk> <unk>, Our Chief Financial Officer on this call will cover our first quarter financial and operating results.
Robert William Beck: On this call, we'll cover our first quarter financial and operating results, test the credit performance of our portfolio, and share our expectations for the second quarter and the balance of the year. We had a very strong start to 2024, as we outperformed our outlook on both the top and bottom. For the quarter, we generated net income of $15.2 million and diluted earnings per share of $1.56.
Robert William Beck: The credit performance of our portfolio and share our expectations for the second quarter and the balance of the year.
Robert William Beck: We had a very strong start to 2024 as we outperformed our outlook on both the top and bottom lines for the quarter. We generated net income of $15 2 million and diluted earnings per share of $1 56, our portfolio liquidated by 27 million in the quarter in line with our expectations and consistent with normal seasonal trends the.
Robert William Beck: Our portfolio liquidated by $27 million in the quarter, in line with our expectations and consistent with normal seasonal trends. The increased pricing that we've implemented over the past several quarters and the growth in our higher-margin small loan portfolio drove total revenue yield to 32.8 percent, which was 80 basis points better than the prior year and contributed to record quarterly revenue of $144 million. We've also continued to aggressively manage our expense base while still investing in our growth and strategic initiatives, resulting in a sequential improvement in our operating expense ratio of 110 basis points. In sum, we're very pleased with our first quarter results, and I continue to be very proud of the way that our team members are navigating through the current environment.
Robert William Beck: <unk> pricing that we've implemented over the past several quarters and the growth in our higher margin small loan portfolio drove total revenue yield to 32, 8%, which was 80 basis points better than prior year and contributed to record quarterly revenue of $144 million.
Robert William Beck: We've also continued to aggressively manage our expense base, while still investing in our growth and strategic initiatives, resulting in a sequential improvement in our operating expense ratio of 110 basis points.
Robert William Beck: And so we're very pleased with our first quarter results and I continue to be very proud of the way that our team members are navigating through the current environment.
Robert William Beck: We remain cautiously optimistic about the direction of the economy and the credit performance of our portfolio. We continue to maintain tighter underwriting guidelines and thoughtfully grow our high-margin small loan portfolio, which has grown by nearly 50 million, or 10 percent, since the middle of last year. We expect to continue to grow our small loan book in a measured way, as the returns are very strong and more than make up for the higher loss rates on this portfolio.
Robert William Beck: We remain cautiously optimistic about the direction and the credit performance of our portfolio.
Robert William Beck: We continue to maintain tighter underwriting guidelines and thoughtfully grow our high margin small loan portfolio, which has grown by nearly $50 million or 10% since the middle of last year.
Robert William Beck: We expect to continue to grow our small loan book in a measured way as the returns are very strong and more than make up for the higher loss rates on this portfolio.
Robert William Beck: Overall, we're seeing the benefits of our prudent underwriting and our credit metrics despite the growth of those loans with higher risk adjustment. We again originated roughly 60% of our loans to our top two risk ranks in the first quarter.
Robert William Beck: Overall, we're seeing the benefits of our prudent underwriting and our credit metrics. Despite the great those loans with higher risk adjusted margins.
Robert William Beck: We again originated roughly 60% of our loans to our top two risk ranks in the first quarter. We ended the first quarter with a 30 plus day delinquency rate of seven 1%, a 10 basis points improvement from the first quarter of last year.
Robert William Beck: We ended the first quarter with a 30-plus day delinquency rate of 7.1%, a 10 basis point improvement from the first quarter of last year. Our auto-secured portfolio also continued to grow, ending the quarter at 9.2% of our total portfolio, up from 2.1% three years ago. The credit performance of these loans has been very strong, with a 30-plus day delinquency rate of 2.1% as of the end of the quarter. In addition, our front book continues to perform in line with our expectations despite macroeconomic stress.
Robert William Beck: Our auto secured portfolio has also continued to grow ending the quarter at nine 2% of our total portfolio up from two 1% three years ago.
Robert William Beck: The credit performance of diesel has been very strong with a 30 plus day delinquency rate of two 1% as of the end of the quarter.
Robert William Beck: In addition, our front book continues to perform in line with our expectations. Despite macroeconomic stress. The front book represented 78% of the portfolio at the end of the first quarter and had a 30 plus day delinquency rate of six 5% compared to nine 8% and our back book back book accounted for 25% of our 30 plus day delinquent accounts.
Robert William Beck: The front book represented 78% of the portfolio at the end of the first quarter and had a 30-plus day delinquency rate of 6.5%, compared to 9.8% in our back book. The back book accounted for 25% of our 30-plus day delinquent accounts, despite representing only 18% of the portfolio at quarter one. By the end of 2024, we expect the back book to represent only 8 to 10% of the total portfolio.
Robert William Beck: Spite, representing only 18% of the portfolio at quarter end by the end of 'twenty 'twenty four we expect the back book to represent only 8% to 10% of the total portfolio.
Robert William Beck: Compared to the back book, the front book continues the season at lower levels of loss, which should benefit our 2025 results. Our net credit losses also came in better than out. Despite indicators of improving credit performance within our portfolio, we marginally increased our loan loss reserve rate to 10.7 in the quarter in light of more recent mixed economic indicators, including inflation rates that remain elevated. We believe this approach is appropriate during this time of relative economic uncertainty.
Robert William Beck: Compared to the back book Front book continues to season at lower level, so loss, which should benefit our 2025 results.
Robert William Beck: Our net credit losses also came in better than outlook, despite indicators of improving credit performance within our portfolio. We marginally increased our loan loss reserve rate to 10, 7% in the quarter in light of more recent mixed economic indicators, including inflation rates that remain elevated we believe this approach is appropriate during this time of relative.
Robert William Beck: Amid uncertainty.
Robert William Beck: While inflation and interest rates remained higher than expected we are maintaining our full year guidance. The strong start to the year provides us with protection on the bottom line should macro conditions, namely inflation and interest rates remain elevated for longer.
Robert William Beck: While inflation and interest rates remain higher than expected, we are maintaining our full-year guidance. The strong start to the year provides us with protection on the bottom line should macro conditions, namely inflation and interest rates, remain elevated for a prolonged period. In addition, our outperformance on G&A expenses in the first quarter, part of which is due to timing, gives us flexibility to invest more in marketing in the back half of the year to achieve better results in 2025, assuming the economic conditions are conducive to faster growth. Against the current economic backdrop, we will continue to operate based on the guiding principles that I've laid out for you.
Robert William Beck: In addition, our outperformance on G&A expenses in the first quarter part of which was due to timing it gives us flexibility to invest more in marketing in the back half of the year to benefit 2025 results, assuming the economic conditions are conducive to faster growth.
Robert William Beck: Against the current economic backdrop, we will continue to operate based on the guiding principles that I've laid out previously.
Robert William Beck: First, we're committed to our core business of small and large loan installment lending. We have a long history and runway of controlled profitable growth with these products, and will continue to originate loans where we have a high degree of confidence in meeting our return hurdle. We're always keeping a close eye on economic data and its impact on our consumers. Recent reports indicate a strong labor market and real wage growth. However, we continue to observe stress in certain segments of our portfolio caused by continued inflationary pressure.
Robert William Beck: First we're committed to our core business of small and large loan installment lending we have a long history and runway of controlled profitable growth with these products will continue to originate loans, where we have a high degree of confidence in meeting our return hurdles.
Robert William Beck: We're always keeping a close eye on economic downturn and its impact on our consumer base. Recent reports indicate a strong labor market and real wage growth. However, we continue to observe stress in certain segments of our portfolio caused by continued inflationary pressures give.
Robert William Beck: Given the economic uncertainty, at this time, we remain comfortable prioritizing credit quality over loan growth. As a result, we expect to remain highly selective in making loans within our tight credit box, at least in the near term.
Robert William Beck: Given the economic uncertainty at this time, we remain comfortable prioritizing credit quality over loan growth as a result, we expect to remain highly selective in making loans within our tight credit box at least in the near term.
Robert William Beck: By expanding to eight new states and increasing our addressable market by more than 80% since 2020, we have ample opportunity to take advantage of high levels of consumer demand to drive quality portfolio growth while remaining selective in approving borrowers under our more conservative underwriting criteria. Where appropriate, we'll also continue to pursue opportunities to increase pricing and expand our margins, including through growth in our small loan portfolio, a strategy that has been effective in recent quarters in improving our revenue yield.
Robert William Beck: By expanding to eight new states and increasing our addressable market by more than 80%. Since 2020, we have ample opportunity to take advantage of high levels of consumer demand to drive quality portfolio growth, while remaining selective improving borrowers under our more conservative underwriting criteria.
Robert William Beck: Where appropriate we will also continue to pursue opportunities to increase pricing and expand our margins including through growth in our small loan portfolio. Our strategy that has been affected in recent quarters and improving our revenue yield.
Robert William Beck: As we've always done, we'll manage the business with a goal of maximizing direct contribution margin and bottom-line results. Second, we'll continue to meticulously manage expenses while also investing in our core business in a way that improves our operating efficiency over time and ensures our long-term success and profitability. We continue to allocate capital to improve our capabilities and pursue our strategic initiatives, including several important technology, digital, and data and analytics projects that are key to the modernization and evolution of our platform and omni-channel business.
Robert William Beck: As we've always done we'll manage the business with a goal of maximizing direct contribution margin and bottom line results.
Robert William Beck: Second we'll continue to meticulously manage expenses, while also investing in our core business in a way that improves our operating efficiency over time and ensures our long term success and profitability, we continue to allocate capital to improve our capabilities and pursue our strategic initiatives, including several important technology digital and data and analytic.
Robert William Beck: Projects that are key to the modernization and evolution of our platform and omni channel business.
Robert William Beck: These investments are critical to achieving our strategic objectives and will create additional sustainable growth, improve credit performance, and greater productivity, operating efficiency, and leverage over the long term. Finally, we will maintain a strong balance sheet with ample liquidity and borrowing capacity, diversified and staggered funding sources, and a sensible interest rate management strategy. As of the end of the first quarter, we had $478 million of unused capacity on our credit facilities, and 81% of our debt was at a fixed rate with a weighted average coupon of 3.7% and a weighted average revolving duration of one year.
Robert William Beck: These investments are critical to achieving our strategic objectives and will create additional sustainable growth improved credit performance and greater productivity operating efficiency and leverage over the long term.
Robert William Beck: Finally, we will maintain a strong balance sheet with ample liquidity and borrowing capacity diversified and staggered funding sources and a sensible interest rate management strategy.
Robert William Beck: As at the end of the first quarter, we had $478 million of unused capacity on our credit facilities and 81% of our debt was at a fixed rate with a weighted average coupon of three 7% and a weighted average revolving duration of one year.
Robert William Beck: Later this year, we expect to access the securitization market. However, given our significant existing liquidity and borrowing capacity, we have the flexibility to go to market when conditions are most advantageous. In summary, we'll continue to stay focused on making fundamentally sound business decisions in line with these key principles. As a result, we're well positioned to operate effectively through the current economic cycle. Though we remain focused on growth at this time, we stand ready to make adjustments to our underwriting and growth strategy based on changes in our credit performance and the macroeconomic environment.
Robert William Beck: Later this year, we expect to access the securitization market. However, given our significant existing liquidity and borrowing capacity, we have the flexibility to go to market when conditions are most advantageous.
Robert William Beck: In summary, we'll continue to stay focused on making fundamentally sound business decisions in line with these key principles, we are well positioned to operate effectively through the current economic cycle.
Robert William Beck: We remain measured on growth at this time, we stand ready to make adjustments to our underwriting and growth strategy based on changes in our credit performance and the macroeconomic environment.
Robert William Beck: With ample liquidity significant borrowing capacity and a large addressable market, we have the ability to lean back into growth when justified by the economic conditions.
Robert William Beck: With ample liquidity, significant borrowing capacity, and a large addressable market, we have the ability to lean back into growth when justified by the economic conditions. I'll now turn the call over to HARP to provide additional color on our first quarter results as well as our second quarter.
Robert William Beck: I'll now turn the call over to Mark to provide additional color on our first quarter results as well as second quarter guidance.
Harpreet Rana: Thank you, Rob, and hello everyone. I'll now take you through our first quarter results in more detail and provide you with an updated outlook for the second quarter. On page four of the supplemental presentation, we provide our first quarter financial highlights. As Rob noted, we generated strong net income of $15.2 million, or diluted earnings per share of $1.56, driven by solid revenue growth and continued expense discipline. We also exited the quarter with a strong balance sheet, healthy loan loss reserves, and an improved credit profile.
Mark: Thank you Robin Hello, everyone I'll now take you through our first quarter results in more detail and provide you with an updated outlook for the second quarter on page four of the supplemental presentation. We provide our first quarter financial highlight as Rob noted we generated strong net income of $15 2 million or diluted earnings per share of $1 56, driven.
Robert William Beck: Solid revenue growth and continued expense discipline.
Robert William Beck: We also exited the quarter with a strong balance sheet healthy loan loss reserve and an improved credit profile.
Harpreet Rana: Turning to page 5, demand remained strong in the quarter, and we maintained our cautious approach to underwriting, with an emphasis on higher-margin segments. Total originations increased 8% year-over-year. By channel, branch and direct mail originations increased by 2% and 30%, respectively, while digital originations were 9% lower year-over-year.
Robert William Beck: Turning to page five demand remained strong in the quarter and we maintained our cautious approach to underwriting with an emphasis on higher margin.
Robert William Beck: Total originations increased 8% year over year by channel branch in direct mail originations increased by 2% and 30% respectively. While digital originations were 9% lower here over here.
Harpreet Rana: As we've consistently noted, we've deliberately decelerated origination since 2022 as we appropriately balance growth with credit quality and higher returns. Page 6 displays our portfolio growth and our product mix through the first quarter. We closed the quarter with net finance receivables of roughly $1.74 billion, down $27 million from year-end due to the normal seasonal liquidation expected in the quarter. As of the end of the first quarter, our large loan book comprised 72% of our total portfolio.
Robert William Beck: As we've consistently noted we've deliberately decelerated origination 2022 as we appropriately balance growth with credit quality and higher return.
Robert William Beck: Page six displays our portfolio growth in our product mix through the first quarter.
Robert William Beck: During the quarter with net finance receivables, the Berkley 174 billion down 27 million from yearend due to the normal seasonal liquidation of expected in the quarter.
Robert William Beck: As of the end of the first quarter, our large loan book comprised 72% of our total portfolio. In addition, slightly under 84% of our portfolio carried an APR at or below 36% compared to just over 86% of our portfolio a year ago.
Harpreet Rana: In addition, slightly under 84% of our portfolio carried an APR at or below 36%, compared to just over 86% of our portfolio a year ago. As Rob previously noted, we've purposely leaned into growth of higher-margin small loans in recent quarters, as they will support future revenue yield, offsetting increasing funding costs, and exceed our return hurdles despite higher expected net credit losses on these particular segments. Looking ahead, we expect our ending net receivables in the second quarter to increase by approximately $30 to $35 million as we exit the tax season and begin to re-grow our portfolio.
Robert William Beck: As Rob previously noted, we purposefully leaned into growth of higher margin small loans in recent quarters as they will support future revenue yield offsetting increasing funding cost and exceed our return hurdles. Despite higher expected credit losses on these particular segment.
Robert William Beck: Looking ahead, we expect our ending net receivables in the second quarter to increase by approximately $30 million to $35 million as we exit tax season and begin to re grow our portfolio.
Harpreet Rana: During the quarter, we'll continue to monitor the economy and focus on originating loans that maximize our margins. As economic circumstances dictate, we're prepared to further tighten our underwriting or lean back into growth, either of which could impact ending net receivables. Turning to pages 7 and 8, total revenue grew to a record $144 million in the first quarter, up 7% from the prior year period.
Robert William Beck: During the quarter will continue to monitor the economy and focus on originating loans that maximize our margin and economic circumstances dictate we're prepared to further tighten our underwriting or lean back into growth either of which could impact ending net receivables.
Robert William Beck: Turning to pages seven and eight total revenue grew to a record 144 million in the first quarter up 7% from the prior year period, our total revenue yield an interesting field with 32, 8% and 29, 3% respectively.
Harpreet Rana: Our total revenue yield and interest and fee yield were 32.8% and 29.3%, respectively. Consequently, sequentially, total revenue yield was up 50 basis points, exceeding our outlook. Year over year, our total revenue yield was up 80 basis points, due in large part to our pricing increases on newer loans and growth in our higher-margin small loan portfolio. In the second quarter, we expect a roughly 50 basis point sequential decline in total revenue yield, primarily due to higher expected interest income reversals from net credit losses in the quarter. As credit outcomes improve in parallel with an improving economic environment, we would expect to see benefits to yield.
Robert William Beck: Sequentially total revenue yield about 50 basis points exceeding our outlook year over year. Our total revenue yield was up 80 basis points due in large part to our pricing increases on newer loans and growth in our higher margin small loan portfolio.
Robert William Beck: In the second quarter, we expect a roughly 50 basis point sequential decline in total revenue yield primarily due to higher expected interest income reversal from net credit losses in the quarter.
Robert William Beck: As credit outcomes improved in parallel with an improving economic environment, we would expect to see benefits to yield moving to page nine our delinquency and net credit losses were roughly in line with our outlook. Despite a slower start to the tax season and continued inflationary pressure, our 30 plus day delinquency rate at quarter end was seven.
Harpreet Rana: Moving to page 9, our delinquency and net credit losses were roughly in line with our outlook, despite a slower start to the tax season and continued inflationary pressure. Our 30-plus day delinquency rate as a quarter ended at 7.1%, up sequentially, but an improvement from 7.2% at the end of the first quarter of 2023. Our net credit losses, at $46.7 million, were modestly better than our first quarter outlook, while we recorded an annualized net credit loss rate of 10.6%. Page 10 provides additional information on the performance of our front book and back book.
Robert William Beck: 1% sequentially, but an improvement from seven 2% at the end of the first quarter of 2023.
Robert William Beck: Our net credit losses of $46 7 million were modestly better than our first quarter outlook well, we recorded an annualized net credit loss rate of 10, 6%.
Robert William Beck: Page 10 provides additional information on the performance of our front book and back book.
Harpreet Rana: The front book ended the quarter at 78% of our total book, compared to 73% at the end of 2023 and represents 71% of our 30 plus day delinquency. Our backbook, which represents 18% of our portfolio, accounts for 25% of our 30-plus day delinquency. Our front book and backbook reserve rates are 10.1 and 14.1%, respectively. In the second quarter, we expect our delinquency rate to improve, consistent with seasonal patterns.
Robert William Beck: It's not book ended the quarter at 78% of our total book compared to 73% at the end of 2023 and represents 71% of our 30 plus day delinquency, our back book, which represents 18% of our portfolio accounts for 25% of our 30 plus day delinquency, our front book and back book Reserve rates are 10.
Robert William Beck: One and 14, 1% respectively in.
Robert William Beck: In the second quarter, we expect our delinquency rate to improve consistent with seasonal patterns. In addition, we anticipate that our net credit losses will be approximately 55 million in the second quarter as more of a back book loans fall pillar.
Harpreet Rana: In addition, we anticipate that our net credit losses will be approximately 55 million in the second quarter, as more of our backbook loans roll to loss. Turning to page 11, we increased our first quarter allowance for credit losses reserve rate by 10 basis points to 10.7 percent, slightly above our outlook due to macroeconomic considerations. As of quarter end, the allowance was $187 million and assumes a 2024 year-end unemployment rate of 5.8 percent.
Robert William Beck: Turning to page 11, we increased our first quarter allowance for credit losses reserve rate by 10 basis points to 10, 7%.
Robert William Beck: Slightly above our outlook due to macroeconomic consideration.
Robert William Beck: As of quarter end, the allowance of 187 million and assumes the 'twenty 'twenty four and year end unemployment rate of five 8%.
Harpreet Rana: Looking ahead, we expect to maintain a loan loss reserve rate of 10.5 percent at the end of the second quarter, which would be a 20 basis point reduction from the end of the first quarter, subject, of course, to economic conditions. Slipping to page 12, we continue to closely manage our spending while still investing in our capabilities and strategic initiatives. Our G&A expenses of $60.4 million in the first quarter were substantially better than our outlook, partially due to timing.
Robert William Beck: Looking ahead, we expect to maintain a loan loss reserve rate of 10, 5% at the end of the second quarter, which would be a 20 basis point reduction from the end of the first quarter subject of course to economic condition.
Robert William Beck: Flipping to page 12, we continue to closely manage our spending while still investing in our capabilities and strategic initiatives.
Robert William Beck: Our G&A expenses of 64 million in the first quarter were substantially better than our outlook, partially due to timing our annualized operating expense ratio was 13, 7% in the first quarter 30 basis points better than the prior year period, and our first quarter 2024 year over year revenue growth Okay for G&A.
Harpreet Rana: Our annualized operating expense ratio was 13.7% in the first quarter, 30 basis points better than the prior year period, and our first quarter 2024 year-over-year revenue growth outpaced our G&A expense growth by 7.9%. We continue to aggressively manage our personnel expense, and as Rob noted, our beat on G&A expenses in the first quarter gives us the ability to spend more on marketing in the back half of the year to benefit 2025 results, assuming the economic conditions are right. We'll continue to manage our spending closely moving forward.
Robert William Beck: Hence growth by seven nine times, we continue to aggressively manage our personnel expense and as Rob noted our beat on G&A expenses in the first quarter gives us the ability to spend more in marketing in the back half of the year to benefit 2025 result, assuming the economic conditions are right. We'll continue to manage our spending closely moving forward.
Harpreet Rana: In the second quarter, we expect G&A expenses to be approximately $62 million to support our larger portfolio and continued targeted investments in our operations. Turning to pages 13 and 14, our interest expense for the first quarter was $17.5 million, or 4% of average net receivables on an annualized basis, slightly better than our outlook on lower average debt and lower rates. Despite the sharp increase in benchmark rates since early 2022, we've experienced a comparatively modest increase in interest expense as a percentage of average net receivables, thanks to our fixed-rate debt issued through our asset-backed securitization program.
Robert William Beck: In the second quarter, we expect G&A expenses to be approximately 62 million to support a larger portfolio and continued targeted investments in our operations.
Robert William Beck: Turning to pages 13, and 14, our interest expense for the first quarter was $17 5 million or 4% of average net receivables on an annualized basis.
Robert William Beck: Better than our outlook on lower average debt and lower rates.
Robert William Beck: The sharp increase in benchmark rates since early 2022, we've experienced a comparatively modest increase in interest expense as a percentage of average net receivables. Thanks for fixed rate debt issued through our asset backed securitization program.
Harpreet Rana: As of March 31st, 81% of our debt is fixed rate with a weighted average coupon of 3.7% and a weighted average revolving duration of one year. In the second quarter, we expect interest expense to be approximately $18.5 million, or 4.2% of average net receivables. As our 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.
Robert William Beck: As of March 31, 81% of our debt is fixed rate with a weighted average coupon of three 7% and a weighted average revolving duration of one year.
Robert William Beck: In the second quarter, we expect interest expense to be approximately $18 5 million or four 2% of average net receivables.
Robert William Beck: As our 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.
Harpreet Rana: We also have a strong balance sheet and continue to maintain ample liquidity to fund our growth. We have $187 million of lifetime loan loss reserves, as well as $336 million of stockholders' equity, a little over $34 in book value per share. As of the end of the first quarter, we had $478 million of unused capacity on our credit facilities and $169 million of available liquidity, consisting of unrestricted cash on hand and immediate availability to draw down on our revolving credit facilities.
Robert William Beck: We also have a strong balance sheet continue to maintain ample liquidity to fund our growth, we had $187 million of lifetime loan loss reserves as well as $336 million of stockholder exactly a little over $34 and book value per share.
Robert William Beck: At the end of the first quarter, we had 478 million of unused capacity on our credit facility and 169 million of available liquidity.
Robert William Beck: This thing of unrestricted cash on hand, and immediate availability to draw down on our revolving credit facility.
Harpreet Rana: Our debt has a staggered revolving duration, stretching out to 2026, and since 2020, we've maintained a quarter-end unused borrowing capacity of between roughly $400 million and $700 million, demonstrating our ability to protect ourselves against short-term disruptions in the credit market. Our first quarter funded debt-to-equity ratio remained a conservative 4.0 to 1. We have ample capacity to fund our business.
Robert William Beck: That has staggered revolving duration stretching out to 2020 and since 2020, we've maintained a quarter and unused borrowing capacity of between roughly $400 million and 700 million demonstrating our ability to protect ourselves against short term disruptions in the credit market.
Robert William Beck: First quarter funded debt to equity ratio remained a conservative four point out to them with ample capacity to fund our business.
Harpreet Rana: We incurred an effective tax rate of 23.7% in the first quarter, slightly lower than our guidance due to discrete tax benefits related to equity compensation. For the second quarter, we expect an effective tax rate of 24% to 25%, 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 second quarter. The dividend will be paid on June 12, 2024, to shareholders of record as of the close of business on May 22, 2024.
Robert William Beck: We incurred an effective tax rate of 23, 7% in the first quarter slightly lower than our guidance due to discrete tax benefits related to equity compensation.
Robert William Beck: For the second quarter, we expect an effective tax rate of 24% to 25% prior to discrete items.
Robert William Beck: We also continue to return capital to our shareholders. Our board of directors declared a dividend at <unk> 30 per common share for the second quarter.
Robert William Beck: The dividend will be paid on June 12, 2024 to shareholders of record as of the close of business on May 22024.
Harpreet Rana: Finally, I'll note that we provide a summary of our second quarter 2024 guidance on page 15 of our earnings supplement, and we maintained our full year 2024 guidance. As a reminder, our quarterly net income typically is at its lowest point in the second quarter of each year, and we expect 2024 to be no different. That concludes my remarks. I'll now turn the call back over to Rob.
Robert William Beck: Finally, I'll note that we provide a summary of our second quarter 2020 guidance on page 15 of our earnings supplement and we maintained our full year 2024 guidance as a reminder, our quarterly net income typically is at its lowest point in the second quarter each year and we expect 2024 to be no different that concludes my run.
Robert William Beck: I'll now turn the call back over to Robyn.
Robert William Beck: Thanks, Hart. Before we get into Q&A, I'd like to take a moment to thank the regional team for their hard work, commitment to our hard-working customers, and delivery of outstanding results in the first quarter. We had an excellent start to the new year, and we look forward to continuing the momentum in the second quarter and beyond. While we remain conservative in our underwriting at this time, we're cautiously optimistic about the direction of the economy, and we're well-positioned to continue our growth and increase our market share when the conditions are right.
Robyn: Thanks Art before we get into Q&A I'd like to take a moment to thank the retail team for the hard work commitment to our hard working customers and delivery of outstanding results in the first quarter we had.
Robyn: On an excellent start to the new year, and we look forward to continuing the momentum in the second quarter and beyond.
Robyn: While we remain conservative on our underwriting at this time, we're cautiously optimistic about the direction of the economy, and we're well positioned to continue our growth and increase our market share when the conditions are right in the meantime, we'll continue to provide best in class service to our customers advance our capabilities and strategic initiatives and deliver sustainable returns and long term value to our.
Robert William Beck: In the meantime, we'll continue to provide best-in-class service to our customers, advance our capabilities and strategic initiatives, and deliver sustainable returns and long-term value to our shareholders. Thank you again for your time and interest. I'll now open up the call to questions. Operator, could you please open the line?
Robyn: Shareholders.
Speaker Change: Thank you again for your time and interest I will now open up the call for questions. Operator could you. Please open the line.
Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. The first question comes from John Hecht with Jeffrey. Please go ahead.
Speaker Change: Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: [noise] formation tone will indicate your line is in the question queue.
Robyn: Start to if you would like to remove your question from the queue.
Robyn: For participants using speaker equipment, it may be necessary to pick up your handset before pressing with Barclays.
Robyn: First question comes from John Hecht with Jefferies. Please go ahead.
John Hecht: Hey guys, thanks for taking my question. I know you guys mentioned a revenue yield about 50 basis points below Q2 and Q1 and from Q1, which I think is normal from a seasonal perspective, but I think that's suppressed because of delinquency. But how do we think about core yields throughout the year given pricing increases, and how should that influence yields in the second quarter?
John Hecht: Hey, guys. Thanks for taking my question I know you guys. You mentioned the revenue yield about 50 basis points below Q2 and Q1.
John Hecht: From Q1, which I think is normal from a seasonal perspective, but.
Robyn: Hi.
John Hecht: I think thats, a suppressed because of delinquencies.
John Hecht: But how do we think about core yields throughout the year.
John Hecht: Given pricing increases and how should that influenced the yields in the second half.
Harpreet Rana: Hi John, it's Harp. Thank you for the question. So I think you're referring to second quarter guidance, where we said that we would be lower by 50 basis points, and that very much is seasonal. Our NCLs are going to go up in the second quarter. So that's very much due to that. In terms of yields for the full year, we did provide guidance, and we said that they were going to be 40 to 50 basis points higher year over year, and that is inclusive of the pricing that we've spoken about previously.
Heart: Hi, John its its heart. Thank you for the question. So I think you're referring to second quarter guidance, where we said that we would be lower by 50 basis points and that very much is seasonal our ngls are going to go up in the in the second quarter. So that's very much to do to that in terms of yields.
Heart: In terms of yields for the full year, we did provide guidance and we said that they were going to be 40 to 50 basis points up year over year and that is inclusive of the pricing that we've spoken about previously.
Speaker Change: Okay, and John I would just add that.
Robert William Beck: Okay. Yeah, and John, I would just add that, you know, yields are up 80 basis points versus the prior year and 50 basis points versus the prior quarter. And if you look at page nine of the release, you'll see that it's all on the small loan side. So small loans are up 280 basis points versus the prior year and 150 basis points versus the prior quarter. And that's important because, you know, we put on about $50 million in small loans since the middle of last year. And that's part of that higher risk but higher return business that we've been talking about. It's a fantastic business.
Speaker Change: Yields are up 80 basis points versus prior year, and 50 basis points versus prior quarter.
Speaker Change: And if you look at page nine of the release, you'll see that.
Speaker Change: It's all on the small loan sizes. So small loans are up 280 basis points versus prior year, and 150 basis points versus prior quarter.
Speaker Change: And that's important because we put on about $50 million of small loans since middle of last year, that's part of that higher risk higher return business that we've been talking about its fantastic business. We're obviously, putting it on in a very measured way, but it's having a meaningful impact on yields and I would tell.
Robert William Beck: We're obviously putting it on in a very measured way, but it's having a meaningful impact on yields. And, you know, I would tell you that from a delinquency standpoint, that business probably cost us 10 basis points of delinquencies in the quarter, but 80 basis points of improved yields. You know, we've got a dial that we can turn on. We're being measured in terms of, you know, how we do it and when we do it because we're watching, obviously, the inflationary environment and, you know, and seeing that, hopefully, continue to come down.
Speaker Change: You that from a delinquency standpoint that business, probably cost us 10 basis points.
Speaker Change: <unk>.
Speaker Change: In the quarter, but 80 basis points of improved yields.
Robyn: We've got a dial that we can turn on it we're being measured in terms of how we do it and when we do it because we're watching obviously the inflationary environment.
Robyn: And seeing that hopefully continue to come down.
Robert William Beck: But it's a big lever for us if we choose to pursue it more aggressively. And quite frankly, I think it's one of the biggest strategic advantages that we have versus others that cap themselves at 36%. Having this pricing power is something that sets us apart, you know, should we choose to lean in more aggressively at some point.
Robyn: But it's a it's a big lever for us if we choose to.
Robyn: Pursue it more aggressively and quite frankly, I think it's one of the biggest strategic advantages that we have versus others.
Robyn: Cap themselves at 36%.
Robyn: Having this pricing power is is something that.
Robyn: Census, apart.
Robyn:
Robyn: Should we choose to lean in more aggressively at some point in time.
John Hecht: Okay, and then just on expenses real quick. You beat your specific guidance by You said you referred to some of it as a timing difference, but your Q2 guide is less than that, so I mean, I guess the question is...where are you getting some good leverage on the expenses and how does that kind of impact the... expense rate past the next quarter?
Speaker Change: Okay and then.
Speaker Change: Just on expenses real quick.
Speaker Change: Sure.
Robyn: The guidance by.
Robyn: $5 million in the quarter, you said you referred to some of it was timing difference, but you are.
Robyn: To guide us.
Robyn: Less than that so I mean, I guess the question is.
Robyn: Where you're getting some good leverage on the expenses.
Robyn: How does that kind of impact that.
Robyn: Expense rate past the next quarter.
Harpreet Rana: So, John, thank you for that question. It's Harp again.
Robyn: So John Thank you for that question, it's hard to again, so and in terms of our beat this quarter. We really were focused on managing online, but we very much managed our personnel line part of what we said in the prepared remarks is there was going to be timing between first quarter and second quarter, that's a little.
Harpreet Rana: So, in terms of our BEAT this quarter, we really were focused on managing all lines, but we very much managed our personnel line. Part of what we said in the prepared remarks was that there was going to be timing between the first quarter and the second quarter. That's a little bit under a million dollars that you'll see shift from first quarter to second quarter, which is part of that increase that you see in the second quarter guidance.
Robyn: Under a million dollars that youll see shifts from first quarter and into the second quarter, which is part of that increase that you see in the second quarter guidance. The other increase that you see in the second quarter guidance is really marketing and volume related expenses as our volumes pick up in the second quarter, but are be versus <unk>.
Harpreet Rana: The other increase that you see in the second quarter guidance is really marketing and volume-related expenses as our volumes pick up in the second quarter. But our BEAT versus the first quarter was, again, due to that timing item, but also very much due to us managing our line items quite meticulously, specifically personnel.
Robyn: First quarter was again due to that timing item, but also very much due to us managing our line items quite meticulously specifically personnel.
Robert William Beck: Yeah, and John, look, and that was a conscious decision. I think our people costs are actually down, you know, almost 800,000 versus the prior year, despite the growth in the business, and obviously down versus the fourth quarter, as you noted, and so, you know, we, you know, our view was, let's manage the business very tightly. It gives us dry powder to lean back into growth, you know, more aggressively later in the year.
Speaker Change: Yeah, and John walk and that was a conscious decision.
Speaker Change: I think our people costs are actually down.
Speaker Change: Almost 800000 versus prior year.
Robyn: Despite the growth in the business and obviously down versus fourth quarter as you noted and so.
Robyn: Our view was let's manage.
Robyn: The business very tightly it gives us dry powder to lean back into growth.
Robyn: No more aggressively later in the year and so we feel good about how we quite frankly, how we execute on every line item I mean.
Robert William Beck: And so we feel good about how we, quite frankly, executed on every line item. I mean, you know, it's, but, you know, you want to run the business in a relatively conservative way as you wait for, you know, the macro conditions to further unfold. And I think that, you know, we did a great job, you know, keeping tight control of expenses.
Robyn: But you know you you want to run the business.
Robyn: No.
Robyn: Relatively conservative way as you wait for the macro conditions to further unfold and I think that we did a great job keeping keeping a tight control of expenses.
John Hecht: Great. I appreciate the answers. Thanks very much.
Speaker Change: Great I appreciate the answers thanks very much.
Robyn: Thank you again, if you would like to ask a question. Please press star one on your telephone Keypad next question comes from Matt Dane with T and capital Management go ahead.
Operator: Once again, if you would like to ask a question, please press star 1 on your telephone keypad. The next question comes from Matt Dane with Teton Capital Management. Go ahead.
Matthew W. Dhane: Thank you. That's tie it to capital. I did want to delve a little bit more into the, I guess, the conditions you're looking for before you do lean into growth. What more can you share around that, because although the economy's been slowing, it still has, I was looking to get a little bit more guidance on what you're looking for before you start drawing down the loan.
Matt Dane: Thank you that that's tied to capital I.
Matt Dane: Did want to delve a little bit more into the.
Robyn: Yes.
Matt Dane: I guess that the conditions, you're looking for before you do lean into growth, but what more can you share with that around that.
Matt Dane: Although the economy has been slowing it still adds.
Matt Dane: GDP growth of just so I was looking to get a little bit more guidance on what youre looking for before you start growing the loan book again.
Speaker Change: Yeah, Hey, Matt No Great question look I think I've heard.
Robert William Beck: Yeah. Hey Matt.
Robert William Beck: No. Great question. You know, look, I think I've heard, well, I keep track of what a lot of people are saying about the state of the customer, and I think that's really what is the driver of how aggressively we lean into growth. So, you know, the metrics that we're looking at are, you know, consumers have had real wage growth in the last year. As you said, the economy's growing. You know, there are still eight and a half million open jobs out there. Most of them, or a large portion of them, are for lower-income folks.
Speaker Change: Track of what a lot of people are saying about the state of the customer and I think thats really.
Matt: What what is the driver of how aggressively lean into growth. So you know.
Matt: The metrics that we're looking at is you know consumers have had real wage growth last year as you said the economy is growing.
Matt: You know Theres still $8 5 million open jobs out there most of them or a large portion of them are for lower income folks.
Robert William Beck: And that's all, you know, the positives that we see. Obviously, inflation is still higher than expected. We're not seeing, obviously, the number of rate cuts that we would have anticipated early in the year. I mean, maybe we'll see one.
Matt: And that's all the positives that we see obviously inflation is still higher than expected you know we're not seeing obviously the number of rate cuts that we would have been anticipated early in the year I mean, maybe we will see one and so when I look at it as the customer is still recovering from the inflation hanger.
Robert William Beck: And so, you know, when I look at it, the customer is still recovering from the inflation hangover, right? So the last, from 2020 to, you know, April of 2024, inflation's up about 21%. But wage growth, you know, kind of for the, you know, call it the 20% or 40% segment of the population, has been a little over 5%. And so while stimulus money helped people, you know, stay on top and, you know, meet their family obligations, you know, they're still, you know, working their way through kind of that inflationary period.
Matt: Right. So the last since 2022.
Matt: April of 'twenty, 'twenty, four inflation's up about 21%, but wage growth you know kind of for the you know call. It 20 or 40% you know segment of the population.
Matt: It's been a little over 5% and so while stimulus has helped you know the stimulus money how people.
Matt: Hey on top and meet their family obligations.
Matt: They're still working there through working away through kind of that inflationary period.
Robert William Beck: And so, you know, from our standpoint, we're able to be very selective in where we grow our growth. We're able to be, you know, very selective where we put some of the higher risk, higher return growth. And so I think what we're really looking for is, you know, what we're really looking for is inflation to continue to fall. And I will tell you that demand, in my opinion, has started to pick up here in the month of April.
Matt: So from our standpoint, we're able to be very selective in where we put on growth.
Matt: We're able to be very selective where we put on some of the higher risk higher return growth.
Matt: And so I think what we're what we're really looking for is you know we're really looking for is inflation to continue to fall I will tell you that demand in my opinion is starting to pick up here in the month of April that's incurred.
Robert William Beck: You know, that's encouraging, but, you know, it has to be the right kind of demand, obviously. You want to make sure it's customers with their underwriting that can, you know, pay their bills.
Matt: <unk>, but you know it has to be the right kind of demand obviously, you want to make sure its customers.
Matt: Customers with their underwriting that can can pay they pay their bills. So that's.
Robert William Beck: So, you know, that's kind of where we're at. I mean, I feel like it's a good place to be because we have, you know, we've tested into the smaller loan portfolio. We're seeing how that's performing. We know how to turn the dials up to, you know, when we feel like it's the right time. But I don't think it's prudent to necessarily slam the accelerator down at this point in time either.
Matt: That's kind of where we're at I mean, I feel like it's.
Matt: It's a good place to be because we have you know we've tested into the smaller loan portfolio. We're seeing how that's performance we know how to turn the dials up to you know when we feel like it's the right time, but I don't think its prudent necessarily to slam.
Matt: Slam the accelerator down at this point in time, either so you know as long as we continue to make those right tradeoffs each and every quarter.
Robert William Beck: So, you know, as long as we continue to make those right tradeoffs each and every quarter, I see things continuing to improve. I will also say that from a credit standpoint, the credit on the front book is performing, you know, in line with our expectations. Of course, everybody would like to have inflation go down faster, but, you know, we are where we are.
Matt: Quarter.
Matt: I see the see things continuing to.
Matt: Improve I will also say that from a credit standpoint.
Matt: The credit on the front book is performing in.
Matt: In line with our expectations.
Matt: Of course, everybody would like to have inflation go down faster, but we are where we are and I. You know I would tell you that you know are one to 89 day delinquency buckets about 190 basis points below 2019, and 200 basis points below the fourth quarter.
Robert William Beck: And I would tell you that, you know, our one to 89-day delinquencies are about 190 basis points below 2019 and 200 basis points below the fourth quarter. And while delinquencies overall in the first quarter are up 20 basis points versus the fourth quarter, when you kind of normalize for the loan sale, it's actually down, you know, 70 basis points. We're seeing the trends and, you know, and although I don't typically say this, I will, you know, disclose that the April delinquency number is below 7%, and that's in line with the seasonal improvement that Harp talked about in the second quarter.
Matt: And while delinquencies overall in the first quarter up 20 basis versus the fourth quarter, when you kind of normalize for the loan sale.
Matt: It's actually down.
Matt: 70 basis points, so we're seeing the trends and although.
Matt: Although I don't typically say this I will disclose that the April delinquency numbers below 7%.
Matt: And that's in line with the.
Matt: The seasonal improvement that <unk> talked about in the second quarter. So.
Robert William Beck: So we're feeling good about pricing and the impact. We're feeling, you know, reasonably good about credit, and we're cautiously optimistic about when we can, you know, lean back into more aggressive growth as macro conditions continue to improve.
Matt: We're feeling good about pricing and the impact we're feeling reasonably good about credit.
Matt: We're cautiously optimistic about when we can you know might lean back into more aggressive growth as macro conditions.
Matt: To prove.
Speaker Change: Great. That's helpful. Rob I appreciate the color there one other dynamic I did want to ask about.
Matthew W. Dhane: That's helpful, Robert. I appreciate the color there.
Matthew W. Dhane: One other dynamic I did want to ask about is you folks have entered a couple of new states here over the last several years. Just wanted to get some insights into how those have been developing relative to your expectations. And yeah, just what more can you tell us about those newer states?
Speaker Change: Folks who have entered a couple of new states here over the last several years just wanted to get some some insights about how those have been developing relative to your expectations.
Robert William Beck: Yeah, just what what more can you tell us around those those newer states.
Robert William Beck: Yeah, I mean look, and it's in the, I think it's in the appendix of the supplement, but you can see that the ENR per branch for branches open less than a year is now about three points, you know, seven million, up from 2.3 million a year ago and, you know, same thing for branches open from one to three years. Now, you know, we, you know, with the environment we're in, we haven't added, you know, a ton of branches, so that addressable market opportunity we talked about from the new states, which is, you know, kind of increased by 80%, in my mind is still largely untapped, and so, you know, my expectation is we will add a few more branches this year.
Robert William Beck: Yeah, I mean look I E.
Robert William Beck: And it's in the I think it's in the appendix of the supplement but you you can see that the E NR per branch.
Speaker Change: For our branches opened less than a year.
Speaker Change: <unk> is now about 3.7.
Speaker Change: $7 million up from $2 3 million, you know a year ago and same thing for branches open from one to three years now you know we.
Speaker Change: You know with the environment and we haven't added a ton of branches, so that addressable market opportunity, we've talked about for the new states, which as you know kind of increased by 80%.
Speaker Change: My mind is still largely untapped and so you know.
Speaker Change: My expectation is we will add a few more branches this year.
Robert William Beck: We've got some expense dollars, which may, you know, allow us to add more branches, and we'll see whether that's the appropriate thing to do, and then we'll be looking in 2025, of course, to continue to go after that, you know, untapped market and, you know, maybe even look at additional markets. But, you know, overall, we're pleased with the new state.
Speaker Change: We've got some expense dollars, which.
Speaker Change: May allow.
Speaker Change: Allow us to add more branches, we'll see whether that's the appropriate thing to do and then we'll be looking in 2025 of course too.
Speaker Change: Continue to go after that.
Speaker Change: Untapped market and you know maybe even look at additional markets.
Speaker Change: But overall, we're pleased with the new states.
Matthew W. Dhane: Great. Glad to hear that it covers my questions. Thank you, Rob.
Speaker Change: Great glad to hear that.
Speaker Change: The cards are my questions. Thank you Rob.
Robert William Beck: Thanks, Matt.
Operator: There are no further questions. I would like to turn the floor over to Rob Beck for closing remarks.
Speaker Change: There are no further questions I would like to turn the floor over to Rob for closing remarks.
Robert William Beck: Great. Thank thank you operator.
Robert William Beck: Great. Thank you, operator. You know, look, in conclusion, I'd just say we're very pleased with the outcome of the quarter. As I said, I think we've executed on all lines across the P&L, and that's hard to do in any environment. So we're really pleased with the effort, and I'm extremely pleased with the team and how they're executing. You know, I talked about credit. I talked about pricing and continued expense discipline. That's the heart of what we do.
Robert William Beck: Look in in conclusion I would just say, we're very pleased with the outcome of the quarter as I said, you know I think we've.
Robert William Beck: We've executed on all lines across the P&L and that's.
Robert William Beck: That's hard to do in in any environment. So we're really pleased with with the effort and I'm extremely pleased with the team and how they are executing.
Robert William Beck: I talked about credit I talked about pricing.
Robert William Beck: <unk> expressed expense discipline, that's that's the heart of what what we do and you know and as I said I do.
Robert William Beck: And, you know, and as I said, I do believe that having this small-owned business that can price itself above 36% is a real competitive advantage. And, you know, in a couple ways, not only the pricing power, but it also gives you the customer flow that allows you to, which is part of our core strategy, to graduate those customers to, you know, a lower rate loan and a higher dollar loan. The customer is extremely satisfied with that.
Robert William Beck: Do you believe that having this small loan business.
Speaker Change: Price above 36%.
Speaker Change: Is a real competitive advantage and.
Speaker Change: A couple of ways not only the pricing power, but it also gives you the the.
Speaker Change: The customer flow in that allows you to which is part of our core strategy to graduate those customers to a lower rate loan in a in a higher higher dollar loan the customer is extremely satisfied by by that improves their credit profile and its.
Robert William Beck: It improves their credit profile, and it's core to the business that we've been building over the last seven or eight years in growing our large loan book. I would also say that, you know, the $50 million of small loans that we put on, which are higher risk and higher returns, a very key part of our strategy is also to balance that out with a more, you know, low-risk product, which is our auto-secured business.
Speaker Change: Core to the business that we've been building over the last seven or eight years and growing our large loan book I would also say that you know the.
Robert William Beck: And our auto-secured business, we put on about $30 million over that same timeframe as the small loans, and that auto-secured business had very low delinquencies and losses. So, you know, we're balancing out this business, a barbell strategy between taking on a little bit more risk on one end, which gives you good returns and, you know, strong revenue yields, even though it's, you know, slightly elevated losses and delinquencies, and we're balancing that out with the, you know, that auto-secured book.
Speaker Change: The $50 million of small loans that we put on which are higher risk and higher returns.
Speaker Change: A very key part of our strategy is also to balance that out with.
Speaker Change: More.
Speaker Change: Low risk product, which is our auto secured business and our auto secured business, we put on about $30 million over that same timeframe as the small loans and that auto secured business is very low delinquencies and losses. So.
Speaker Change: We're balancing out this business a barbell strategy between taken a little bit more risk on one hand, which is you know gives you good returns and you know.
Robert William Beck: So everything we put in place and the hard work we did in the fourth quarter and the actions we took, we feel like they paid off for us in the first quarter. So with that, I would just say thanks, everybody, for joining the call and, you know, I appreciate the call, and, you know, have a good evening.
Speaker Change: <unk> revenue yields, even though it's slightly elevated losses, and delinquencies and we're balancing that out with the.
Speaker Change: Auto secured book so.
Speaker Change: Everything we put in place and the hard work, we did in the fourth quarter and the actions we took we.
Speaker Change: We feel like the.
Speaker Change: They paid off for us in the first quarter, so with that I'll, just say thanks, everybody for joining the call and you know.
Speaker Change: I appreciate.
Speaker Change: The call and have a good evening.
Operator: This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.
Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation.
Speaker Change: [music].