Regional Management Corp. - FORM 8-K - EX-99.1

Attached files

file	filename
8-K - 8-K - Regional Management Corp.	d916317d8k.htm
EX-10.1 - EX-10.1 - Regional Management Corp.	d916317dex101.htm
EX-10.4 - EX-10.4 - Regional Management Corp.	d916317dex104.htm
EX-10.5 - EX-10.5 - Regional Management Corp.	d916317dex105.htm
EX-10.3 - EX-10.3 - Regional Management Corp.	d916317dex103.htm
EX-10.2 - EX-10.2 - Regional Management Corp.	d916317dex102.htm
EX-10.7 - EX-10.7 - Regional Management Corp.	d916317dex107.htm
EX-10.6 - EX-10.6 - Regional Management Corp.	d916317dex106.htm

Exhibit 99.1

LOGO

Regional Management Corp. Announces First Quarter 2015 Results

- Total delinquencies as percentage of receivables lowest since IPO -

- 37.3% sequential and 51.3% year-over-year growth for large loan receivables -

- Non-operating costs impact operating expenses and net income -

Greenville, South Carolina – April 28, 2015 – Regional Management Corp. (NYSE: RM), a diversified specialty consumer finance company, today announced results for the first quarter ended March 31, 2015.

First Quarter 2015 Highlights

•

Net income for the first quarter 2015 was $4.1 million, an increase of 20.8% sequentially, and down 27.2% from the prior-year period. Diluted earnings per share were $0.31 based on a diluted share count of 13.1 million. Excluding non-operating compensation-related costs of $2.1 million and loan system implementation costs of $0.6 million in the first quarter of 2015, non-GAAP diluted earnings per share for the first quarter were $0.44.

•

Total delinquencies as a percentage of total finance receivables as of March 31, 2015 improved to 19.2%, compared to 21.7% as of March 31, 2014 and 22.6% as of December 31, 2014. The total delinquencies as a percentage of receivables was the lowest since the Company’s initial public offering in March 2012.

•

Regional Management’s most important loan categories continue to grow:

•

Large loan finance receivables as of March 31, 2015 increased 37.3% sequentially and 51.3% compared to the prior-year period.

•

Branch small loan and convenience check finance receivables, collectively, as of March 31, 2015 increased 14.3% over the prior-year period.

•

Seasonal portfolio liquidation of $20.3 million was a 53% improvement compared to prior year seasonal portfolio liquidation of $43.0 million, primarily due to a 22% increase in net originations from the prior-year period.

•

Total finance receivables as of March 31, 2015 were $525.9 million, an increase of 4.8% from the prior-year period.

•

Total first quarter 2015 revenue was $52.5 million, a 5.9% increase from the prior-year period.

•

Annualized net charge-offs as a percentage of average finance receivables for the first quarter of 2015 were 9.9%, a slight increase from 9.7% in the prior-year period. Provision for credit losses for the first quarter of 2015 was 18.5% of revenue, a decline from 34.2% in the prior-year period.

•

Regional Management opened 6 new branches in the first quarter of 2015. As of March 31, 2015, Regional Management’s branch network consisted of 306 locations.

“We were pleased that our progress from the fourth quarter continued in the first quarter of the year,” said Michael R. Dunn, Chief Executive Officer of Regional Management Corp. “Our total delinquency levels declined to the lowest level since our IPO due to the improved marketing and underwriting practices that were initiated in the fourth quarter of last year. To that end, we increased our marketing spend in the quarter by $0.6 million sequentially and $1.5 million over the prior-year period to capitalize on our large loan opportunity and to reduce the normal seasonal portfolio liquidation in our industry. Partially due to those efforts, we successfully grew large loan finance receivables 37% sequentially and 51% from the prior-year period and our overall finance receivable portfolio liquidation was more than cut in half compared to the first quarter of 2014. In addition, our combined branch small loan and convenience check categories saw double-digit finance receivable growth from the prior-year period. Considering the first quarter is typically our lightest from a seasonal perspective, we are particularly pleased with the performance of these portfolio segments.”

“Given the success we achieved in the first quarter with our small and large loan portfolios, we continue to believe they will be the core drivers of our growth strategy going forward,” continued Mr. Dunn. “While we still have some work to do to further curtail the growth in our general and administrative expenses, we believe we have identified several opportunities to generate operational efficiencies with respect to our personnel expense, and would expect to see operating margin improvement from current levels over the remainder of 2015. Overall, we believe we are positioning ourselves well to grow both our top and bottom lines through the course of the year.”

First Quarter 2015 Results

Finance receivables outstanding at March 31, 2015 were $525.9 million, a 4.8% increase from $501.7 million in the prior-year period. Finance receivables increased primarily due to the addition of 25 de novo branches since March 31, 2014.

For the first quarter ended March 31, 2015, Regional Management reported total revenue of $52.5 million, a 5.9% increase from $49.6 million in the prior-year period. Interest and fee income for the first quarter of 2015 was $47.1 million, a 6.8% increase from $44.1 million in the prior-year period, primarily due to a significant increase in originations of both small and large installment loans compared to the prior-year period. Insurance income for the first quarter of 2015 was $2.9 million, an 11.1% decrease from the prior-year period. Same-store revenue for the first quarter of 2015 was down 0.6%.

Provision for credit losses in the first quarter of 2015 was $9.7 million versus $16.9 million in the prior-year period. On a sequential basis, provision for credit losses declined 39.1%, reflecting further improvements in credit quality during the first quarter of 2015. Annualized net charge-offs as a percentage of average finance receivables for the first quarter of 2015 were 9.9%, a slight increase from 9.7% in the prior-year period. Net charge-offs of $13.3 million in the first quarter of 2015 exceeded the provision as the Company released a portion of the allowance recorded in 2014 for convenience checks.

General and administrative expenses for the first quarter of 2015 were $32.6 million, an increase of $12.7 million, or 64.0%, from $19.9 million in the prior-year period. Included in first quarter 2015 results were a total of $2.7 million in non-operating expenses, while first quarter 2014 results included a non-operating benefit of $1.4 million related to a change in the Company’s vacation pay policy. The balance of the expense increase was driven primarily by $5.2 million in additional personnel expense due to the expansion of branches and additional home office hiring, a $1.5 million increase in marketing expense to help further build our loan portfolio, and a $1.5 million increase (excluding non-operating costs) in other expense related to additional consulting and legal expenses, as well as other costs related to the larger number of branches.

Net income for the first quarter of 2015 was $4.1 million, a 27.2% decrease compared to net income of $5.6 million in the prior-year period. Diluted earnings per share for the first quarter of 2015 were $0.31, a decrease from $0.43 in the prior-year period. Excluding the aforementioned non-operating expenses, non-GAAP diluted earnings per share for the first quarter of 2015 were $0.44. For a reconciliation of non-GAAP financial measures to the nearest comparable GAAP financial measure, please refer to the reconciliation table accompanying this release.

2015 De Novo Outlook

As of March 31, 2015, Regional Management’s branch network consisted of 306 locations. Regional Management opened 6 de novo branches in the first quarter of 2015 and, for the full year 2015, maintains its plan to open between 25 and 30 de novo branches.

Liquidity and Capital Resources

As of March 31, 2015, Regional Management had finance receivables of $525.9 million and outstanding debt of $312.5 million on its $500.0 million senior revolving credit facility.

Conference Call Information

Regional Management Corp. will host a conference call and webcast today at 4:30 PM ET to discuss these results.

The dial-in number for the conference call is (866) 953-6857 (toll-free) or (617) 399-3481 (direct), passcode 86162507. Please dial the number 10 minutes prior to the scheduled start time. A live webcast of the conference call will also be available on Regional Management’s website at www.RegionalManagement.com.

A replay will be available following the end of the call through Friday, May 1, 2015, by telephone at (888) 286-8010 (toll-free) or (617) 801-6888 (direct), passcode 75453218. A webcast replay of the call will be available at http://www.RegionalManagement.com for one year following the call.

Forward-Looking Statements

This press release may contain various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which represent Regional Management Corp.’s expectations or beliefs concerning future events. Words such as “may,” “will,” “should,” “likely,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “outlook” and similar expressions may be used to identify these forward-looking statements. Such forward-looking statements are about matters that are inherently subject to risks and uncertainties, many of which are outside of the control of Regional Management. Factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements include, but are not limited to, the following: the continuation or worsening of adverse conditions in the global and domestic credit markets and uncertainties regarding, or the impact of, governmental responses to those conditions; changes in interest rates; risks related to acquisitions and new branches; risks inherent in making loans, including repayment risks and value of collateral, which risks may increase in light of adverse or recessionary economic conditions; recently-enacted or proposed legislation; the timing and amount of revenues that may be recognized by Regional Management; changes in current revenue and expense trends (including trends affecting delinquencies and charge-offs); changes in Regional Management’s markets and general changes in the economy (particularly in the markets served by Regional Management); and the departure, transition or replacement of key personnel. Such factors and others are discussed in greater detail in Regional Management’s filings with the Securities and Exchange Commission. Regional Management will not and is not responsible for updating the information contained in this press release beyond the publication date, or for changes made to this document by wire services or Internet services.

About Regional Management Corp.

Regional Management Corp. (NYSE: RM) is a diversified specialty consumer finance company providing a broad array of loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies and other traditional lenders. Regional Management began operations in 1987 with four branches in South Carolina and has since expanded its branch network across South Carolina, Texas, North Carolina, Tennessee, Alabama, Oklahoma, New Mexico and Georgia. Each of its loan products is structured on a fixed rate, fixed term basis with fully amortizing equal monthly installment payments and is repayable at any time without penalty. Regional Management’s loans are sourced through its multiple channel platform, including in its branches, through direct mail campaigns, independent and franchise automobile dealerships, online credit application networks, retailers and its consumer website. For more information, please visit http://www.RegionalManagement.com.

Contact:

Investor Relations

Garrett Edson, (203) 682-8331

Regional Management Corp. and Subsidiaries

Consolidated Statements of Income

(Unaudited)

(in thousands, except per share amounts)


					Better (Worse)
	1Q’15		1Q’14		YoY $			YoY %
Revenue
Interest and fee income	$	47,065	$	44,080	$	2,985			6.8	%
Insurance income, net		2,929		3,295		(366	)		-11.1	%
Other income		2,530		2,206		324			14.7	%

Total revenue		52,524		49,581		2,943			5.9	%

Expenses
Provision for credit losses		9,712		16,945		7,233			42.7	%
Personnel		19,760		11,174		(8,586	)		-76.8	%
Occupancy		4,125		3,420		(705	)		-20.6	%
Marketing		2,471		982		(1,489	)		-151.6	%
Other		6,267		4,322		(1,945	)		-45.0	%

Total general and administrative expenses		32,623		19,898		(12,725	)		-64.0	%
Interest expense		3,604		3,763		159			4.2	%

Income before income taxes		6,585		8,975		(2,390	)		-26.6	%
Income taxes		2,502		3,365		863			25.6	%

Net income	$	4,083	$	5,610	$	(1,527	)		-27.2	%

Net income per common share:
Basic	$	0.32	$	0.44	$	(0.12	)		-27.3	%

Diluted	$	0.31	$	0.43	$	(0.12	)		-27.9	%

Weighted-average shares outstanding:
Basic		12,838		12,655		183			1.4	%

Diluted		13,061		13,000		61			0.5	%

Regional Management Corp. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(in thousands, except par value amounts)


							Increase (Decrease)
	1Q’15			1Q’14			YoY $			YoY %
Assets
Cash	$	2,060		$	6,265		$	(4,205	)		-67.1	%
Gross finance receivables		638,809			601,514			37,295			6.2	%
Less unearned finance charges, insurance premiums, and commissions		(112,902	)		(99,780	)		(13,122	)		-13.2	%

Finance receivables		525,907			501,734			24,173			4.8	%
Allowance for credit losses		(36,950	)		(34,325	)		(2,625	)		-7.6	%

Net finance receivables		488,957			467,409			21,548			4.6	%
Property and equipment, net of accumulated depreciation		8,211			7,370			841			11.4	%
Deferred tax asset, net		1,372			—			1,372			100.0	%
Repossessed assets at net realizable value		400			806			(406	)		-50.4	%
Goodwill		716			716			—			0.0	%
Intangible assets, net		745			1,219			(474	)		-38.9	%
Other assets		5,281			4,826			455			9.4	%

Total assets	$	507,742		$	488,611		$	19,131			3.9	%

Liabilities and Stockholders’ Equity
Liabilities:
Senior revolving credit facility	$	312,538		$	310,315		$	2,223			0.7	%
Accounts payable and accrued expenses		10,905			9,320			1,585			17.0	%
Deferred tax liability, net		—			1,802			(1,802	)		-100.0	%

Total liabilities		323,443			321,437			2,006			0.6	%
Commitments and Contingencies
Stockholders’ equity:
Preferred stock, $0.10 par value, 100,000 shares authorized, no shares issued or outstanding		—			—			—			—
Common stock, $0.10 par value, 1,000,000 shares authorized, 12,848 and 12,748 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively		1,285			1,267			18			1.4	%
Additional paid-in-capital		87,538			83,706			3,832			4.6	%
Retained earnings		95,476			82,201			13,275			16.1	%

Total stockholders’ equity		184,299			167,174			17,125			10.2	%

Total liabilities and stockholders’ equity	$	507,742		$	488,611		$	19,131			3.9	%

Regional Management Corp. and Subsidiaries

Selected Financial Data

(Unaudited)

(in thousands, except per share amounts)


	Averages and Yields
	1Q’15					4Q’14					1Q’14
	Average Finance Receivables		Average Yield (Annualized)			Average Finance Receivables		Average Yield (Annualized)			Average Finance Receivables		Average Yield (Annualized)
Branch small loans	$	124,350		46.2	%	$	119,097		48.4	%	$	105,332		48.1	%
Convenience checks		181,425		45.9	%		192,951		46.8	%		169,456		43.5	%
Large loans		52,738		26.7	%		43,464		27.1	%		42,607		26.7	%
Automobile loans		150,107		19.2	%		159,047		19.5	%		177,962		19.7	%
Retail loans		25,121		18.2	%		26,493		18.7	%		30,465		17.9	%

Total interest and fee yield	$	533,741		35.3	%	$	541,052		36.2	%	$	525,822		33.5	%

Total revenue yield	$	533,741		39.4	%	$	541,052		39.8	%	$	525,822		37.7	%


	Components of Increase in Interest and Fee Income 1Q’15 Compared to 1Q’14 Increase/(Decrease)
	Volume			Rate			Net
Branch small loans	$	2,215		$	(513	)	$	1,702
Convenience checks		1,343			1,024			2,367
Large loans		677			7			684
Automobile loans		(1,400	)		(150	)		(1,550	)
Retail loans		(234	)		16			(218	)

Total increase in interest and fee income	$	2,601		$	384		$	2,985


	Net Loans Originated (1)
	1Q’15		4Q’14		1Q’14		QoQ $ Inc (Dec)			QoQ % Inc (Dec)			YoY $ Inc (Dec)			YoY % Inc (Dec)
Branch small loans	$	51,371	$	80,170	$	42,846	$	(28,799	)		-35.9	%	$	8,525			19.9	%
Convenience checks		60,653		95,330		52,656		(34,677	)		-36.4	%		7,997			15.2	%
Large loans		29,829		17,737		10,358		12,092			68.2	%		19,471			188.0	%
Automobile loans		14,590		13,516		18,898		1,074			7.9	%		(4,308	)		-22.8	%
Retail loans		6,727		7,634		8,517		(907	)		-11.9	%		(1,790	)		-21.0	%

Total net loans originated	$	163,170	$	214,387	$	133,275	$	(51,217	)		-23.9	%	$	29,895			22.4	%

(1)	Represents the balance of loan origination and refinancing net of unearned finance charges


	Other Key Metrics
	1Q’15			4Q’14			1Q’14
Net charge-offs	$	13,273		$	18,740		$	12,709
Percentage of average finance receivables (annualized)		9.9	%		13.9	%		9.7	%
Provision for credit losses	$	9,712		$	15,950		$	16,945
Percentage of average finance receivables (annualized)		7.3	%		11.8	%		12.9	%
Percentage of total revenue		18.5	%		29.7	%		34.2	%
General and administrative expenses	$	32,623		$	28,396		$	19,898
Percentage of average finance receivables (annualized)		24.4	%		21.0	%		15.1	%
Percentage of total revenue		62.1	%		52.8	%		40.1	%
Same store results:
Finance receivables at period-end	$	480,768		$	504,697		$	446,814
Finance receivable growth rate		-2.0	%		-6.0	%		5.7	%
Revenue during period	$	48,821		$	50,875		$	44,583
Revenue growth rate		-0.6	%		4.8	%		16.8	%
Number of branches in calculation		264			264			221


	Finance Receivables by Product
	1Q’15		4Q’14		QoQ $ Inc (Dec)			QoQ % Inc (Dec)			1Q’14		YoY $ Inc (Dec)			YoY % Inc (Dec)
Branch small loans	$	121,649	$	128,217	$	(6,568	)		-5.1	%	$	100,031	$	21,618			21.6	%
Convenience checks		170,013		191,316		(21,303	)		-11.1	%		155,030		14,983			9.7	%
Large loans		63,338		46,147		17,191			37.3	%		41,868		21,470			51.3	%
Automobile loans		146,724		154,382		(7,658	)		-5.0	%		175,152		(28,428	)		-16.2	%
Retail loans		24,183		26,130		(1,947	)		-7.5	%		29,653		(5,470	)		-18.4	%

Total finance receivables	$	525,907	$	546,192	$	(20,285	)		-3.7	%	$	501,734	$	24,173			4.8	%


	1Q’14		4Q’13		QoQ $ Inc (Dec)			QoQ % Inc (Dec)
Total finance receivables	$	501,734	$	544,684	$	(42,950	)		-7.9	%


	Contractual Delinquency by Aging
	1Q’15					4Q’14					1Q’14
	Amount		Percentage of Total Finance Receivables			Amount		Percentage of Total Finance Receivables			Amount		Percentage of Total Finance Receivables
Allowance for credit losses	$	36,950		7.0	%	$	40,511		7.4	%	$	34,325		6.8	%
Current		425,088		80.8	%		422,342		77.4	%		392,804		78.3	%
1 to 29 days past due		67,653		12.9	%		82,714		15.1	%		72,265		14.4	%

Delinquent accounts:
30 to 59 days		11,596		2.2	%		15,951		2.9	%		12,034		2.4	%
60 to 89 days		6,824		1.3	%		9,624		1.8	%		7,479		1.5	%
90 to 119 days		4,844		0.9	%		6,899		1.2	%		5,653		1.2	%
120 to 149 days		4,881		0.9	%		4,988		0.9	%		4,242		0.8	%
150 to 179 days		5,021		1.0	%		3,674		0.7	%		3,557		0.7	%
180 days and over		—		0.0	%		—		0.0	%		3,700		0.7	%

Total contractual delinquency	$	33,166		6.3	%	$	41,136		7.5	%	$	36,665		7.3	%

Total finance receivables	$	525,907		100.0	%	$	546,192		100.0	%	$	501,734		100.0	%

1 day and over past due	$	100,819		19.2	%	$	123,850		22.6	%	$	108,930		21.7	%


	Contractual Delinquency by Product
	1Q’15					4Q’14					1Q’14
	Amount		Percentage of Product Finance Receivables			Amount		Percentage of Product Finance Receivables			Amount		Percentage of Product Finance Receivables
Branch small loans	$	8,890		7.3	%	$	10,247		8.0	%	$	8,804		8.8	%
Convenience checks		14,681		8.6	%		17,165		9.0	%		13,533		8.7	%
Large loans		1,704		2.7	%		2,106		4.6	%		2,469		5.9	%
Automobile loans		6,854		4.7	%		10,302		6.7	%		10,353		5.9	%
Retail loans		1,037		4.3	%		1,316		5.0	%		1,506		5.1	%

Total contractual delinquency		33,166		6.3	%		41,136		7.5	%		36,665		7.3	%


	Subset of Convenience Checks (1)
	1Q’15			4Q’14
Current	$	10,750		$	20,717
1 to 29 days contractually delinquent		2,200			4,965
30 days and over contractually delinquent	$	4,975		$	7,534

Total finance receivables	$	17,925		$	33,216

Allowance for credit losses		4,972			9,337
Allowance as a % of 30 days and over contractually delinquent		100	%		124	%
Allowance as a % of 1 day and over contractually delinquent		69	%		75	%

(1)	Remaining balance of convenience checks originated in the summer of 2014 that contained a higher percentage of lower credit quality customers


	Quarterly Trend
	1Q’14		2Q’14		3Q’14		4Q’14		1Q’15		QoQ $ B(W)			YoY $ B(W)
Revenue
Interest and fee income	$	44,080	$	42,962	$	48,792	$	48,964	$	47,065	$	(1,899	)	$	2,985
Insurance income, net		3,295		2,481		2,636		2,261		2,929		668			(366	)
Other income		2,206		1,994		2,481		2,567		2,530		(37	)		324

Total revenue		49,581		47,437		53,909		53,792		52,524		(1,268	)		2,943

Expenses
Provision for credit losses		16,945		13,620		22,542		15,950		9,712		6,238			7,233
Personnel		11,174		13,068		14,042		17,099		19,760		(2,661	)		(8,586	)
Occupancy		3,420		3,713		4,179		4,115		4,125		(10	)		(705	)
Marketing		982		1,750		1,756		1,842		2,471		(629	)		(1,489	)
Other		4,322		4,667		5,307		5,340		6,267		(927	)		(1,945	)

Total general and administrative		19,898		23,198		25,284		28,396		32,623		(4,227	)		(12,725	)
Interest expense		3,763		3,556		3,848		3,780		3,604		176			159

Income before income taxes		8,975		7,063		2,235		5,666		6,585		919			(2,390	)
Income taxes		3,365		2,649		838		2,285		2,502		(217	)		863

Net income	$	5,610	$	4,414	$	1,397	$	3,381	$	4,083	$	702		$	(1,527	)

Net income per common share:
Basic	$	0.44	$	0.35	$	0.11	$	0.27	$	0.32	$	0.05		$	(0.12	)

Diluted	$	0.43	$	0.34	$	0.11	$	0.26	$	0.31	$	0.05		$	(0.12	)

Weighted-average shares outstanding:
Basic		12,655		12,691		12,714		12,744		12,838		94			183

Diluted		13,000		12,916		12,934		12,955		13,061		106			61


	1Q’14		2Q’14		3Q’14		4Q’14		1Q’15		QoQ $ Inc (Dec)			YoY $ Inc (Dec)
Total assets		488,611		503,995		522,820		530,270		507,742		(22,528	)		19,131

Finance receivables		501,734		517,975		543,353		546,192		525,907		(20,285	)		24,173

Allowance for credit losses		34,325		34,584		43,301		40,511		36,950		3,561			(2,625	)

Senior revolving credit facility		310,315		324,570		339,323		341,419		312,538		(28,881	)		2,223


	Headcount Trend
	1Q’14		2Q’14		3Q’14		4Q’14		1Q’15		QoQ Inc(Dec)			YoY Inc(Dec)
Branch headcount		1,084		1,176		1,313		1,335		1,273		(62	)		189
2015 new branches										15		15			15

Total branch headcount		1,084		1,176		1,313		1,335		1,288		(47	)		204
Home office headcount		77		88		92		105		125		20			48

Total headcount		1,161		1,264		1,405		1,440		1,413		(27	)		252

Number of branches		281		293		296		300		306		6			25


	General & Administrative Expenses Trend
	1Q’14		2Q’14		3Q’14		4Q’14		1Q’15		QoQ $ B(W)			YoY $ B(W)
Branch G&A expenses	$	14,487	$	15,525	$	16,866	$	18,020	$	19,284	$	(1,264	)	$	(4,797	)
2015 new branches										86		(86	)		(86	)

Total branch G&A expenses		14,487		15,525		16,866		18,020		19,370		(1,350	)		(4,883	)
Marketing		982		1,750		1,756		1,842		2,471		(629	)		(1,489	)
Home office G&A expenses		4,429		5,923		6,662		8,534		10,782		(2,248	)		(6,353	)

Total G&A expenses	$	19,898	$	23,198	$	25,284	$	28,396	$	32,623	$	(4,227	)	$	(12,725	)

Because it adjusts for certain non-operating and non-cash items, the Company believes that non-GAAP measures are useful to investors as supplemental financial measures that, when viewed with its GAAP financial information, provide information regarding trends in the Company’s results of operations and credit metrics, which is intended to help investors meaningfully evaluate and compare the Company’s results of operations and credit metrics between periods.


	Non-GAAP Reconciliation
	1Q’15			Adjustments			Non-GAAP
General and administrative expenses	$	32,623		$	(2,672	)^(1)(2)(3)	$	29,951
Income taxes	$	2,502		$	1,015	⁽⁵⁾	$	3,517
Net income	$	4,083		$	1,657		$	5,740
Diluted net income per common share	$	0.31		$	0.13		$	0.44
Efficiency ratio		62.1	%		-5.1	%		57.0	%


	Non-GAAP Reconciliation
	1Q’14			Adjustments			Non-GAAP
General and administrative expenses	$	19,898		$	1,151	⁽²⁾⁽⁴⁾	$	21,049
Income taxes	$	3,365		$	(432	)⁽⁵⁾	$	2,933
Net income	$	5,610		$	(719	)	$	4,891
Diluted net income per common share	$	0.43		$	(0.06	)	$	0.38
Efficiency ratio		40.1	%		2.3	%		42.5	%

(1)	Exclude executive retirement agreement costs of $533

(2)	Exclude loan system conversion costs of $609 and $237 for 1Q’15 and 1Q’14

(3)	Exclude CEO equity award costs of $1,530

(4)	Benefit related to vacation policy change of $1,388

(5)	Tax effect of the adjustments

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