Regional Management Corp. · NYSE:RM
Regional Management — Q4 2023 Earnings Presentation
25 slides from Regional Management's earnings presentation, Feb 7, 2024
Slide 1: 4Q 2023 Earnings Presentation
4Q 2023 Earnings Presentation February 7th, 2024
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: 4Q 2023 Financial Highlights
4Q 2023 Financial Highlights Net loss of $7.6 million and diluted loss per share of $0.80 Earnings were reduced by $12.6 million, or $1.34 per share, due to three discrete actions: • Restructuring charge - $1.6 million $ Chg % Chg • Sale of non-performing loans ⁽1⁾ - $3.9 million $ in millions (exce
Slide 4: Originations Trend
Originations Trend ($ in millions) Quarterly Origination Trend Year-over-year growth rate reduced from credit tightening actions; $470.3 originations were concentrated on $420.7 $434.4 $426.3 $418.7 $425.1 $407.8 programs to present and former $399.0 borrowers, who perform better $326.0 than new bor
Slide 5: Controlled Portfolio Growth and Solid Small Loan Growth
Controlled Portfolio Growth and Solid Small Loan Growth Ending Net Finance Receivables (ENR) vs. 3Q 23 vs. 4Q 22 ($ in millions) 3Q 21 4Q 21 1Q 22 2Q 22 3Q 22 4Q 22 1Q 23 2Q 23 3Q 23 4Q 23 $ Chg I/(D) % Chg I/(D) $ Chg I/(D) % Chg I/(D) Small Loans (≤ $2,500) $420 $445 $438 $455 $480 $482 $456 $445
Slide 6: Higher ENR Per Branch is Driving Efficiency
Higher ENR Per Branch is Driving Efficiency • Branch consolidations and our new-state, lighter-footprint strategy with larger branches are driving higher ENR per branch • Same store(1) year-over-year growth rate of 1.5% in 4Q 23 vs. 14.8% in the prior-year period ($ in thousands) Ending Net Finance
Slide 7: Revenue Up 7.3% on Controlled Receivable Growth
Revenue Up 7.3% on Controlled Receivable Growth ($ in millions) Total Revenue $135.4 $140.9 $141.7 Revenue grew 7.3% year-over- $131.5 $132.0 $133.5 $119.5 $120.8 $122.9 year to a record $141.7 million Other Income $111.5 in 4Q 23 Insurance Income Interest and Fee Income 4Q 23 loan sale decreased to
Slide 8: Revenue Yield
Revenue Yield • Total revenue yield increased 20 basis points year-over-year due to the impact of pricing changes flowing into the portfolio, offset by the mix shift towards larger, higher-quality loans • 4Q 23 loan sale decreased total revenue yield by 30 basis points • 4Q 22 loan sale decreased to
Slide 9: Recent Credit Trends
Recent Credit Trends ($ in millions) 30+ & 90+ Delinquency Rates $128.4 $116.0 $119.8 $121.2 $116.3 $64.6 $122.9 4Q 23 delinquency of 6.9% decreased 40 $57.7 $67.6 $52.6 $58.6 $66.0 basis points sequentially and decreased 20 30-89 Days $94.7 basis points versus prior year $84.9 90-179 Days $82.0 $51
Slide 10: Front Book Represents 73% of Total Portfolio
Front Book Represents 73% of Total Portfolio • ENR from higher credit quality front book is becoming a larger portion of the portfolio ($ in millions) Front Book/Back Book Mix (December 31, 2023) • Front book(1) is 73% of the total portfolio, but $1,771 $123 $187(4) only 60% of the 30+ DQ ENR • Fron
Slide 11: Reserved For Stressed Credit Losses
Reserved For Stressed Credit Losses Loan loss reserves increased by $2.5 million in 4Q 23 due to portfolio growth and a $9.3 million reserve build for our back book, partially offset by a $10.8 million portfolio reserve release associated with the 4Q 23 loan sale ($ in millions) Loan Loss Reserves $
Slide 12: Continued Focus on Operating Leverage & Expense Control
Continued Focus on Operating Leverage & Expense Control ($ in millions) Operating Expense Ratio $64.8 $62.1 4Q 23 operating expense ratio is $58.2 $59.3 Total G&A Expense $55.5 $55.1 $54.1 $55.1 $56.9 higher than prior year by 140 % of ANR (1) $47.8 basis points inclusive of the following items: 16.
Slide 13: Cost of Funds
Cost of Funds • 4Q 23 interest expense as an annualized percentage of ANR increased 40 basis points year-over-year on higher interest rates and ENR growth, while the Federal Funds Rate has increased 100 basis points year-over-year • 1Q 23 includes accelerated debt issue costs amortization of $0.6 mi
Slide 14: Strong Funding Profile
Strong Funding Profile ($ in millions) Unused Debt Capacity $557 $555 $552 As of December 31, 2023, total unused capacity was $552 million (subject to borrowing base) $438 Available liquidity of $113 million as of December 31, 2023 2020 2021 2022 2023 Fixed-rate debt represented 82% of total debt as
Slide 15: 4Q 2023 Outlook vs 4Q 2023 Results
4Q 2023 Outlook vs 4Q 2023 Results Key Metrics 4Q 2023 Outlook 4Q 2023 Results 4Q 2023 Results inclusive of: ENR Growth ~$35.0 million $20.4 million $15.9 million reduction from the loan sale 50 basis points 40 basis points Total Revenue Yield 30 basis point decrease from the loan sale sequential de
Slide 16: 1Q 2024 and FY 2024 Outlook
1Q 2024 and FY 2024 Outlook Key Metrics 1Q 2024 Outlook FY 2024 Outlook ENR Growth/(Liquidation) ~($25.0) million ~5-7% ~40 basis points sequential ~40-50 basis points year-over-year Total Revenue Yield decrease increase Net Credit Losses/ ~$47.5 million ~10.7-10.8% Net Credit Loss Rate Reserves as
Slide 17: Appendix
Appendix 17
Slide 18: Digitally Sourced Originations
Digitally Sourced Originations • Digital volume represented 23.1% of our total new borrower volume in 4Q 23 • Large loans represented 69.5% of new borrower digitally sourced loans booked in 4Q 23 • Digital originations and percent of new borrowers decreased sequentially in 4Q 23 due to credit tighte
Slide 19: Significant Capacity to Absorb Losses
Significant Capacity to Absorb Losses $ in millions 4Q 23 Total stockholders' equity $322.3 Allowance for credit losses 187.4 TTM(1) net income 16.0 Absorption capacity including TTM net income $525.6 Absorption capacity as % of net finance receivables 29.7% Total stockholders' equity $322.3 Allowan
Slide 20: 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 (1) Warehouse Facilities Private Securitization Securitizations Size $355 m
Slide 21: Consolidated Income Statements
Consolidated Income Statements $ in thousands 4Q 23 4Q 22 2023 2022 2021 2020 Revenue Interest and fee income $ 126,190 $ 117,432 $ 489,698 $ 450,854 $ 382,544 $ 335,215 Insurance income, net 10,985 10,751 44,529 43,502 35,482 28,349 Other income 4,484 3,833 17,172 12,831 10,325 10,342 Total revenue
Slide 22: Consolidated Balance Sheets
Consolidated Balance Sheets $ in thousands 2023 2022 2021 2020 Cash $ 4,509 $ 3,873 $ 10,507 $ 8,052 Net finance receivables 1,771,410 1,699,393 1,426,257 1,136,259 Unearned insurance premiums (47,892) (51,008) (47,837) (34,545) Allowance for credit losses (187,400) (178,800) (159,300) (150,000) Net
Slide 23: 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 24: Non-GAAP Financial Measures (Cont'd)
Non-GAAP Financial Measures (Cont’d) $ in millions TTM (1) Pre-Tax Pre-Provision Income (Non-GAAP) Reconciliation Net income $16.0 Income taxes 4.8 Provision for credit losses 220.0 Pre-tax pre-provision income (non-GAAP) $240.8 $ in millions 4Q 23 % of ENR Absorption Capacity Non-GAAP Reconciliatio
Slide 25: Non-GAAP Financial Measures (Cont'd)
Non-GAAP Financial Measures (Cont’d) $ in thousands 2023 2022 2021 2020 Total assets $ 1,794,527 $ 1,724,987 $ 1,459,662 $ 1,103,856 Less: Intangible assets 15,846 12,122 9,517 8,689 Tangible assets (non-GAAP) 1,778,681 1,712,865 1,450,145 1,095,167 Debt 1,399,814 1,355,359 1,107,953 768,909 Total s