Regional Management Corp. · NYSE:RM
Regional Management — Q3 2020 Earnings Presentation
21 slides from Regional Management's earnings presentation, Oct 29, 2020
Slide 1: 3Q 2020 Earnings Call Supplemental Presentation
3Q 2020 Earnings Call Supplemental Presentation October 29, 2020
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 2020 Financial Highlights
3Q 2020 Financial Highlights dollars in millions (except per share amounts) 3Q 20 3Q 19 $ Chg B/(W) % Chg B/(W) Average Net Finance Receivables (ANR) $ 1,032.1 $ 1,033.9 $ (1.8) (0.2%) Interest & Fee Income 81.3 83.1 (1.8) (2.1%) Total Revenue 90.5 91.7 (1.2) (1.3%) Provision for Credit Losses 22.1
Slide 4: Generated Core Growth Sequentially and Year-Over-Year
Generated Core Growth Sequentially and Year-Over-Year Ending Net Finance Receivables (ENR) vs. 2Q 20 vs. 3Q 19 in millions 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 2Q 20 3Q 20 $ Chg I/(D) % Chg I/(D) $ Chg I/(D) % Chg I/(D) Small Loans (≤ $2,500) $389 $419 $442 $426 $435 $454 $468 $440 $380 $
Slide 5: Originations Increase & Credit Quality Remains Stable
Originations Increase & Credit Quality Remains Stable $120.0 Originations $109.4 Branch Direct Mail Digital $105.8 $100.0 $92.9 $76.2 $77.2 $79.0 $80.0 $75.9 Millions $60.0 $57.9 $40.0 $35.3 $20.0 Jan Feb Mar Apr May Jun Jul Aug Sep % Y/Y Change 0% 12% 2% (65%) (58%) (29%) (27%) (11%) 7% $100.0 30+
Slide 6: 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 represen
Slide 7: Average Receivables and Revenue Trends
Average Receivables and Revenue Trends • Total revenue declined 1% and the interest $100.0 Revenue $98.0 $96.1 and fee yield declined 60 basis points year- $91.7 $89.9 $90.5 over-year, both due to the continued product $90.0 $83.7 $84.3 $81.7 mix shift toward large loans and the portfolio $77.9 $80.
Slide 8: 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) 3Q 20 Total stockholders' equity $272.5 Allowance for credit losses $144.0 Total absorption capacity $416.5 Absorption capacity as % of net finance receivables 39.3% TTM
Slide 9: Lower Net Credit Losses on Low Delinquency Levels
Lower Net Credit Losses on Low Delinquency Levels Net credit loss rate decreased 30 basis points vs. the prior-year period and 280 basis points sequentially on low delinquency levels 12.0% Net Credit Loss Rates 10.7% 10.5% 10.6% 10.4% Annualized % of ANR 10.0% 9.3% 8.9% 9.0% 8.1% 7.8% 8.0% 7.6% 6.0%
Slide 10: Delinquency at Historically Low Levels
Delinquency at Historically Low Levels • 3Q 20 delinquency is down from the prior year even as borrower assistance usage returned to pre- pandemic levels and government stimulus diminished ₋ 30+ days past due of 4.7% is 180 basis points lower than prior year ₋ 90+ days past due of 2.2% is 60 basis p
Slide 11: Reserved For Stressed Credit Losses
Reserved For Stressed Credit Losses We ran several macroeconomic stress scenarios, and our final forecast contemplated the following: unemployment peaking at 17.5% in 2020 and declining to 9.0% by the end of 2021. The macro scenario was adjusted for the potential benefits of internal borrower assist
Slide 12: Operating Expense Ratio
Operating Expense Ratio • The following items impacted the operating expense ratio by 130 basis points in 3Q 20: ₋ Incurred $0.8 million of severance expenses in 3Q 20 due to workforce actions ₋ Deferred $0.9 million less in loan origination costs year-over-year on less loan volume in 3Q 20 ₋ Increa
Slide 13: Cost of Funds Trending Downward
Cost of Funds Trending Downward $12.0 8.0% $10.3 $10.3 $10.2 7.0% $10.0 $9.6 $9.7 $9.8 $9.1 $9.3 $8.7 6.0% $7.9 $8.0 5.0% % of ANR (1) 4.0% 4.1% 4.1% 4.1% 4.0% Millions $6.0 3.7% 3.7% 3.6% 4.0% 3.4% 3.5% 3.0% $4.0 2.0% $2.0 1.0% $- - 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 10 2Q 20 3Q 20 Intere
Slide 14: Strong Funding Profile
Strong Funding Profile $600 Debt Capacity • As of September 30, 2020, total $493 $507 undrawn capacity was $507 million $500 $433 $407 $400 $94 (subject to borrowing base) $377 $368 $369 $98 $400 $330 $94 • Available liquidity of $193 million as $95 $311 $70 Millions $120 $43 $74 $79 of September 30
Slide 15: Appendix
@ REGIONAL MANAGEMENT Appendix NEE
Slide 16: Same Store Portfolio Growth
Same Store Portfolio Growth • Same store(1) year-over-year growth rate of -1.5% in 3Q 20 vs. +17.1% in the prior-year period • Considerable growth opportunities in our existing branch footprint, particularly from branches opened within the last 3 years $3,500 Ending Net Finance Receivables Per Branc
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 facility, and securitizations Senior Revolver Warehouse Facility Large Loan Securitizations Size: $640 million Size
Slide 18: Consolidated Income Statements
Consolidated Income Statements in thousands 3Q 20 3Q 19 2019 2018 2017 2016 Revenue Interest and fee income $ 81,306 $ 83,089 $ 321,169 $ 280,121 $ 249,034 $ 220,963 Insurance income, net 6,861 5,087 20,817 14,793 13,061 9,456 Other income 2,371 3,531 13,727 11,792 10,364 10,099 Total revenue 90,538
Slide 19: Consolidated Balance Sheets
Consolidated Balance Sheets in thousands 3Q 20 3Q 19 2019 2018 2017 2016 Cash $ 4,292 $ 2,044 $ 2,263 $ 3,657 $ 5,230 $ 4,446 Net finance receivables 1,059,554 1,067,086 1,133,404 951,183 834,045 729,161 Unearned insurance premiums (30,024) (24,900) (28,591) (18,940) (16,582) (11,386) Allowance for
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 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 21: Non-GAAP Financial Measures (Cont'd)
Non-GAAP Financial Measures (Cont’d) in thousands 3Q 20 3Q 19 2019 2018 2017 2016 Total assets $ 1,035,281 $ 1,086,172 $ 1,158,540 $ 956,395 $ 829,483 $ 712,224 Less: Intangible assets 8,677 9,574 9,438 10,010 10,607 6,448 Tangible assets (non-GAAP) 1,026,604 1,076,598 1,149,102 946,385 818,876 705,