Regional Management Corp. · NYSE:RM
Regional Management — ABS East Conference 2018
32 slides from Regional Management's conference presentation, Sep 24, 2018
Slide 1: Regional Management Corp. ABS East Conference September 2018
Regional Management Corp. ABS East Conference September 2018
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation, the related remarks, and the responses to various questions may contain various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which represent Regional Management Corp.’s expectations or beliefs concer
Slide 3: Company Overview
Company Overview Consumer Finance Installment Lender 30 Years of Operating History Operating Subsidiaries in Each State Bricks-and-Clicks Model 340 Branches in 9 States as of June 30, 2018 Digital Servicing with Strategic Digital Lead Partnerships Headquartered in Greer, SC Operations in the Southea
Slide 4: Company Highlights
Company Highlights Attractive Long-Term Market Opportunity Numerous Avenues for Additional Growth 13 Consecutive Quarters of Double-Digit Receivable Growth Deep Management Experience Stable Credit Performance Significantly Upgraded Infrastructure
Slide 5: 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 – 15-member team with Chief Comp
Slide 6: Operating History
Operating History RM Completes Portfolio System RM Founded Private RM Enters Reaches $500 RM Enters in South Equity Invests Migration and Oklahoma Million in Virginia Carolina in RM Size Closes on First Securitization 1987 2004 2007 2009 2011 2012 2013 2014 2015 2016 2017 2018 RM Operates RM Closes
Slide 7: Management Team
Management Team Board of Directors Peter Knitzer President and Chief Executive Officer John Schachtel Don Thomas Dan Taggart Jim Ryan Joseph Manavalan Ralph Warchol Brian Fisher Chief Operating Chief Financial Chief Risk Chief Marketing Chief Digital Chief Information General Counsel Officer Officer
Slide 8: Deep Management Experience
Deep Management Experience 30+ years of consumer financial services experience Peter Knitzer President and Spent 14 years at Citi in various senior roles, including Chairman & CEO of Citibank North America CEO Prior to joining Regional, was EVP and Head of Payments at CIBC, and President and Directo
Slide 9: Strong Corporate Governance and Board of Directors
Strong Corporate Governance and Board of Directors Board of Directors (Non-Employee Directors) Al de Molina Chairman of RM’s Board of Directors Former CEO and COO of GMAC Former CFO of Bank of America Former CEO of Banc of America Securities Steve Freiberg Senior Advisor to The Boston Consulting Gro
Slide 10: Diversified Liquidity Profile
Diversified Liquidity Profile Long history of liquidity support from a strong group of banking partners Diversified funding platform with an ABL, warehouse facility, amortizing loan facility, and securitization Senior Revolver (ABL) ï,§ Size: $638 Million ï,§ Interest Type: Floating ï,§ Maturity: Ju
Slide 11: Historical Financial Performance
Historical Financial Performance Recent earnings growth driven by combination of volume-related revenue growth and more normalized credit losses Receivables and revenue have grown in parallel Net Income Total Revenue
Slide 12: Significant Market Opportunity to Help Underserved Population
Significant Market Opportunity to Help Underserved Population There are approximately 80 million Americans that generally align with our customer base. We believe that the personal installment loan segment is an approximately $60 billion market opportunity. $3.8 Trillion Consumer Finance Market (1)
Slide 13: Regional Product Offerings
Regional Product Offerings Product diversity allows Regional to offer customers various products as credit needs change Products are easy for customers to understand and underwritten based on an ability to repay Small ï,§ Short-term cash needs Customer Needï,§ Bill payment ï,§ Back-to-school expense
Slide 14: Multi-Channel Origination Platform
Multi-Channel Origination Platform 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 YTD Origination Volume as
Slide 15: What Makes Regional Different?
What Makes Regional Different? Convenience Checks and Small Loans provide a unique acquisition opportunity to convert Unique Acquisition highest credit worthy and good paying customers into larger personal loans Channel for Large Personal Loans Regional has a total portfolio customer base with more
Slide 16: Branch Network Overview
Branch Network Overview Branch Overview – Hybrid Approach to Growth Multiple channels and products provide attractive market opportunities - Most loans are serviced and collected through branches - Migrating late-stage delinquency / collections to centralized collections group Many branches have sig
Slide 17: Branch Network Staffing Structure
Branch Network Staffing Structure Branch is generally staffed with 3-4 employees (Branch Manager, Assistant Manager, Account Executives) Approximately 1,571 square feet of leased space in high traffic areas like shopping malls and strip centers Branches are divided into districts and report into Dis
Slide 18: Branch Oversight and Audits
Branch Oversight and Audits Risk-Based Yearly Required Audits by RM Training Internal Audit Program Department Monthly Branch Detailed Policy Self- and Procedure Assessments Manuals Detailed Incentive Supervisory Program Based Visits at Least 3 on Delinquency, Times per Year Profitability & by Distr
Slide 19: Loan Application Approval Process
Loan Application Approval Process Customized auto 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 28 36 Review of 72 49 Initial Customer Decision Financials Review Credit Custom Underwritin
Slide 20: Robust Underwriting Standards
Robust Underwriting Standards Collateral Verifications All borrowers must provide Identity collateral Employment Secured by titled assets Income (hard secured) or personal property (soft secured) Credit Scoring Repayment Ability Diverse data attributes Debt to Income Calculation Review of credit bur
Slide 21: Total Portfolio Growth Through Multiple Cycles
Total Portfolio Growth Through Multiple Cycles Millions
Slide 22: Recent Portfolio Growth Driven by Large Loans
Recent Portfolio Growth Driven by Large Loans Millions SMALL LARGE AUTO RETAIL
Slide 23: Large Loan Originations
Large Loan Originations Millions * Data includes large loans with < = 36% APR only
Slide 24: 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, large loan receivables have grown approximately 650%, from $46 million to $347 million, in less than three years (in millions) Ending Net Receivables of Core Loans % Increase 10.0% 32.6% 22.5% 21.
Slide 25: Large Loan Origination Metrics
Large Loan Origination Metrics FICO Original Term WA FICO Weighted Average Original Term (in months) APR Original Loan Balance Weighted Average APR Average Original Balance * Data includes only large loans with < = 36% APR
Slide 26: RMIT 2018-1 Compared to Other Branch Based Lenders
RMIT 2018-1 Compared to Other Branch Based Lenders Collateral Overview Regional Lendmark OneMain Mariner RMIT 2018-1 LFT 2018-1 OMFIT 2018-2 MFIT 2017-B Current Balance ($mm) $168.541 $321.716 $380.625 $306.748 # of Loans 38,793 67,148 70,072 108,405 Average Current Principal Balance $4,344.62 $4,79
Slide 27: Large Loan Portfolio Historical Performance
Large Loan Portfolio Historical Performance Gross Loss % 60+ Delinquency % * Data includes large loans with < = 36% APR only * Gross loss data excludes the benefit from non-file insurance
Slide 28: RMIT 2018-1 Performance
RMIT 2018-1 Performance Reinvestment Criteria Current Level Test Level Compliance Top Three States 69% 80% Yes Single State Originated (Top state) 26% 35% Yes Single State Originated (other than any Top 3 States) 9% 18% Yes Minimum Weighted Average Coupon 30% 24% Yes Weighted Average Remaining Term
Slide 29: 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 performed in the branches High-touch relationship allows branches to
Slide 30: 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 (Delinquent Renewal) Refinance of previous loan
Slide 31: Company Highlights
Company Highlights Attractive Long-Term Market Opportunity 13 Numerous Consecutive Avenues for Quarters of Additional Double-Digit Growth Receivable Growth Deep Significantly Management Upgraded Experience Infrastructure Stable Credit Performance
Slide 32: CHNANENT
CHNANENT