Regional Management Corp. · NYSE:RM
Regional Management — Investor Presentation (November 2020)
32 slides from Regional Management's investor presentation, Nov 12, 2020
Slide 1: Investor Presentation November 12, 2020
Investor Presentation November 12, 2020 Exhibit 99.1
Slide 2: Legal Disclosures
Legal Disclosures This document contains summarized information concerning Regional Management Corp. (the “Company”) and the Company’s business, operations, financial performance, and trends. No representation is made that the information in this document is complete. For additional financial, stati
Slide 3: Investment Highlights
Investment Highlights Clear Path Forward for Sustainable Long-Term Growth Successful Differentiated Growth Strategy Advanced Credit Tools Deep Management Experience Abundant Market Opportunity Modern Infrastructure
Slide 4: Originations Increase & Credit Quality Remains Stable
Originations Increase & Credit Quality Remains Stable September originations up 7% year-over-year driven by increased demand and the execution of new growth initiatives Branch originations further increased from $67.0 million in June to $82.3 million in September Continue direct mail and digital cha
Slide 5: Significant Capacity to Absorb Losses
(1) TTM Margin defined as total revenue of $374.4 million, less general and administrative expenses of $172.4 million and interest expense of $38.9 million from 4Q 19 through 3Q 20 (2) Net credit losses as a percentage of average net finance receivables Significant Capacity to Absorb Losses
Slide 6: Stable Profitability While Investing for the Long-Term
Stable Profitability While Investing for the Long-Term Deployed custom credit scorecards, convenience check risk/response models Approximately 74% of core branch small and large portfolio underwritten using custom scorecards as of September 30, 2020 Large loan portfolio receivables CAGR of 68% from
Slide 7: Abundant Market Opportunity to Serve the Underserved
Abundant Market Opportunity to Serve the Underserved Approximately 80 million Americans generally align with Regional’s customer base $82 billion market opportunity – RM has less than 2% market share; significant runway for growth $4.1 Trillion Consumer Finance Market (1) 31% of US Population with F
Slide 8: Supporting Growth to Generate Shareholder Value
Supporting Growth to Generate Shareholder Value Hybrid approach for portfolio growth – increasing receivables per branch and de novo expansion Differentiated go-to-market strategy offering small and large loans Well-established, cost-efficient omni-channel sales with integrated marketing Modernized
Slide 9: Hybrid Approach to Growth
Hybrid Approach to Growth Multiple channels and products provide attractive market opportunities Most loans serviced and collected through branches Late-stage delinquencies collected through centralized collections group Most branches with significant capacity to increase size of their portfolios En
Slide 10: Multi-Product Offering Fits Customer Needs
Multi-Product Offering Fits Customer Needs Size (a) Term Security Net Finance Receivables (b) # of Loans (b) Average APR (c) Range: $500 to $2,500 Average: ~$2,000 Up to 48 months Non-essential household goods $382.8 million ~247,000 41.7% Range: $2,501 to $12,000 Average: ~$5,400 18 to 60 months Ti
Slide 11: Core Loan Portfolio Growth Driven by Large Loan Receivables
Core Loan Portfolio Growth Driven by Large Loan Receivables Since adding large loans as a core product in 2015, large loan receivables have grown from $47 million to $656 million Large Loan CAGR of 68%
Slide 12: Digitally-Sourced Originations
Digitally-Sourced Originations Digital originations are sourced from either our affiliate partnerships or directly from our website All digitally-sourced loans are underwritten in our branches by our custom credit scorecards and serviced by our branches As of 3Q 20, our digital volume represented ap
Slide 13: Omni-Channel Originations Provide Market Opportunities
$23.3MM Omni-Channel Originations Provide Market Opportunities Branches are the foundation of Regional’s multi-channel strategy. Mail campaigns attract approximately 100,000 new customers per year to Regional. Regional continues to expand digital channel / online lending capabilities to acquire cust
Slide 14: NLS Platform Supports Advanced Marketing & Analytics
NLS provides visibility to the “application funnel” that was previously invisible Applications System Eligible Branch Approved (Marketing Stimulus) Pre-NLS Post-NLS NLS Platform Supports Advanced Marketing & Analytics Understanding “funnel dynamics” provides significant benefit to Marketing, Risk, a
Slide 15: Regional's Digital Journey – Past, Present and Future
Regional’s Digital Journey – Past, Present and Future Rudimentary processes and no prequalification criteria to acquire digital leads Lead generation through online affiliates Servicing via customer portal Remote closings for renewals Paper-based loan application process Labor intensive data entry r
Slide 16: Developing Omni-Channel Capabilities
Developing Capabilities to Provide Customers the Choice of Where and How to Interact With Us In Branch Phone Browser Originate Service Renew existing future Omni-Channel Capabilities Mobile
Slide 17: Top-Shelf Customer Experience
Top-Shelf Customer Experience Net promoter score of 58, representing our customers’ strong loyalty and willingness to recommend our products to others (1) 90%+ favorable ratings for key attributes (1): Loan process was quick, easy and understandable People are professional, responsive, respectful, k
Slide 18: Our Typical Customer
Our Typical Customer Annual income (1) $45,000 Some college or advanced degree (1) 61% Our customer demographics… How we solve their financial needs… Average age 53 years Homeownership 57% (1) Sourced from Fall 2020 Customer Satisfaction Survey
Slide 19: Robust Loan Approval Process
Send to Branch Underwriting Decision Branch Exceptions Review Credit Assess Ability to Repay Positive Net Cash Flow Audits Initial Decision Review of Customer Financials Underwriting Exceptions Sent to Home Office Credit Custom Decision Engine Final Decision Book New Loan Credit / Underwriting Proce
Slide 20: Operating Expense and Efficiency Ratios
Operating Expense and Efficiency Ratios Operating Expense Ratios ($ in millions) ($ in millions) (1) Excludes non-operating G&A expenses of $3.1 million related to executive transition costs, $0.7 million from the system outage, and $0.8 million of severance related to workforce actions (2) Excludes
Slide 21: Volume Driven Revenue Growth
Volume Driven Revenue Growth ($ in millions) ($ in millions) Net Finance Receivables Total Revenue
Slide 22: Growing Receivables and Expanding Bottom Line Lead to Consistent Returns
Growing Receivables and Expanding Bottom Line Lead to Consistent Returns ($ in millions) Net Income & Diluted Earnings Per Share Return on Assets & Return on Equity Expansion of net income and EPS follows receivable growth, coupled with consistent returns
Slide 23: Funding Facilities
Senior Revolver Size: $640 million Interest Type: Floating Maturity: September 2022 Lenders: Wells Fargo Bank (Agent), Bank of America, BMO Harris, First Tennessee, Texas Capital, Synovus, Bank United, Axos Bank Collateral: Allows for the funding of Small, Large, and Retail loans Facility has been u
Slide 24: Strong Funding Profile
Strong Funding Profile (1) This is a non-GAAP measure. Refer to the Appendix for a reconciliation to the most comparable GAAP measure (2) Annualized interest expense as a percentage of average net finance receivables (1) As of September 30, 2020, total undrawn capacity was $507 million (subject to b
Slide 25: Announcement of Capital Return Plan
Announcement of Capital Return Plan Shareholder value creation… Our Board of Directors authorized a new $30 million share repurchase program and initiated a quarterly dividend of $0.20 per common share beginning in 4Q 2020. The Board and Management have confidence in our business model’s ability to
Slide 26: Investment Highlights
Investment Highlights Clear Path Forward for Sustainable Long-Term Growth Successful Differentiated Growth Strategy Advanced Credit Tools Deep Management Experience Abundant Market Opportunity Modern Infrastructure
Slide 27: Appendix
G@REGIONAL MANAGEMENT Appendix _ ——_ .|
Slide 28: Deep and Tested Management Experience
Deep and Tested Management Experience Rob Beck President and CEO John Schachtel COO Manish Parmar Chief Credit Risk Officer Mike Dymski Interim CFO and CAO Jim Ryan Chief Marketing Officer 25+ years of financial services experience Regional Management’s Chief Accounting Officer since 2016 Prior to j
Slide 29: Strong Corporate Governance and Board of Directors
Strong Corporate Governance and Board of Directors Jonathan Brown Partner with Basswood Capital Management, LLC Formerly at Sandelman Partners Formerly at Goldman Sachs Maria Contreras-Sweet Former Administrator of U.S. Small Business Administration Founder of ProAmerica Bank Former Secretary of CA’
Slide 30: Non-GAAP Financial Measures
Non-GAAP Financial Measures In addition to financial measures presented in accordance with generally accepted accounting principles (“GAAP”), this press release contains certain non-GAAP financial measures. The company’s management utilizes non-GAAP measures as additional metrics to aid in, and enha
Slide 31: Non-GAAP Financial Measures (Cont'd)
Non-GAAP Financial Measures (Cont’d)
Slide 32: EGIONAL
EGIONAL R MANAGEMENT GE REGIONAL ies MANAGEMENT nyse
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