Regional Management Corp. · NYSE:RM
Regional Management — Q3 2023 Earnings Presentation
22 slides from Regional Management's earnings presentation, Nov 1, 2023
Slide 1: 3Q 2023 Earnings Presentation
3Q 2023 Earnings Presentation November 1st, 2023
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: 3Q 2023 Financial Highlights
3Q 2023 Financial Highlights $ Chg % Chg $ in millions (except per share amounts) 3Q 23 3Q 22 B/(W) B/(W) Net income of $8.8 million and diluted EPS of $0.91 Interest & Fee Income $ 125.0 $ 116.0 $ 9.0 7.8% Insurance Income, Net 11.4 12.0 (0.6) (5.0%) Total revenue increased $9.4 million, or 7.2% Ot
Slide 4: Originations Trend
Originations Trend ($ in millions) Quarterly Origination Trend We continued to control growth, with originations up 1.5% over the $470.3 prior-year period; originations were $420.7 $434.4 $426.3 $418.7 $425.1 concentrated on programs to $377.7 $399.0 present and former borrowers, which perform bette
Slide 5: Digitally Sourced Originations
Digitally Sourced Originations • Digital originations are sourced from either our affiliate partnerships or directly from our website, underwritten by our custom credit scorecards, and serviced by our branches • Digital volume represented 28.3% of our total new borrower volume in 3Q 23 • Large loans
Slide 6: Controlled Portfolio Growth and Solid Small Loan Growth
Controlled Portfolio Growth and Solid Small Loan Growth Ending Net Receivables (ENR) vs. 2Q 23 vs. 3Q 22 ($ in millions) 2Q 21 3Q 21 4Q 21 1Q 22 2Q 22 3Q 22 4Q 22 1Q 23 2Q 23 3Q 23 $ Chg I/(D) % Chg I/(D) $ Chg I/(D) % Chg I/(D) Small Loans (≤ $2,500) $381 $420 $445 $438 $455 $480 $482 $456 $445 $47
Slide 7: Higher ENR Per Branch is Driving Efficiency
Higher ENR Per Branch is Driving Efficiency • Branch consolidations and our new-state, lighter-footprint strategy with larger branches are driving higher ENR per branch • Same store(1) year-over-year growth rate of 4.9% in 3Q 23 vs. 19.2% in the prior-year period ($ in thousands) Ending Net Finance
Slide 8: Revenue Up 7.2% on Controlled Receivable Growth
Revenue Up 7.2% on Controlled Receivable Growth ($ in millions) Total Revenue $131.5 $132.0 $135.4 $133.5 $140.9 Revenue grew 7.2% year-over-year to a $111.5 $119.5 $120.8 $122.9 record $140.9 million in 3Q 23 Other Income $99.7 Insurance Income Interest and Fee Income Total revenue yield decreased
Slide 9: Recent Credit Trends
Recent Credit Trends ($ in millions) 30+ & 90+ Delinquency Rates $128.4 $119.8 $121.2 $116.0 $116.3 $64.6 $67.6 $52.6 $94.7 $57.7 $58.6 30+ days past due of 7.3% increased 10 30-89 Days 90-179 Days $84.9 $82.0 $51.2 basis points versus prior year and 40 90+ DQ % $45.7 $36.2 basis points sequentially
Slide 10: Reserved For Stressed Credit Losses
Reserved For Stressed Credit Losses In 3Q 23, loan loss reserves increased due to portfolio growth, partially offset by changes in estimated future macroeconomic impacts on credit losses, resulting in a net increase in the reserve of $3.5 million ($ in millions) Loan Loss Reserves $5.0 $183.8 $181.4
Slide 11: Achieving Operating Leverage While Investing in Our Business
Achieving Operating Leverage While Investing in Our Business ($ in millions) Operating Expense Ratio $62.1 3Q 23 operating expense ratio $58.2 $59.3 $55.5 $55.1 $54.1 $55.1 $56.9 improved 50 basis points from Total G&A Expense $47.8 the prior-year period % of ANR (1) $46.4 16.5% 16.3% 3Q 23 year-ove
Slide 12: Cost of Funds
Cost of Funds 3Q 23 interest expense as an annualized percentage of ANR increased 100 basis points year-over-year on higher interest rates and ENR growth 1Q 23 includes accelerated debt issue costs amortization of $0.6 million, or 10 basis points, related to the early payoff of a $75 million warehou
Slide 13: Strong Funding Profile
($ in millions) Unused Debt Capacity Strong Funding Profile $613 $557 $555 As of September 30, 2023, total unused capacity was $613 million (subject to borrowing base) $438 Available liquidity of $179 million as of September 30, 2023 2020 2021 2022 3Q 23 Fixed-rate debt represented 87% of total debt
Slide 14: 4Q 2023 Outlook
4Q 23 Outlook Key Metrics 3Q 2023 Results 4Q 2023 Outlook ENR Growth $62.1 million ~$35.0 million 20 basis points sequential Interest & Fee Yield 29.0% decrease 50 basis points sequential Total Revenue Yield 32.7% decrease Net Credit Losses $47.4 million ~$52 million Reserves as % of ENR 10.6% 10.4%
Slide 15: Appendix
a> CBERIONAL 15
Slide 16: Significant Capacity to Absorb Losses
Significant Capacity to Absorb Losses $ in millions 3Q 23 Total stockholders' equity $330.6 Allowance for credit losses 184.9 (1) TTM net income 25.9 Absorption capacity including TTM net income $541.4 Absorption capacity as % of net finance receivables 30.9% Total stockholders' equity $330.6 Allowa
Slide 17: Diversified Liquidity Profile
Diversified Liquidity Profile Long history of liquidity support from a strong group of banking partners Diversified funding platform with a senior revolving facility, warehouse facilities, and securitizations Senior Revolver Warehouse Facilities Private Securitization Securitizations Size $420 milli
Slide 18: Consolidated Income Statements
Consolidated Income Statements $ in thousands 3Q 23 3Q 22 2022 2021 2020 2019 Revenue Interest and fee income $ 125,018 $ 116,020 $ 450,854 $ 382,544 $ 335,215 $ 321,169 Insurance income, net 11,382 11,987 43,502 35,482 28,349 20,817 Other income 4,478 3,445 12,831 10,325 10,342 13,727 Total revenue
Slide 19: Consolidated Balance Sheets
Consolidated Balance Sheets $ in thousands 3Q 23 3Q 22 2022 2021 2020 2019 Cash $ 7,413 $ 3,140 $ 3,873 $ 10,507 $ 8,052 $ 2,263 Net finance receivables 1,751,009 1,607,598 1,699,393 1,426,257 1,136,259 1,133,404 Unearned insurance premiums (48,764) (49,789) (51,008) (47,837) (34,545) (28,591) Allow
Slide 20: Non-GAAP Financial Measures
Non-GAAP Financial Measures In addition to financial measures presented in accordance with generally accepted accounting principles (“GAAP”), this presentation contains certain non-GAAP financial measures. The Company’s management utilizes non-GAAP measures as additional metrics to aid in, and enhan
Slide 21: Non-GAAP Financial Measures (Cont'd)
Non-GAAP Financial Measures (Cont’d) (1) $ in millions TTM Pre-Tax Pre-Provision Income (Non-GAAP) Reconciliation Net income $25.9 Income taxes 5.6 Provision for credit losses 211.9 Pre-tax pre-provision income (non-GAAP) $243.5 $ in millions 3Q 23 % of ENR Absorption Capacity Non-GAAP Reconciliatio
Slide 22: Non-GAAP Financial Measures (Cont'd)
Non-GAAP Financial Measures (Cont’d) $ in thousands 3Q 23 3Q 22 2022 2021 2020 2019 Total assets $ 1,765,340 $ 1,606,550 $ 1,724,987 $ 1,459,662 $ 1,103,856 $ 1,158,540 Less: Intangible assets 15,048 11,305 12,122 9,517 8,689 9,438 Tangible assets (non-GAAP) 1,750,292 1,595,245 1,712,865 1,450,145 1