Regional Management Corp. · NYSE:RM
Regional Management — Stephens Nashville Investment Conference 2019
28 slides from Regional Management's conference presentation, Nov 13, 2019
Slide 1: Investor Presentation November 2019
Investor Presentation November 2019
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: Investment Highlights
Investment Highlights Clear Path Forward for Sustainable Long-Term Growth Abundant Successful Market Differentiated Opportunity Growth Strategy Deep Advanced Management Credit Tools Experience Modern Infrastructure 3
Slide 4: Profitability Growing While Investing for the Long-Term
Profitability Growing While Investing for the Long-Term 358 branches in 11 states as of September 30, 2019 Total receivables of $1.0 billion as of September 30, 2019 Profile Omni-channel origination capabilities - Branches, direct mail, digital, referrals, and retailers Large loan portfolio
Slide 5: Abundant Market Opportunity to Serve the Underserved
Abundant Market Opportunity to Serve the Underserved • Approximately 80 million Americans generally align with Regional’s customer base • $66 billion market opportunity – RM has 2% market share; significant runway for growth $3.9 Trillion Consumer Finance Market (1) 31% of US Population with FICO Be
Slide 6: Supporting Growth to Generate Shareholder Value
Supporting Growth to Generate Shareholder Value Hybrid approach for portfolio growth – increasing receivables per branch and de novo expansion Differentiated go-to-market strategy offering small and large loans Well-established, cost-efficient omni-channel sales and integrated marketing targets and
Slide 7: Hybrid Approach to Growth
Hybrid Approach to Growth Multiple channels and products provide attractive market opportunities - Most loans serviced and collected through branches - Late-stage delinquency through centralized collections group Most branches with significant capacity to increase size of their portfolios Miss
Slide 8: Ongoing Growth Opportunities from Existing and De Novo Branches
Ongoing Growth Opportunities from Existing and De Novo Branches • Same store(1) portfolio growth in 3Q 19 of 15.9% vs. 14.4% in the prior-year period • Considerable growth opportunities in existing branch footprint, particularly from branches opened within last 3 years • Plan to open approximately 2
Slide 9: Multi-Product Offering Fits Customer Needs
Multi-Product Offering Fits Customer Needs Product suite provides multiple solutions for customers as their credit needs evolve Easy-to-understand products based on credit underwriting and ability to repay Ability to cost-effectively “graduate” qualified small loan customers to larger loans at
Slide 10: Core Loan Portfolio Growth Driven by Large Loan Receivables
Core Loan Portfolio Growth Driven by Large Loan Receivables Since adding large loans as a core product in 2015, large loan receivables have grown from $46 million to $555 million Core Loan Finance Receivables $1,200 $1,004 $1,000 $876 $825 $800 $723 $555 $ in millions $594 $438 $600 $411 $485 $347 $
Slide 11: Digitally Sourced Originations Continue to Accelerate
Digitally Sourced Originations Continue to Accelerate • 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 19, our
Slide 12: Omni-Channel Originations
Omni-Channel Originations Branches are the foundation of Regional’s multi-channel strategy Mail campaigns attract ~100,000 new customers per year to Regional Continued expansion of digital channel / online lending capabilities to acquire customers Branch Originated (1) Non-Branch Originated (1
Slide 13: NLS Platform Supports Advanced Marketing & Analytics
NLS Platform Supports Advanced Marketing & Analytics NLS provides visibility to the “application funnel” that was previously invisible Pre-NLS Post-NLS (Marketing Stimulus) Applications System Eligible Branch Approved Loans Booked Understanding “funnel dynamics” provides significant benefit to Marke
Slide 14: A Snapshot of Regional's Digital Journey – 2016 to 2019
A Snapshot of Regional’s Digital Journey – 2016 to 2019 # Function 2016 2019 1 Loan Origination Process • Paper-based process • Implemented in NLS as streamlined workflow from application to booking • Debt Consolidation Sales Tools in NLS 2 Loan Underwriting Process • Manual and paper-based process
Slide 15: Top-Shelf Customer Satisfaction
Top-Shelf Customer Satisfaction Top-three box (8, 9, or 10 out of 10) customer satisfaction of 88% 90% of customers would apply to Regional Finance first the next time they need a loan ~90% favorable ratings for key attributes: − Loan process was quick, easy and understandable − People are professio
Slide 16: Our Typical Customer
Our Typical Customer Our customer demographics… How we solve their financial needs… Originations (2) Average age Cash needs Auto-related 52 years 12% 10% Home-related 10% Annual income (1) Debt consolidation $45,000 15% Medical 7% Homeownership Family event 59% related 7% Household bills College or
Slide 17: Robust Loan Approval Process
Robust Loan Approval Process Custom automated decision engine used to determine if customer qualifies for product offerings Product offering is based on risk profile of customer and their ability to repay Credit exceptions are administered by central underwriting team Determine Review of Colla
Slide 18: Optimizing Expense Structure
Optimizing Expense Structure Achieving operating leverage while reinvesting in the business Operating Expense and Efficiency Ratios (1) ($ in millions) $140.3 $116.1 $131.0 $103.7 $115.6 $118.6 20.2% 18.0% 17.6% 16.4% 16.6% 16.2% 2015 2016 2017 2018 YTD 18 YTD 19 (2) G&A Expense % of ANR G&A Expense
Slide 19: Volume Driven Revenue Growth
Volume Driven Revenue Growth Finance Receivables ($ in millions) $1,042 $973 18 consecutive $932 $912 quarters of $847 $888 year-over-year $775 $817 $805 double-digit $718 $727 $696 $695 receivable $646 $628 growth $573 $602 $607 2Q 15 3Q 15 4Q 15 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 1Q 1
Slide 20: Growing Receivables and Expanding Bottom Line Lead to Consistent Returns
Growing Receivables and Expanding Bottom Line Lead to Consistent Returns Net Income & Diluted Earnings Per Share ($ in millions) $2.93 Expansion of $2.54 net income and $1.99 $1.79 EPS follow receivable $35.3 growth, $30.0 $23.4 $24.0 coupled with consistent 2015 2016 2017 2018 returns Net income Di
Slide 21: 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 22: Significant Capacity to Fund Growth
Significant Capacity to Fund Growth Debt Capacity • As of September 30, 2019, total undrawn capacity was $400 $94 $95 $311 million (subject to $120 $74 borrowing base) $300 $43 $34 $101 $34 • Fixed-rate debt represents Millions $200 $69 $59 $312 $339 39% of total debt $257 $287 $294 $277 $100 $193 $
Slide 23: Investment Highlights
Investment Highlights Clear Path Forward for Sustainable Long-Term Growth Abundant Successful Market Differentiated Opportunity Growth Strategy Deep Advanced Management Credit Tools Experience Modern Infrastructure 23
Slide 24: Appendix
@REGIONAL MANAGEMENT Appendix
Slide 25: Deep and Tested Management Experience
Deep and Tested Management Experience • 30+ years of consumer financial services experience Peter Knitzer President • Spent 14 years at Citi in various senior roles, including Chairman & CEO of Citibank North America and CEO • Prior to joining Regional, was EVP and Head of Payments at CIBC, and Pres
Slide 26: Strong Corporate Governance and Board of Directors
Strong Corporate Governance and Board of Directors Board of Directors (Non-Employee Directors) Carlos Maria Jonathan Al de Molina Steve Freiberg Mike Dunn Palomares Contreras-Sweet Roel Campos Brown • Former CEO • Senior Advisor • Former CEO • Chairman of • Former • Partner at • Partner with and COO
Slide 27: Balance Sheet Metrics
Balance Sheet Metrics In addition to financial measures presented in accordance with generally accepted accounting principles (“GAAP”), this presentation contains certain non-GAAP financial measures. We utilize non-GAAP measures as additional metrics to aid in, and enhance, the understanding of our
Slide 28: Regional Management
REGIONAL (Hg eg BA @ REGIONAL MANAGEMENT "=
Regional Management — Stephens Nashville Investment Conference 2019 on 6ix