Regional Management Corp. · NYSE:RM
Regional Management — Q2 2021 Earnings Presentation
21 slides from Regional Management's earnings presentation, Aug 3, 2021
Slide 1: 2Q 2021 Earnings Call Supplemental Presentation
2Q 2021 Earnings Call Supplemental Presentation August 3, 2021
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: 2Q 2021 Financial Highlights
2Q 2021 Financial Highlights dollars in millions 2Q 21 2Q 20 $ Chg B/(W) % Chg B/(W) (except per share amounts) Average Net Finance Receivables (ANR) $ 1,124.3 $ 1,049.8 $ 74.5 7.1% Interest & Fee Income 88.8 80.1 8.7 10.9% Total Revenue 99.7 89.9 9.8 10.9% Provision For Credit Losses 20.5 27.5 7.0
Slide 4: Originations Increase & Delinquencies Reach Historic Lows
Originations Increase & Delinquencies Reach Historic Lows Quarterly Origination Trend $400.0 $372.8 $150.0 Monthly Origination Trend $145.8 $349.0 $348.9 $359.1 $358.7 $131.1 $350.0 $308.1 $125.0 $300.0 $100.0 $95.8 Millions $229.2 $231.4 Millions $250.0 $219.5 $82.8 $79.2 $200.0 $75.0 $69.4 $172.2
Slide 5: Return to Year-Over-Year Double-Digit Portfolio Growth
Return to Year‐Over‐Year Double‐Digit Portfolio Growth Ending Net Finance Receivables (ENR) vs. 1Q 21 vs. 2Q 20 in millions 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 2Q 20 3Q 20 4Q 20 1Q 21 2Q 21 $ Chg I/(D) % Chg I/(D) $ Chg I/(D) % Chg I/(D) Small Loans (≤ $2,500) $426 $435 $454 $468 $440 $380 $383 $403 $371
Slide 6: Digitally-Sourced Originations Reach Record Best
Digitally‐Sourced Originations Reach Record Best • 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 • Our new digital volume
Slide 7: Revenue and Average Net Finance Receivables Trends
Revenue and Average Net Finance Receivables Trends Revenue $100.0 $98.0 $96.1 $97.4 $97.7 $99.7 • Total revenue yield increased 130 $91.7 $89.9 $90.5 basis points year‐over‐year and 70 $90.0 $84.3 basis points sequentially $81.7 Millions $80.0 $70.0 • Interest and fee yield increased 110 basis point
Slide 8: Lower Net Credit Losses on Low Delinquency Levels
Lower Net Credit Losses on Low Delinquency Levels Net credit loss rate improved 320 basis points versus the prior‐year period on low delinquency levels Net Credit Loss Rates 11.0% 10.7% 10.5% 10.6% 10.4% Annualized % of ANR 9.0% 9.0% 8.1% 7.8% 7.7% 7.4% 6.9% 7.0% 5.0% 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 2
Slide 9: Delinquency at Historically Low Levels
Delinquency at Historically Low Levels 2Q 21 delinquency is down from prior year as a result of government stimulus and enhanced credit standards • 30+ days past due of 3.6% is 120 basis points lower than prior year • 30+ days past due of $42.8 million (loan loss reserves of $139.4 million) 30+ & 90
Slide 10: Reserved For Stressed Credit Losses
Reserved For Stressed Credit Losses In 2Q 21, we reserved $6.1 million primarily for $77.8 million in sequential portfolio growth and released COVID‐19 related reserves of $6.3 million based on the macroeconomic model $30.4 $150.0 $139.6 $6.1 $139.4 (1) ($2.7) ($6.6) ($3.8) $122.3 ($6.3) Jan 1st CEC
Slide 11: Operating Expense Ratio Trend
Operating Expense Ratio Trend The following items impacted the Operating Expense Ratio by 160 basis points in 2Q 21: our investment in digital and technological capabilities of $1.2 million, and increased marketing expenses of $3.3 million, normalized to pre‐ pandemic levels, and to support our grow
Slide 12: Cost of Funds Trending Downward
Cost of Funds Trending Downward $12.0 12.0% $10.3 $10.3 $10.2 $10.0 $9.7 $9.8 10.0% $9.1 $9.3 $9.3 $7.8 $8.0 8.0% $7.1 % of ANR (1) Millions $6.0 6.0% 4.1% 4.1% 4.0% 3.7% 3.6% 3.5% $4.0 3.4% 3.3% 4.0% 2.6% 2.8% $2.0 2.0% $‐ ‐ 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 2Q 20 3Q 20 4Q 20 1Q 21 2Q 21 Interest Expen
Slide 13: Strong Funding Profile
Strong Funding Profile $647 • As of June 30, 2021, total unused $700 Debt Capacity capacity was $647 million (subject $573 $600 to borrowing base) $493 $507 $151 $89 $500 $433 $438 • Available liquidity of $202 million Millions $400 $98 $94 $368 $369 as of June 30, 2021 $400 $94 $83 $311 $70 $300 $7
Slide 14: Appendix
@ REGIONAL MANAGEMENT Appendix
Slide 15: Significant Capacity to Absorb Losses
Significant Capacity to Absorb Losses Our balance sheet is in a strong position to absorb losses Absorption Capacity (in millions) 2Q 21 Total stockholders' equity $279.0 Allowance for credit losses $139.4 Total absorption capacity $418.4 Absorption capacity as % of net finance receivables 35.4% (1)
Slide 16: Same Store Portfolio Growth
Same Store Portfolio Growth • Same store(1) year‐over‐year growth rate of 15.4% in 2Q 21 vs. 2.2% in the prior‐year period • Considerable growth opportunities in our existing branch footprint, particularly from branches opened within the last 3 years $4,000 Ending Net Finance Receivables Per Branch
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 Securitizations Size: $640 million Size: $300 mill
Slide 18: Consolidated Income Statements
Consolidated Income Statements in thousands 2Q 21 2Q 20 YTD 21 YTD 20 2020 2019 2018 2017 Revenue Interest and fee income $ 88,793 $ 80,067 $ 176,072 $ 167,064 $ 335,215 $ 321,169 $ 280,121 $ 249,034 Insurance income, net 8,656 7,650 16,641 13,599 28,349 20,817 14,793 13,061 Other income 2,227 2,133
Slide 19: Consolidated Balance Sheets
Consolidated Balance Sheets in thousands 2Q 21 2Q 20 2020 2019 2018 2017 Cash $ 6,086 $ 8,973 $ 8,052 $ 2,263 $ 3,657 $ 5,230 Net finance receivables 1,183,387 1,022,635 1,136,259 1,133,404 951,183 834,045 Unearned insurance premiums (39,469) (27,016) (34,545) (28,591) (18,940) (16,582) Allowance fo
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) in thousands 2Q 21 2Q 20 2020 2019 2018 2017 Total assets $ 1,191,305 $ 1,000,225 $ 1,103,856 $ 1,158,540 $ 956,395 $ 829,483 Less: Intangible assets 9,081 8,824 8,689 9,438 10,010 10,607 Tangible assets (non‐GAAP) 1,182,224 991,401 1,095,167 1,149,102 946,385 81