Regional Management Corp. · NYSE:RM
Regional Management — Debt Investor Presentation (January 2021)
41 slides from Regional Management's debt investor presentation, Jan 25, 2021
Slide 1: ABS Investor Presentation January 25, 2021
Exhibit 99.1 ABS Investor Presentation January 25, 2021Exhibit 99.1 ABS Investor Presentation January 25, 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: Company Overview
Company OverviewCompany Overview
Slide 4: Company Highlights
Company Highlights Clear Path Forward for Sustainable Long-Term Growth Successful Abundant Differentiated Market Growth Opportunity Strategy Deep Advanced Management Credit Tools Experience Modern Infrastructure 4Company Highlights Clear Path Forward for Sustainable Long-Term Growth Successful Abund
Slide 5: Company Overview
Company Overview • Consumer Finance Installment Lender • 30+ years of operating history • Operating subsidiaries in each state • Bricks-and-Clicks model • 368 branches in 11 States as of September 30, 2020 • $1.06 billion total portfolio size • Headquartered in Greer, SC • Operations in the Southeas
Slide 6: Public Company Discipline and Transparency
Public Company Discipline and Transparency § Full Transparency – Public SEC Filings and Disclosures § Internal Controls – SOX controls in place since 2013 § External Audits – RSM US LLP § Internal Audit – Covers all corporate office functions and branch activities § Compliance – 16-member team with
Slide 7: Operating History
Operating History RM has operated successfully through multiple credit cycles Rolled Out RM Completes Electronic RM Founded Portfolio System Contracting & Private Equity RM Enters RM Enters in South Reaches $500 Migration and Signature for Invests in RM Oklahoma Virginia Carolina Million in Size Clo
Slide 8: Deep and Tested Management Experience
Deep and Tested Management Experience • 30+ years of finance and accounting experience Rob Beck • Spent 29 years at Citi, including service as COO of the US Retail Bank President and CEO • Prior to joining Regional, was EVP and COO for the Leukemia and Lymphoma Society • 30+ years of consumer financ
Slide 9: Experienced Board of Directors
Experienced Board of Directors Board of Directors (Non-Employee Directors) Jonathan Al de Molina Steve Freiberg Mike Dunn Carlos Maria Roel Campos Jonathan Brown Sandra Johnson, Maria Brown Palomares Contreras-Sweet Ph.D. Contreras-Sweet - Former CEO and - Former CEO and - Senior Advisor - Chairman
Slide 10: Significant Market Opportunity to Serve the Underserved
Significant Market Opportunity to Serve the Underserved • Approximately 80 million Americans generally align with Regional’s customer base • $82 billion market opportunity – RM has less than 2% market share; significant runway for growth (1) $4.1 Trillion Consumer Finance Market 31% of US Population
Slide 11: Our Typical Customer
Our Typical Customer Our customer demographics… How we solve their financial needs… (1) Originations Average age Cash needs Auto-related 53 years 12% 9% Home-related 8% Debt (1) consolidation Annual income Medical 16% $45,000 6% Family event Homeownership related 12% 57% Household bills Other 23% 14
Slide 12: 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 § As of Q3 2020, RM has over $500 million in unused capacity on its credit lines and $193
Slide 13: Origination Channels and Branch Network
Origination Channels and Branch Network Origination Channels and Branch Network
Slide 14: Omni-Channel Originations Provide Market Opportunities
Omni-Channel Originations Provide Market Opportunities § Branches are the foundation of Regional’s multi-channel strategy. § Mail campaigns attract approximately 100,000 new customers per year to Regional. § Regional continues to expand digital channel / online lending capabilities to acquire custom
Slide 15: 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 16: 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 delinquencies collected through centralized collections group § Most branches with significant capacity to increase size of their portf
Slide 17: Branch Oversight and Audits
Branch Oversight and Audits Risk-Based Yearly Audits by Required Internal Audit Training Department Program Detailed Policy and Monthly Branch Self- Procedure Manuals Assessments Monthly Incentive Program Monitoring of Based on Delinquency, Critical Profitability & Growth Analytics Detailed Supervis
Slide 18: Underwriting
UnderwritingUnderwriting
Slide 19: 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 20: Robust Underwriting Standards
Robust Underwriting Standards Collateral Verifications •Identity •Soft Secured Loans (Personal Property) •Employment •Hard Secured (Titled Assets) •Income •Unsecured Credit Scoring Repayment Ability •Diverse data attributes •Debt to Income Calculation •Review of credit bureau •Minimum Annual Income
Slide 21: Origination Characteristics
Origination Characteristics Origination Characteristics
Slide 22: <=36% Portfolio Breakdown
<=36% Portfolio Breakdown As of 9/30: $900 • Large: 66% $800 • Small: 19% $700 • Checks: 15% $600 $500 $400 $300 $200 $100 $0 Large Branch Small Branch Checks 80% of RM Total Portfolio is <=36% APR as of Q3 2020 22 In Millions<=36% Portfolio Breakdown As of 9/30: $900 • Large: 66% $800 • Small: 19%
Slide 23: <=36% Origination Metrics by Product
<=36% Origination Metrics by Product FICO Original Term 680 50 45 660 40 640 35 620 30 25 600 20 580 15 560 Large WA Original Term Check WA Original Term Large WA FICO Check WA FICO Small WA FICO Small WA Original Term APR Monthly Payment 225 35 200 33 175 150 31 125 29 100 27 75 25 Large Avg. Month
Slide 24: Competitor Pool Comparisons
Competitor Pool Comparisons Collateral Characteristics Transaction Indicative RMIT Pool REPS 2020-A LFT 2020-2 OMFIT 2020-2 MFIT 2020-A Pool Size $260,417,053 $214,980,695 $292,869,396 $1,052,633,250 $274,726,493 Number of Contracts 73,788 41,556 52,819 140,692 79,039 Avg. Principal Balance $3,529 $
Slide 25: Historical Credit Performance
Historical Credit Performance Historical Credit Performance
Slide 26: <=36% Portfolio Trends (Small, Large, Check)
<=36% Portfolio Trends (Small, Large, Check) 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Gross Loss % 60+ Delinquency % All quarter end values are annualized for losses Note: Gross loss numbers do not include benefit of non-file payments 26<=36% Portfolio Trends (Small, Large, Check) 12.0% 10.0% 8.0% 6.0%
Slide 27: Vintage Gross Loss Curves – Large Loans
Vintage Gross Loss Curves – Large Loans Note: Gross loss numbers do not include benefit of non-file payments 27Vintage Gross Loss Curves – Large Loans Note: Gross loss numbers do not include benefit of non-file payments 27
Slide 28: Vintage Gross Loss Curves – Small Loans
Vintage Gross Loss Curves – Small Loans Note: Gross loss numbers do not include benefit of non-file payments 28Vintage Gross Loss Curves – Small Loans Note: Gross loss numbers do not include benefit of non-file payments 28
Slide 29: Vintage Gross Loss Curves – Checks
Vintage Gross Loss Curves – Checks Note: Gross loss numbers do not include benefit of non-file payments 29Vintage Gross Loss Curves – Checks Note: Gross loss numbers do not include benefit of non-file payments 29
Slide 30: RMC 30+ Delinquency Trend
RMC 30+ Delinquency Trend 30RMC 30+ Delinquency Trend 30
Slide 31: Historical Loss and Delinquency Peer Comparison
Historical Loss and Delinquency Peer Comparison Cumulative Net Loss • As seen in the following graphs, Regional’s term ABS transactions have performed in line with its branch-based 20% competitors on a cumulative net loss and delinquency 18% basis. 16% 14% 12% 10% 8% 6% 4% 2% 0% 1 3 5 7 9 11 13 15 1
Slide 32: Servicing
Servicing Servicing
Slide 33: Servicing Overview
Servicing Overview Regional employs a hybrid strategy of localized collection efforts through the branches and centralized support for late-stage collections In-Branch Servicing Centralized Collections • Collection efforts primarily • Late stage co-collection support for the branches by performed in
Slide 34: Loss Mitigation / Borrower Assistance Tools
Loss Mitigation / Borrower Assistance Tools § Tools are designed to lower overall loss in the portfolio by helping qualified customers § These programs are targeted toward helping customers navigate through short term cash flow issues Renewal Balance Only Deferral (Delinquent Renewal) § Refinance of
Slide 35: Payment Channel Mix
Payment Channel Mix Electronic Payments In Branch Payments 100% 100% 90% 90% 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% % Electronic Payments In Branch Recurring Payments Increased Payment Channel Options 14% • Steady increase in electronic payments 12% 10% • Contributing
Slide 36: Financial Performance
Financial Performance Financial Performance
Slide 37: Historical Financial Performance
($ in millions) ($ in millions) Historical Financial Performance Net Income $50 $44.7 $45 $40 $35.3 $35 $30.0 $30 $24.0 • Recent earnings $23.4 $25 $20 growth driven by $14.8 $15 combination of $10 volume-related $5 revenue growth $0 and normalized 2014 2015 2016 2017 2018 2019 credit losses Total R
Slide 38: 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 39: 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 40: 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% (1)
Slide 41: CBREGI
fe) CBREGI MANAG CRERNNT
Regional Management — Debt Investor Presentation (January 2021) on 6ix