Regional Management Corp. (RM) Q3 2020 Earnings Report, Transcript and Summary

Thank you for standing by; this is the conference operator. Welcome to the Regional Management Corporation Third Quarter 2020 Earnings Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Garrett Edson with ICR. Please go ahead.

Thank you, and good afternoon. By now, everyone should have access to our earnings announcement and supplemental presentation, which was 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. 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. These statements are not guarantees of future performance, and therefore, you should not place undue reliance upon them. We refer all of you to our press release, presentation and recent filings with the SEC for a more detailed discussion about forward-looking statements and the risks and uncertainties that could impact the future operating results and financial condition of Regional Management Corp. Also, our discussion today may include references to certain non-GAAP measures. A reconciliation of these measures to the most comparable GAAP measure 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.

Thanks, Garrett, and welcome to our third quarter 2020 earnings call. I'm joined today by Mike Dymski, our Interim Chief Financial Officer. Simply put, we had an outstanding third quarter, particularly when considering the challenging economic and operating environment. I couldn't be happier with our results and our team's effort. We generated $11.2 million of net income or $1.01 of diluted EPS as a result quality growth in our loan portfolio, a strong credit profile, discipline, expense management and low funding costs. Thanks to both rebounding consumer demand and our new growth initiatives, we sequentially grew our total portfolio by $37 million led by $41 million of growth in our core small and large loan portfolio. Our core loan portfolio also grew by $10 million year-over-year. At the same time, the credit quality of our portfolio remained stable, with a net credit loss rate of 7.8% in the third quarter, compared to a 10.6% rate in the second quarter and 8.1% in the prior year period. We ended the third quarter with 30 plus day delinquency rate of 4.7%. Near historic lows and down from 4.8% as of June 30 and 6.5% as of the prior year, even as our borrower system program usage held steady at pre-pandemic levels throughout the quarter. Our $144 million allowance for credit losses as of September 30 compares favorably to our 30 plus day contractual delinquency of $49.9 million. The allowance includes $31.9 million reserved for credit losses associated with COVID-19. So we expect delinquencies to begin to normalize of these historic lows, we're confident that we have ample coverage to absorb the associated credit losses. Of course, any additional government stimulus would help us to keep delinquencies low for a longer period of time. As an annualized percentage of average receivables, interest expense in the third quarter improved by 50 basis points to 3.5% compared to 4% in the prior year period. In late September, we completed our largest securitization transaction to-date, at a weighted average coupon of 2.85% further reducing our cost of capital and improving our already ample liquidity and borrowing capacity. We're now a well established issuer in the AVS market and expect to access the market regularly moving forward. As of October 23, we had $516 million of unused capacity on our credit facilities, and $208 million of liquidity consisting of a combination of unrestricted cash on hand and immediate availability to drawdown cash from our credit facility. In sum, we executed well on all facets of our business and we continue to position the company to expand market share and profitability in the coming quarters and years. As we've consistently noted, our Management Team and Board of Directors regularly assess our capital allocation priorities. On the heels of our outstanding third quarter performance, and based on our strong capital position, robust liquidity and confidence in our long-term strategy and ability to generate excess capital to return to shareholders on a regular basis. Our Board of Directors approved a quarterly dividend of $0.20 per share, and authorized a $30 million share repurchase program. The quarterly dividend and the repurchase program enable us to return significant value to our shareholders, while at the same time allowing us to maintain a strong balance sheet and the necessary capital to invest in our long-term growth strategy. Looking ahead, we're excited about our growth prospects. We continue to invest heavily in our omni-channel digital and marketing initiatives as we see considerable opportunities to generate significant growth and expand our market share moving forward. We entered the fourth quarter with $1.1 billion of net finance receivables and thus far in October, we have continued to experience a steady uptick in the number of loan applications and originations, further evidence of rebounding consumer demand, and the early effectiveness of our growth strategy. As I noted on our prior call, we completed the rollout of a remote loan closing capabilities across our network in July. Our remote loan closing process enables our customers to extend and expand their borrowing relationship with us from the comfort of their home, while still allowing us to maintain the exact same underwriting standards that we would apply if the customers were meeting with us in our branches. After only three months, with the new capabilities fully deployed, we completed 16% of September branch originations through the road loan closing process, a demonstration of our ability to adapt successfully to the new operating environment, while continuing to provide our customers with the best-in-class service and experience that they've come to expect for loans. Over the next 18 months, we expect to test and implement a number of exciting digital growth initiatives. For example, in the third quarter, we experienced early positive results from a test of our larger loan offers to our highest credit quality customers. And a test of direct mail offers to expand in segments of our risk response model, which we believe will generate attractive risk adjusted returns. By early 2021, we expect to complete the migration of IT infrastructure to the cloud. And in the first half of 2021, we plan to rollout and improve digital pre-qualification experience for our customers, including expanded integrations with existing and new digital affiliates and lead generators. Early next year, we also plan to enter a new state as we continue our footprint expansion. And we intend to pilot a guarantee loan offer program, which will be an alternative to our convenience check loan product and maybe fulfilled online with ACH funding into a customer's bank account. In the second half of 2021 and early 2022, we expect to test the digital origination product and channels for new and existing customers. In parallel, we plan to improve our customer experience through the introduction of a mobile app, and the enhancement of our customer portal. Being available at the customer's convenience is imperative now more than ever, and having modern capabilities that further enrich the customer experience will only aid in our ability to retain our current customers and win new customers. We believe that our omni-channel and digital investments will allow us to extend the geographic reach of our existing branches, enter new markets more quickly and with lower branch density, enable new growth and higher average receivables per branch and ultimately further expand our revenue and operating efficiencies, leading to stronger bottom line growth. As we grow and introduce new channels, products and service features, we remain keenly focused on maintaining the credit quality of our portfolio. We're proud of the job we've done in preserving a strong and stable credit profile. Our ongoing credit performance is a testament to the quality of our pre-pandemic underwriting criteria, our custom scorecards, the bridge provided by borrower assistance programs and government stimulus, and our ability to quickly adapt our underwriting criteria as the operating and macroeconomic environment above. Our investment in our credit infrastructure over the past several years has paid dividends in 2020 and has positioned us well to pursue our growth initiatives over the long-term. Looking ahead, we plan to continue investing in further improving our underwriting including through alternative data, and advanced machine learning tools and models that will expand the use of trended credit attributes. Maintaining sharp focus on our credit quality will help to ensure the top line expansion translates into sustainable bottom line growth. To aid in the execution of our ongoing initiatives, we announced last month that Harp Rana will be joining us in November as our new Chief Financial Officer, along with her significant financial and credit expertise, Harp has extensive experience in steering digital initiatives and innovation at Citi making her an ideal fit for the role. We look forward to having her as a key member of the team. And I would be remiss if I didn't thank Mike for doing an outstanding job in the interim CFO position. I look forward to continuing to work with him in his ongoing role as our Chief Accounting Officer. In summary, I want to thank our team members who continue to perform admirably for an outstanding third quarter performance in all respects. We remain confident in the sustainability of our operating model, the resilience of our customers, and our team's ability to execute in a challenging environment. We're very pleased with our results and with our ability returned capital to our shareholders, and we're excited about what the future holds. I'll now turn the call over to Mike to provide additional color on our financials.

Thank you, Rob, and hello everyone. Let me take you through our third quarter results in more detail. On Page 3 of the supplemental presentation, we provide the third quarter financial highlights; we produce net income of $11.2 million and diluted earnings per share of $1.01 driven by sequential portfolio growth, stable credit performance and low funding costs. H4 displays our portfolio growth and mixed trends through September 30. We closed the quarter with net finance receivables of $1.1 billion, up $37 million sequentially due to rebounding consumer demand and the execution of our new growth initiatives. Our core loan portfolio grew $41 million or 4% sequentially and $10 million or 1% year-over-year. We continue to originate new loans with appropriately tightened lending criteria. As illustrated on Page 5, branch originations further increased from $67 million in June to $82 million in September. Meanwhile, direct mail and digital originations increased from $12 million in June to $27 million in September. Total originations for the third quarter of 2020 decreased 12% over the prior year period. The year-over-year change in total originations has consistently improved for the past five months with September originations increasing 7% year-over-year. We expect fourth quarter originations to decline from third quarter levels as part of our normal seasonal pattern, which should result in modest sequential portfolio growth in the quarter. However, the timing of any new government stimulus check would temporarily reduce loan demand. Turning to Page 7, total revenue declined 1% in the interest and fee yield declined 60 basis points year-over-year, due to the continued product mix shift toward large loans in the portfolio composition shift toward higher credit quality customers with slightly lower interest rates due to enhanced underwriting standards during the pandemic. Interest and fee yield increased 100 basis points sequentially as a result of increased renewal activity and the recognition of unearned revenue on those renewals. In the fourth quarter, we expect interest and fee yield to be 30 basis points lower than the third quarter as of September 30, 80% of our loan portfolio at an APR at or below 36%. Total revenue yield which includes our insurance net income, decreased 40 basis points year-over-year also due to the change in product mix and portfolio composition shift to higher credit quality customers. As a reminder, customers purchased unemployment insurance coverage from us to help keep their loan payments on track, even during an unforeseen unemployment event. As of September 30, 53,000 or 13% of our customer accounts are covered by unemployment insurance. In the first quarter of 2020, we recorded a $1.3 million IUI reserve related to elevated unemployment claims at the start of the pandemic. Based on IUI claim frequency today, no additional reserves were required in the second or third quarters. In the fourth quarter, we expect our total revenue yield to be 50 basis points lower than the third quarter. Moving to Page 9, our net credit loss rate was 7.8% for the third quarter of 2020, a 30 basis point improvement year-over-year, and 280 basis point improvements from the second quarter of 2020. We expect to see the impact of the pandemic on our net credit loss rate, more prominently in the middle of 2021 with the timing dependent on macro conditions and the impact of any additional government stimulus. Looking to Page 10, the credit quality of our portfolio remained stable. Our 30 plus day delinquency level at September 30 was 4.7%, which was a 10 basis point improvement from the second quarter and a 180 basis point improvement year-over-year. 74% of our core loan portfolio has now passed our scorecard underwriting criteria. In addition, approximately 40% of our total loan portfolio has been originated since April, the vast majority of which was subject to enhanced underwriting standards deployed following the outset of the pandemic. Turning to Page 11, we ended the second quarter with an allowance for credit losses of $142 million or 13.9% of net finance receivable. During the third quarter of 2020, the allowance increased by $2 million, with a base reserve build of $3.5 million from portfolio growth, partially offset by a macroeconomic reserve release of $1.5 million. We ran several updated economic stress scenarios, and our final forecast assumed elevated unemployment in 2020, with a gradual decline 9% by the end of 2021. The severity and duration of our macro assumptions remained relatively consistent with the second quarter model. We ended the third quarter with an allowance for credit losses of $144 million or 13.6% of net finance receivable inclusive of $31.9 million of COVID-19 related reserves. We are confident that we are sufficiently reserved if the pandemic continues for an extended period. Looking to Page 12, G&A expenses in the third quarter of 2020 were $43.8 million up $3.6 million year-over-year, but better than our sequential guidance for the quarter by $0.7 million. As we reposition the business for future growth, we adjusted our workforce in the third quarter and incurred $0.8 million of non-operating severance expense. The savings from these actions will be used to fund our omni-channel and digital investments. We deferred $0.9 million less in loan origination costs on less loan volume in the third quarter of 2020, which increased personnel expense year-over-year. We increased marketing expense year-over-year by $0.9 million to support our growth initiative. Lastly, the third quarter of 2020 included $0.8 million of incremental costs related to new branches that opened since the prior year period. Our operating expense ratio was 17% in the third quarter of 2020 with the items previously noted impacting the ratio by 130 basis points. We remain focused on investing in our digital capabilities and marketing efforts. All to drive new revenue opportunities enhance our customers’ omni-channel experience and create long-term operating leverage. In parallel with these efforts, we executed cost management actions including the aforementioned workforce reduction to self fund a large portion of the digital investment, excluding marketing, expenses in the second half of 2020 are forecasted to be down from the first half of the year, which evidences the self funding of the digital initiatives. Overall, we expect G&A expenses for the fourth quarter to be higher than the third quarter by $1.7 million, encompassing $1 million of increased marketing and the remainder related to investment in digital capability. Turning to Page 13, interest expense of $9.3 million in the third quarter of 2020 was $1 million lower than the prior year period due to the lower interest rate environment and despite $0.8 million of accelerated amortized debt issue costs incurred during the third quarter of 2020. These costs related to repaying our first securitization, with the proceeds from our latest securitization transaction. In late September, we closed our fourth and largest asset-backed securitization, a $180 million note issuance, with a weighted average coupon of 2.85% our lowest cost of capital ever. Our third quarter annualized interest expense as a percentage of average finance receivables was 3.5% a 50 basis point improvement year-over-year. During the third quarter, we purchased $150 million of interest rate cap contracts with three-year terms and a strike rate against LIBOR of 50 basis points. We took advantage of the favorable rate environment and help secure our funding costs for the future. In the fourth quarter, we expect interest expense to be approximately $9.1 million. Our effective tax rate during the third quarter of 2020 was 27% compared to 25% in the prior year period. In the ordinary course of business, we have non-deductible expenses, taxes on share-based compensation and State Taxes in Texas that largely do not vary based on pre-tax income. So these items have a larger impact on our effective tax rate when pre-tax income is lower. Our 27% effective tax rate for the third quarter of 2020 was better than our guidance of 30% as pre-tax income increased on sequential loan growth, strong credit results and low funding costs. In the fourth quarter, we expect our effective tax rate to be approximately 27%. Page 14 is a reminder of our strong funding profile, our third quarter funded debt-to-equity remained at a very conservative 2.6 to 0.1 low leverage coupled with $144 million in loan loss reserves provides [Indiscernible] for our balance sheet. In the completion of the securitization transaction during the third quarter improved our liquidity profile and borrowing capacity even more. In summary, we have more than adequate liquidity and capacity to support the fundamental operations of our business throughout the pandemic. That concludes my remarks. I’ll now turn the call back over to Rob to wrap up.

Thanks Mike. In summary, we exited the third quarter with solid operating results, strong balance sheet, ample liquidity, stable credit profile and an exciting long-term growth trajectory. We are very pleased with our performance our current position and with our Board of Directors decision to begin regularly returning excess capital to our shareholders. Thank you again for your time and interest. I’ll now open up the call for questions. Operator could you please open the line.

Certainly. We will now begin the question and answer session. [Operator Instructions] Our first question is from David Scharf with JMP Securities. Please go ahead.

Hi, good afternoon, and thanks for taking my questions. First off, Rob, you kind of rattled off an awful lot of sort of new growth initiatives next year, I couldn't get them all down. But I was just wondering at a high level, whether it's new -- trying to think about how to rank maybe the prioritization, in your mind as you think about what might be most impactful to origination volumes over the next maybe 24, 30 months? Is it new stores? Is it the digital convenience checks or just remote closing? How should we be thinking about how the origination model is ultimately changing?

Yes, David, great question and good to hear from you. So I guess -- well I look at it this way, the growth we saw in the third quarter, the $41 million increase in receivables. About half of that came from some of the new initiatives that we listed, whether that was testing some larger offers to our very best credit quality customers. Some of the enhanced analytics we use for our direct mail program to kind of expand the segments that we're marketing into within our risk response models. We talked about extended footprint mailing before. So we're starting to see some early results from those initiatives, I think the key takeaway, and we did pack in a lot in my commentary there is this is all about really finally building out that true omni-channel experience. So the customer can be served where and how they want. And we think that's going to be critical post-COVID. The things we're going to be rolling out next year is going to ultimately allow us to do end-to-end digital originations, whether that's on a mobile app or our portal. And when you have those capabilities that can be applied in numerous ways to not only expand the top line, and grow your balance sheet and your receivables, but also drive efficiencies in the organization. And so then when you think about, we talked about entering a new state next year, as we think about entering new markets, not only could that allow you to do that in a more efficient way with less stores, but it can also ramp up your ability to enter more geographies faster. So it's hard for me to give any kind of quantification now, other than, I think part of the confidence in returning capital to our shareholders is the confidence that we have in our long-term business model and ability to return excess capital to our shareholders.

Got it. Understood. I appreciate that. And maybe just one follow up. I guess, with roughly 80% of balances now, it sounded like at or below 36%. You obviously can control based on what types of products you're actually marketing either digitally or direct mail. Did you have a goal in mind time wise or when you would prefer perhaps for the portfolio to be entirely at that level particularly in advance of what potentially could be a different regulatory environment in Washington?

in: But stepping back more from a practicality standpoint and no one could predict what's going to happen in Washington, the access to credit that would get taken away, if there's a 36% rate cap, it couldn’t impact I don't know, 100 million Americans. And that's going to have a significant impact on the economy right, as we're hopefully coming out of COVID. And so while it sounds good that there's a 36% rate cap, I'm not sure from a practical standpoint, that's going to be beneficial to the economy and get through. But again, whichever way it goes, we're well positioned. And we like where we stand.

Great. Thanks very much. Congratulations.

Thanks David.

Thank you. The next question comes from Sanjay Sakhrani with KBW. Please go ahead.

your:

Hey, Steven, thanks for the question. I'll take the first part and probably kick the reserve question over to Mike. So where we stand now, delinquencies at 4.7% or just off historical lows. And we do expect that delinquencies, as we've said previously will start to rise. Given where we are in the year, I think right now you're looking at apps and any more government stimulus, you're looking at maybe middle of the year, next year, where you start to see the COVID related losses come through, of which we are reserved well for. So that's kind of the outlook at the moment. Now, obviously, if there's additional government stimulus, and we don't know the timing or the form, but I would expect that would extend the benefit on the delinquencies and push further out the losses, depending on what the nature of that stimulus is. Mike, you want to cover from a reserve standpoint?

Sure. Hey, Steven, good afternoon. And your thesis is correct on the reserving for the losses here in 2020 that would release of the reserves would offset those losses when they come through in 2021. So just to give you a little background on model assumed elevated unemployment in 2020 with a gradual decline to 9% by the end of next year. We then made adjustments to the model to account for some of the benefits of our internal borrower assistance programs. In the third quarter, our severity and duration of our assumptions remain pretty consistent with where the second quarter model was. And overall, we're confident that we are sufficiently reserved if the pandemic continues for extended period. As Rob mentioned, we do expect the delinquency to rise during the fourth quarter. But a lot of that is going to depend on the timing and level of any government stimulus. But in the meantime, we have $31.9 million of COVID related reserves, which is about a 30% stress on our normal reserve rate that we came into 2020 with on CECL, and so we feel comfortable with reserves being able to cover the impact of COVID losses in 2021.

Great, thanks. And just as a quick follow up, like -- are you seeing anything on the consumer side, as some of the stimulus program has kind of gone away? Want to see if you are seeing anything on it?

Well Steven, the additional unemployment expired, the FEMA money that was redirected was largely used up to by the end of September. And so we really haven't seen an impact on our delinquencies ending at 4.7%. And so far in October, we're tracking well to be below 5%. The side to government stimulus, there's other things that are supporting our customer mean and the economy in general. And I think that if you think about the, the forbearance programs with the mortgage forbearance programs and the government agencies, I think up to a third of customers may be taken advantage of those forbearance programs, the average benefit is about $1,100 in cash paid per month. So obviously, star customers may be on the -- below the average in terms of cash saved. But you take that you combine that with people spending less money. And what that translates into is a much higher savings rate. And I think you can see that from some of the metrics being reported, I think, savings are up $12 trillion, since the beginning of the pandemic, and that's really across all income banks, debt-to-income is -- has improved. So the consumers’ balance sheet is pretty healthy. I saw some research recently that suggested for the pure government stimulus that was provided, about a third of the of the dollars want to pay down debt, a third want to spending, and third want to savings. So, there's underlying support beyond direct government stimulus. But clearly, if there's additional government stimulus, that's going to add further support on the credit side. Now, just to be clear, a little bit of a double edged sword,, I do think if there's stimulus checks, at least in the very short-term, you might have some impact on demand for a month or two or a quarter as any stimulus dollars, burn through, but net-net, we're sitting in a pretty good shape, the customer I think, is in better shape. And of course, as Mike said, we're, we've got substantial reserves relative to our current delinquencies at this point in time.

Got it. Thanks for taking my question.

[Operator Instructions] The next question comes from the line of [Indiscernible] of Jefferies. Please go ahead.

Hey, guys, thanks for taking my question. I am for John Hecht today. Just wanted to touch on the omni-channel platform, how it's going to affect the cost structure going forward, and what else do you expect to see out of it, especially in like, ‘21, ‘22?

Yes, a little bit too early to tell how that's all going to play out. As you saw, there are various initiatives we have; I think fundamentally, over time, it is going to improve our cost efficiency. The more customers you service through digital means, the lower the cost will be, if we enter new states with a thinner brands footprint that obviously reduces our origination costs. Part of it -- the reason why I can't give you a straight answer is it really all comes down to the pace of implementation and we're very early in testing some things and we're investing and building out the rest of the capabilities. And, where we finally land is in part going to be, how quickly we can, affect pace of change. And of course along the way, make sure that we're meeting the needs of the customer with the right capabilities. And that's never just a straight line. You test and you learn and you pivot, I think we've learned to be very nimble in the environment during global pandemic. And that's going to pay-off in spades as we digitize the business and build out our omni0channel strategy.

Awesome, thanks. And then another quick one for ‘21 is, how should we think about the branch build-outs? I know you said in your release that we're expecting one for 4Q but going forward or is it too early to tell there?

A little early to tell, I would tell you this, we are going to enter a new state. So you can kind of pencil in right now, approximately 10 new branches, I'm not going to say that they're all going to be in the new state, we do have some opportunities in some of our other regional states we've entered. So, you can pencil in 10 for now. We'll get back to you on more details as we finish up our plan for next year.

Awesome. Thank you so much.

The next question comes from Bill Dezellem with Tieton Capital. Please go ahead.

Thank you. You walk through a number of new digital initiatives over the course of the next 12 or so months, would you please highlight which one of those is going to have the greatest overall impact on the business? Number one. Number two, which one, you'd expect to have the biggest impact on loan growth? And number three, the one that you expect to have the biggest impact on credit?

So Bill, good to hear from you. Yes, we're probably not going to get too far over our skies on any of these initiatives, I can tell you, there are several things we're working on, that we think are very attractive growth opportunities. Obviously, as we enter new states that's always a very nice runway for growth. But, the other capabilities we have around using our data to mail more effectively and efficiently things we may do to extend the reach of our branches, all of those things are going to have a positive impact. And it's not as if we have to choose one over the other, many of these things can be done simultaneously and be built into just the way we operate. Clearly, as we digitize and we go end-to-end in terms of our capabilities to underwrite for new and existing borrowers that opens up tremendous Greenfield opportunities for us to expand our growth. But on the credit front, what I'll tell you is, there's nothing we're doing, that we are keeping laser focus on credit, particularly given the environment with the pandemic, but when you do new strategies, obviously, we are going to be laser like focused on the underwriting the strategies that we started to put together in the -- in fact, in the third quarter all those have been done with the existing underwriting standards we have, I think it's worth pointing out that, since the start of the pandemic, we turned over about 40% of our portfolio. So far, the vast majority of those new receivables has been put on the books with Titan or enhanced credit underwriting. And that's higher FIFO cut-offs, maybe lending less to certain segments, more robust income verification use of other information to guide us in terms of our direct mail program from a risk standpoint, and we're going to build out -- continue to build out our credit infrastructure and go beyond our existing custom scorecards and really start to leverage a broader set of data elements and beyond the ‘23 or ‘24, we have we're talking about thousand or more, which other firms -- some other firms utilize and take advantage of machine learning to make our underwriting even more sophisticated. So, when you take those elements along with tools that exist out there today in particular with digital underwriting to protect fraud, all of those activities are going to help us, grow the top line through these new strategies, but maintain very tight control over our credit, so that we can maintain the returns in the business.

Thank you. And let me ask a -- another unrelated question. To what degree do the category that a person is employed in? And specifically, I'm trying to understand to what degree do you -- could you just pull up the proportion of your customers that are restaurant servers, for example or work in hospitality, just some of these higher risk areas?

Yes, we have the ability to sort by industry, obviously, there's always going to be some noise in the data based on your sources of information, whether it's something that has been reported accurately by the customer or not. So we have the ability to look at that. We have the ability, and we have suppressed certain industries like oil and gas for our direct mail program as an example. So we have the ability to look at that. We know that proportion in our portfolio, not just an aggregate, but at state level. And of course, we look at the performance of the business at a very granular level. But clearly, as we continue to build out our data analytic capabilities, in the credit side, we'll just get better and better at it.

And your credit has been great. But have you seen a difference in behavior amongst customers, either geographically or by type of employment or a type of employer category?

Yes, performance has been pretty consistent across all our states. Obviously, if someone's unemployed, there's more stress. There's obviously been a lot of support for the unemployed, which I think, obviously, improves the performance of that segment, along with all the other, I think, support that that's out there in the economy in general, whether it's forbearance programs and alike, so. But the performance is pretty steady across the portfolio. And, we're pleased with where we are, but we're also watching it like a hawk. And, I think that's what you would expect us to do, and we're reserved obviously for any stress that comes.

Great. Thank you. And, Mike, thanks for the great job you've done.

Thanks for the kind words Bill.

Thanks, Bill.

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

Yes, thank you, operator. And thanks, everyone, for joining. As I said, we're really pleased with the results this quarter. Obviously, the environment is still uncertain. And, top of mind for us is the safety and health of our employees and our customers. We remain there for our customers. We are seeing and have seen a pickup in demand. And we're encouraged of where the future holds. I will tell you that, very confident in the strength of this business. And, just a slight stipulate of some facts with $272 million of equity. We have $208 million of available liquidity as of October 23, $144 million alone losses and $507 million of unused borrowing capacity to support our growth and our earnings in the quarter, all of which were up strongly since the second quarter. So we're confident in the strength of our business. We're optimistic in the future for the business and the growth opportunities. And we are watching the environment closely. And we're prepared and we remain nimble to address whatever challenges faces as a business. So thanks, thanks for joining the call and have a good day.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.