Regional Management Corp. · NYSE:RM
Regional Management — Q4 2020 Earnings Presentation
22 slides from Regional Management's earnings presentation, Feb 10, 2021
Slide 1: 4Q 2020 Earnings Call Supplemental Presentation
4Q 2020 Earnings Call Supplemental Presentation February 10, 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: 4Q 20 Financial Highlights
4Q 20 Financial Highlights dollars in millions 4Q 20 4Q 19 $ Chg B/(W) % Chg B/(W) (except per share amounts) Average Net Finance Receivables (ANR) $ 1,090.5 $ 1,098.4 $ (7.9) (0.7%) Interest & Fee Income 86.8 87.8 (0.9) (1.1%) Total Revenue 97.4 98.0 (0.5) (0.6%) Provision for Credit Losses 24.7 26
Slide 4: Strong Portfolio Growth Supported by Growth Initiatives
Strong Portfolio Growth Supported by Growth Initiatives • Strong rebound in portfolio growth in 2H 20 from increased loan demand and adoption of our new growth initiatives ̶ Total net finance receivables increased $3 million for the year with $114 million in 2H 20 ̶ Core net finance receivables incr
Slide 5: Generated Core Growth Sequentially and Year-Over-Year
Generated Core Growth Sequentially and Year-Over-Year Ending Net Finance Receivables (ENR) vs. 3Q 20 vs. 4Q 19 in millions 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 2Q 20 3Q 20 4Q 20 $ Chg I/(D) % Chg I/(D) $ Chg I/(D) % Chg I/(D) Small Loans (≤ $2,500) $419 $442 $426 $435 $454 $468 $440 $380 $383 $
Slide 6: Originations Increase & Credit Quality Remains Stable
Originations Increase & Credit Quality Remains Stable Originations $140.0 Branch Direct Mail Digital $130.2 $126.8 $120.0 $109.4 $105.8 $101.7 $100.0 $92.9 Millions $76.2 $77.2 $75.9 $79.0 $80.0 $57.9 $60.0 $40.0 $35.3 $20.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec % Y/Y Change 0% 12% 2% (65%
Slide 7: 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 • Our digital volume represented 29% of ou
Slide 8: Average Net Finance Receivables and Revenue Trends
Average Net Finance Receivables and Revenue Trends Revenue $100.0 $98.0 $96.1 $97.4 • Total revenue yield remained at $91.7 $89.9 $90.5 35.7% year-over-year $90.0 $83.7 $81.7 $84.3 $77.9 • Interest and fee yield declined 10 Millions $80.0 basis points year-over-year due to $70.0 continued portfolio
Slide 9: 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) 4Q 20 Total stockholders' equity $272.1 Allowance for credit losses $150.0 Total absorption capacity $422.1 Absorption capacity as % of net finance receivables 37.2% (1)
Slide 10: Lower Net Credit Losses on Low Delinquency Levels
Lower Net Credit Losses on Low Delinquency Levels • Net credit loss rate decreased 210 basis points vs. the prior-year period and 90 basis points sequentially on low delinquency levels 12.0% Net Credit Loss Rates 10.7% 10.6% 10.4% 10.5% Annualized % of ANR 10.0% 8.9% 9.0% 8.1% 7.8% 8.0% 7.6% 6.9% 6.
Slide 11: Delinquency at Historically Low Levels
Delinquency at Historically Low Levels • 4Q 20 delinquency was down from prior year even as borrower assistance usage returned to pre- pandemic levels and government stimulus diminished ₋ 30+ days past due of 5.3% was 170 basis points lower than prior year ₋ 90+ days past due of 2.4% was 70 basis po
Slide 12: Reserved For Stressed Credit Losses
Reserved For Stressed Credit Losses We ran several macroeconomic stress scenarios, and our final forecast assumed unemployment is 9% at the end of 2021. The macro scenario was adjusted for the potential benefits of internal borrower assistance programs and government stimulus. In 4Q 20, we recorded
Slide 13: Operating Leverage Impacted by Marketing & Digital Investment
Operating Leverage Impacted by Marketing & Digital Investment • The 4Q 2020 operating expense ratio was impacted by 110 basis points due to $3.0 million in increased marketing spend and investment in digital capabilities to support growth initiatives $50.0 19.0% Operating Expense Ratio $46.2 $44.8 $
Slide 14: 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 $9.3 $8.7 6.0% $8.0 5.0% % of ANR (1) 4.0% 4.1% 4.1% 4.1% 4.0% Millions $6.0 3.7% 3.6% 4.0% 3.4% 3.5% 3.3% 3.0% $4.0 2.0% $2.0 1.0% $- - 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 2Q 20 3Q 20 4Q 20 Intere
Slide 15: Strong Funding Profile
Strong Funding Profile • As of December 31, 2020, total $600 Debt Capacity $507 unused capacity was $438 million $493 $500 $433 $438 (subject to borrowing base) $407 $400 $94 $368 $369 $98 $400 $330 $95 $94 $311 $70 $83 • Available liquidity of $194 million as Millions $43 $74 $79 of December 31, 20
Slide 16: Appendix
@ REGIONAL MANAGEMENT Appendix NEE
Slide 17: Same Store Portfolio Growth
Same Store Portfolio Growth • Same store(1) year-over-year growth rate of 0.1% in 4Q 20 vs. 17.2% 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 18: 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 19: Consolidated Income Statements
Consolidated Income Statements in thousands 4Q 20 4Q 19 2020 2019 2018 2017 Revenue Interest and fee income $ 86,845 $ 87,784 $ 335,215 $ 321,169 $ 280,121 $ 249,034 Insurance income, net 7,889 6,551 28,349 20,817 14,793 13,061 Other income 2,710 3,649 10,342 13,727 11,792 10,364 Total revenue 97,44
Slide 20: Consolidated Balance Sheets
Consolidated Balance Sheets in thousands 2020 2019 2018 2017 Cash $ 8,052 $ 2,263 $ 3,657 $ 5,230 Net finance receivables 1,136,259 1,133,404 951,183 834,045 Unearned insurance premiums (34,545) (28,591) (18,940) (16,582) Allowance for credit losses (150,000) (62,200) (58,300) (48,910) Net finance r
Slide 21: 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 22: Non-GAAP Financial Measures (Cont'd)
Non-GAAP Financial Measures (Cont’d) in thousands 2020 2019 2018 2017 Total assets $ 1,103,856 $ 1,158,540 $ 956,395 $ 829,483 Less: Intangible assets 8,689 9,438 10,010 10,607 Tangible assets (non-GAAP) 1,095,167 1,149,102 946,385 818,876 Gross long-term debt 768,909 808,218 660,507 571,496 Total s