Regional Management Corp. · NYSE:RM
Regional Management — Debt Investor Presentation (May 2024)
35 slides from Regional Management's debt investor presentation, May 21, 2024
Slide 1: ABS Investor Presentation May 22, 2024
ABS Investor Presentation May 22, 2024
Slide 2: Legal Disclosures
Legal Disclosures The information contained in this electronic presentation (the “Information”) is being provided to you on a confidential basis solely for your review and may not be downloaded, copied, reproduced, or redistributed, in whole or in part, directly or indirectly, by you. The Informatio
Slide 3: Legal Disclosures
Legal Disclosures Factors that could cause actual results or performance to differ from the expectations expressed or implied in forward-looking statements include, but are not limited to, the following: managing growth effectively, implementing Regional Management's growth strategy, and opening new
Slide 4: Company Overview
Company Overview
Slide 5: Company Overview
Company Overview 5 Founded 1987 NYSE Listed: RM 343 branches 19 states Total receivables of $1.7 billion Multi-channel marketing: branches, digital, and direct mail Legacy States (prior to 2021) 2021 New States (IL, UT) 2022 New States (MS, IN, CA, LA) Potential Future State Expansion Geographic foo
Slide 6: Growth Strategy
Growth Strategy Geographic Expansion Accelerated Innovation Product and Channel Expansion Identified states with favorable economics for expansion Continue to identify opportunities to optimize branch network within existing footprint Continue to drive scale using centralized originations and servic
Slide 7: Investment Highlights
Investment Highlights Strong balance sheet supports capital returns Geographic, product, and channel expansion drive growth Omni-channel growth strategy with abundant market opportunity Controlled growth with stable credit using advanced credit tools Modern infrastructure and digital capabilities De
Slide 8: Key Financial Results
Key Financial Results In millions In millions Net Income In millions Continued growth in account base and portfolio in controlled and profitable manner 1Q 24 revenue growth outpaced G&A expense growth by 7.9x from the prior-year period Enhanced prequalification capabilities and tighter integration w
Slide 9: Abundant Total Addressable Market
Abundant Total Addressable Market 9 Approximately 72 million Americans generally align with Regional’s customer base (1)(3) $91 billion market opportunity – RM has less than 2% market share and increased our addressable market by over 80% since 2020; still significant runway for growth $4.7 Trillion
Slide 10: Serving Our Customers Best
Serving Our Customers Best 10 Excellent net promoter score of 64 (1) 90+% favorable ratings for key attributes (1): Loan process was quick, easy, and understandable People are professional, responsive, respectful, knowledgeable, helpful, and friendly 92% of customers would apply to Regional Finance
Slide 11: Product Offerings
Product Offerings Multi-Channel Acquisition Small Loans Large Loans In Branch $196.3MM Originated 67% Large/33% Small Direct Mail $98.8MM Originated Convenience Check Loans Digital $31.2MM Originated Digital Lead Generation Partnership Affiliates Customer Need Short-term cash needs Bill payment Back
Slide 12: Originations
Originations Year-over-year growth rate reduced from credit tightening actions; originations were concentrated on programs to present and former borrowers, who perform better than new borrowers Achieved year-over-year loan growth of $68 million, or 4.1%, in 1Q 24, down from 15.9% in 1Q 23 due to c
Slide 13: Funding
Funding
Slide 14: Evolution of Regional Management Funding
Evolution of Regional Management Funding 1987 2007 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 RM Founded in South Carolina Private Equity Invests in RM RM Closes Initial Public Offering Portfolio Reaches $500 Million in Size RM Closes $76 Million Amortizing Loan Facility RM Closes $125 M
Slide 15: 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 15
Slide 16: ABS Program Highlights
ABS Program Highlights Strength of Sponsor Regional has been in business since 1987 and has effectively managed multiple economic and business cycles Deep management and board experience in consumer finance industry Profitable every year since IPO in 2012 Seasoned Program Regional has successfully c
Slide 17: Governance & Controls
Governance & Controls
Slide 18: Public Company Discipline and Transparency
Public Company Discipline and Transparency Full Transparency – Public SEC Filings and Disclosures Internal Controls – SOX controls in place since 2013 External Audits – Deloitte & Touche LLP Compliance – Team of 20 FTE led by Chief Compliance Officer Enterprise Risk Management – Identifies and manag
Slide 19: Deep Management Experience
Deep Management Experience Accomplished team with extensive backgrounds in consumer finance Rob Beck President and CEO Manish Parmar Chief Credit Risk Officer Harp Rana CFO 20+ years of financial services experience Prior to joining Regional, was Managing Director, North America Retail at Citigroup
Slide 20: Strong Corporate Governance and Diverse Board of Directors
Strong Corporate Governance and Diverse 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 Secretar
Slide 21: Robust Procedures and Controls
Robust Procedures and Controls Oversight Collateral All borrowers must provide collateral Secured by titled assets (hard secured) or personal property (soft secured) Verifications Identity Employment Income Credit Scoring Diverse data attributes Review of credit bureau information Implementation of
Slide 22: Compliance and Audit
Compliance and Audit Compliance Across Home Office Departments Monthly monitoring of critical analytics Establish standards and provide guidance for risk management and controls Well-documented and controlled reporting framework Oversees external state regulatory audits and internal branch audits Al
Slide 23: Strong Servicing Capabilities and Loss Mitigation
Strong Servicing Capabilities and Loss Mitigation Early-stage collection efforts primarily performed in the branches High-touch relationship allows branches to quickly anticipate and proactively resolve repayment problems Combination of payment options available Late-stage co-collection support for
Slide 24: Credit Performance
Credit Performance
Slide 25: Total Portfolio Credit Metrics
Total Portfolio Credit Metrics 1Q 24 delinquency of 7.1% compared to 6.9% in 4Q 23 (inclusive of a 0.9% reduction from the loan sale in 4Q 23) 30+ days past due of $124.2 million compares favorably to loan loss reserves of $187.1 million as of 1Q 24 1Q 24 net credit loss rate of 10.6% included an
Slide 26: Origination Metrics by Product
Origination Metrics by Product (Less than or equal to 36% APR loans) FICO Original Term APR Original Loan Balance (1) The 4Q 22 increases in original term and original balance in the convenience check portfolio were due to targeted campaigns of large checks to former borrowers 26 (1) (1)
Slide 27: Front Book 75% of Portfolio
Front Book 75% of Portfolio (Less than or equal to 36% APR loans) Front Book defined as loans originated 4Q 22 and onwards Back Book defined as 4Q 21 to 3Q 22 originations plus all delinquent renewals associated with loans originated prior to 4Q 22 Other defined as loans originated before 4Q 21 Tota
Slide 28: 30+ Delinquency % Trend
28 Front book defined as loans originated 4Q 22 and onwards; back book defined as 4Q 21 to 3Q 22 originations plus all delinquent renewals associated with loans originated prior to 4Q 22 30+ Delinquency % Trend (Less than or equal to 36% APR loans) ENR from higher-credit-quality front book is becomi
Slide 29: Gross Loss Curves by Vintage
2021 and 2022 back book vintages had elevated yet manageable loss levels that were impacted by peak inflation In November 2023, S&P raised ratings on nine classes of notes and affirmed ratings on the other ten classes of Regional Management Issuance Trust Transactions In April 2024, DBRS raised rati
Slide 30: Consistent Credit Performance for 144a Transactions
Consistent Credit Performance for 144a Transactions (1) RMIT 2022-2 closed in October of 2022 – minimal losses are normal during the early months of a new facility Credit performance for ABS transactions reflects results during their revolving periods 30 ABS collateral pools have experienced steady
Slide 31: Payment Channel Mix
Payment Channel Mix (Less than or equal to 36% APR loans) Significant reduction in cash and check payments in branch 83% of payments received by RM are currently made electronically (ACH and Debit) 31
Slide 32: Appendix
Appendix
Slide 33: Consolidated Income Statements
Consolidated Income Statements 33
Slide 34: Consolidated Balance Sheets
Consolidated Balance Sheets 34
Slide 35: CREGIONAL oe
CREGIONAL oe MANAGEMENT nyse
Regional Management — Debt Investor Presentation (May 2024) on 6ix