Slide 1: 2Q 2023 Earnings Presentation
2Q 2023 Earnings Presentation August 2nd, 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: 2Q 2023 Financial Highlights
2Q 2023 Financial Highlights $ Chg % Chg $ in millions (except per share amounts) 2Q 23 2Q 22 B/(W) B/(W) Net income of $6.0 million and diluted EPS of $0.63 Interest & Fee Income $ 118.1 $ 109.8 $ 8.3 7.6% Insurance Income, Net 11.2 10.2 1.0 9.6% Total revenue increased $10.6 million, or 8.6% Other
Slide 4: Originations Trend
Originations Trend ($ in millions) Quarterly Origination Trend Year-over-year growth rate reduced from credit tightening actions; $470.3 originations were more $434.4 $420.7 $426.3 $418.7 concentrated on programs to $399.0 $377.7 present and former borrowers, $326.0 which perform better than new $30
Slide 5: Digitally Sourced Originations
Digitally Sourced Originations • Digital originations are sourced from either our affiliate partnerships or directly from our website, underwritten by our custom credit scorecards, and serviced by our branches • Digital volume represented 34.0% of our total new borrower volume in 2Q 23 • Large loans
Slide 6: Controlled Portfolio Growth
Controlled Portfolio Growth Ending Net Receivables (ENR) vs. 1Q 23 vs. 2Q 22 ($ in millions) 1Q 21 2Q 21 3Q 21 4Q 21 1Q 22 2Q 22 3Q 22 4Q 22 1Q 23 2Q 23 $ Chg I/(D) % Chg I/(D) $ Chg I/(D) % Chg I/(D) Small Loans (≤ $2,500) $371 $381 $420 $445 $438 $455 $480 $482 $456 $445 ($12) (2.6%) ($11) (2.3%)
Slide 7: Higher ENR Per Branch is Driving Efficiency
Higher ENR Per Branch is Driving Efficiency • Branch consolidations and our new state, lighter footprint strategy with larger branches, are driving higher ENR per branch • Same store(1) year-over-year growth rate of 7.2% in 2Q 23 vs. 24.7% in the prior-year period ($ in thousands) Ending Net Finance
Slide 8: Revenue Up 8.6% on Controlled Receivable Growth
Revenue Up 8.6% on Controlled Receivable Growth ($ in millions) Total Revenue $135.4 $133.5 $131.5 $132.0 $120.8 $122.9 $119.5 Other Income $111.5 Revenue grew 8.6% year-over-year to Insurance Income $97.7 $99.7 $133 million in 2Q 23 Interest and Fee Income Total revenue yield decreased 1.5% year- S
Slide 9: Recent Credit Trends
Recent Credit Trends ($ in millions) 30+ & 90+ Delinquency Rates $119.8 $121.2 $116.0 $67.6 $52.6 $116.3 30+ days past due of 6.9% improved 30 $58.6 basis points sequentially and was 60 $57.7 $94.7 30-89 Days $84.9 $82.0 $51.2 basis points above 2Q 19 levels 90-179 Days $45.7 $36.2 • Estimated 30 ba
Slide 10: Reserved For Stressed Credit Losses
Reserved For Stressed Credit Losses In 2Q 23, we decreased our loan loss reserves by $2.4 million primarily due to changes in future macroeconomic impacts on credit losses, partially offset by portfolio growth during the quarter ($ in millions) Loan Loss Reserves $12.3 $178.8 $5.0 $183.8 $181.4 $179
Slide 11: Improving Operating Leverage While Investing in Our Business
Improving Operating Leverage While Investing in Our Business 2Q 23 operating expense ratio ($ in millions) Operating Expense Ratio $59.3 improved 110 basis points $58.2 $55.5 $55.1 $54.1 $55.1 $56.9 from the prior-year period Total G&A Expense $45.8 $46.4 $47.8 • 2Q 23 includes an % of ANR (1) insur
Slide 12: Cost of Funds
Cost of Funds 2Q 23 interest expense as an annualized percentage of ANR increased 170 basis points year-over-year due to the following: • Favorable market value increases on interest rate caps in 2Q 22 (80 basis points) • Higher interest rates on ENR growth (90 basis points) 1Q 23 includes accelerat
Slide 13: Strong Funding Profile
($ in millions) Unused Debt Capacity Strong Funding Profile $641 $557 $555 As of June 30, 2023, total unused capacity was $641 million (subject to borrowing base) $438 Available liquidity of $147 million as of June 30, 2023 2020 2021 2022 2Q 23 Fixed-rate debt represented 88% of total debt as of Jun
Slide 14: Appendix
Appendix 14
Slide 15: Significant Capacity to Absorb Losses
Significant Capacity to Absorb Losses $ in millions 2Q 23 Total stockholders' equity $321.5 Allowance for credit losses 181.4 (1) TTM net income 27.2 Absorption capacity including TTM net income $530.1 Absorption capacity as % of net finance receivables 31.4% Total stockholders' equity $321.5 Allowa
Slide 16: 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 17: Consolidated Income Statements
Consolidated Income Statements $ in thousands 2Q 23 2Q 22 2022 2021 2020 2019 Revenue Interest and fee income $ 118,083 $ 109,771 $ 450,854 $ 382,544 $ 335,215 $ 321,169 Insurance income, net 11,203 10,220 43,502 35,482 28,349 20,817 Other income 4,198 2,880 12,831 10,325 10,342 13,727 Total revenue
Slide 18: Consolidated Balance Sheets
Consolidated Balance Sheets $ in thousands 2Q 23 2Q 22 2022 2021 2020 2019 Cash $ 10,330 $ 7,928 $ 3,873 $ 10,507 $ 8,052 $ 2,263 Net finance receivables 1,688,937 1,525,659 1,699,393 1,426,257 1,136,259 1,133,404 Unearned insurance premiums (49,059) (48,986) (51,008) (47,837) (34,545) (28,591) Allo
Slide 19: 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 20: 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 $27.2 Income taxes 6.8 Provision for credit losses 209.1 Pre-tax pre-provision income (non-GAAP) $243.1 $ in millions 2Q 23 % of ENR Absorption Capacity Non-GAAP Reconciliatio
Slide 21: Non-GAAP Financial Measures (Cont'd)
Non-GAAP Financial Measures (Cont’d) $ in thousands 2Q 23 2Q 22 2022 2021 2020 2019 Total assets $ 1,723,616 $ 1,547,944 $ 1,724,987 $ 1,459,662 $ 1,103,856 $ 1,158,540 Less: Intangible assets 13,949 10,312 12,122 9,517 8,689 9,438 Tangible assets (non-GAAP) 1,709,667 1,537,632 1,712,865 1,450,145 1