Regional Management Corp. · NYSE:RM
Regional Management — Q2 2020 Earnings Presentation
24 slides from Regional Management's earnings presentation, Aug 5, 2020
Slide 1: 2Q 2020 Earnings Call Supplemental Presentation
2Q 2020 Earnings Call Supplemental Presentation August 5, 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: Proudly Supporting Our Customers and Employees
Proudly Supporting Our Customers and Employees Supporting Our Customers Supporting Our Employees • Our branches remain open and available to service the needs of • Created an HR contact center designed to: our customers ̶ Monitor employee exposure ̶ Substantially all of our branches are open, and we
Slide 4: Proven Operating Model and Effectively Managing the Ongoing COVID-19 Crisis
Proven Operating Model and Effectively Managing the Ongoing COVID-19 Crisis Our Proven Approach Ongoing COVID-19 Response • Strong relationship-driven customer • Proactively deployed borrower interaction model allows us to create assistance programs; June 30, 2020 30+ Customer-Centric responsible le
Slide 5: Monthly Lending and Collection Activity
Monthly Lending and Collection Activity Originations Branch Direct Mail Digital $92.9 $77.2 $79.0 $76.2 $75.9 in Millions $57.9 $35.3 January February March April May June July % Y/Y Change 0% 12% 2% (65%) (58%) (29%) (27%) 30+ Day Delinquencies • Branch originations rebounded from April’s low of $3
Slide 6: 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) 2Q 20 Total stockholders' equity $259.9 Allowance for credit losses $142.0 Total absorption capacity $401.9 Absorption capacity as % of net finance receivables 39.3% TTM
Slide 7: 2Q 20 Financial Highlights
2Q 20 Financial Highlights dollars in millions 2Q 20 2Q 19 $ Chg B/(W) % Chg B/(W) (except per share amounts) Average net finance receivables (ANR) $ 1,049.8 $ 954.9 $ 94.9 9.9% Interest & fee income 80.1 76.0 4.1 5.4% Total revenue 89.9 84.3 5.6 6.6% Provision for credit losses 27.5 25.7 (1.8) (6.9
Slide 8: Portfolio Growth and Mix Trends
Portfolio Growth and Mix Trends Ending Net Finance Receivables (ENR) vs. 1Q 20 vs. 2Q 19 in millions 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 2Q 20 $ Chg I/(D) % Chg I/(D) $ Chg I/(D) % Chg I/(D) Small loans (≤ $2,500) $365 $389 $419 $442 $426 $435 $454 $468 $440 $380 ($60) (13.7%) ($55
Slide 9: Average Receivables and Revenue Trends
Average Receivables and Revenue Trends Revenue $98.0 $96.1 • Total revenue increased 6.6% vs. the $100.0 $91.7 $89.9 prior-year period $90.0 $83.7 $84.3 $81.7 $77.9 • Interest and fee yield decreased 130 $80.0 $72.6 $72.4 basis points vs. the prior-year Millions $70.0 period, as large loan portfolio
Slide 10: Recent Net Credit Loss Trends
Recent Net Credit Loss Trends • Net credit loss rate increased 20 basis points vs. the prior-year period • The denominator effect of slower portfolio growth negatively impacted the 2Q 20 net credit loss rate 12.0% Net Credit Loss Rate 10.7% 10.5% 10.6% 10.4% 9.9% Annualized % of ANR 10.0% 9.3% 9.0%
Slide 11: Delinquency at Historically Low Levels
Delinquency at Historically Low Levels • 2Q 20 delinquency is down from prior year as a result of new custom scorecards, federal stimulus, and the successful execution of internal borrower assistance programs ₋ 30+ days past due of 4.8% is 150 basis points lower than prior year ₋ 90+ days past due o
Slide 12: 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 17.2% in our footprint in 2020 and declining to 8.6% by the end of 2021. The severity of our macro assumptions remained relatively consistent
Slide 13: Operating Expense Ratio
Operating Expense Ratio • Deferred $2.0 million less in loan origination costs on reduced loan volume in 2Q 20, which increased personnel expense • Incurred $0.6 million of 2Q 20 expenses for COVID-19 related customer communications, protective supplies, and remote work equipment • These items impac
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 $8.7 6.0% $7.9 $8.0 $7.2 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% 3.5% 3.4% 3.0% $4.0 2.0% $2.0 1.0% $- - 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 2Q 20 Intere
Slide 15: Strong Funding Profile
Strong Funding Profile Debt Capacity • As of June 30, 2020, total undrawn $600 capacity was $493 million (subject to borrowing base) $500 $98 • Available liquidity of $162 million $400 $94 $95 $70 as of July 31, 2020 Millions $120 $43 $74 $79 $300 $34 $34 • Fixed-rate debt represents 60% of $200 $39
Slide 16: Appendix
@ REGIONAL MANAGEMENT Appendix
Slide 17: Same Store Portfolio Growth
Same Store Portfolio Growth • Same store(1) portfolio growth in 2Q 20 of 2.2% vs. 13.0% in the prior-year period due to the impact of COVID-19 • Considerable growth opportunities in our existing branch footprint, particularly from branches opened within the last 3 years • Wisconsin de novo branches
Slide 18: 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 2Q 20, our digital volume represen
Slide 19: 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 20: Consolidated Income Statements
Consolidated Income Statements in thousands 2Q 20 2Q 19 2019 2018 2017 2016 Revenue Interest and fee income $ 80,067 $ 75,974 $ 321,169 $ 280,121 $ 249,034 $ 220,963 Insurance income, net 7,650 5,066 20,817 14,793 13,061 9,456 Other income 2,133 3,234 13,727 11,792 10,364 10,099 Total revenue 89,850
Slide 21: Consolidated Balance Sheets
Consolidated Balance Sheets in thousands 2Q 20 2Q 19 2019 2018 2017 2016 Cash $ 8,973 $ 694 $ 2,263 $ 3,657 $ 5,230 $ 4,446 Net finance receivables 1,022,635 994,980 1,133,404 951,183 834,045 729,161 Unearned insurance premiums (27,016) (21,546) (28,591) (18,940) (16,582) (11,386) Allowance for cred
Slide 22: 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 23: Non-GAAP Financial Measures (Cont'd)
Non-GAAP Financial Measures (Cont’d) in thousands 2Q 20 2Q 19 2019 2018 2017 2016 Total assets $ 1,000,225 $ 1,019,316 $ 1,158,540 $ 956,395 $ 829,483 $ 712,224 Less: Intangible assets 8,824 9,953 9,438 10,010 10,607 6,448 Tangible assets (non-GAAP) 991,401 1,009,363 1,149,102 946,385 818,876 705,77
Slide 24: CREGIONAL MANAGEMENT
CREGIONAL MANAGEMENT @ REGIONAL MANAGEMENT L™*