Regional Management Corp. · NYSE:RM
Regional Management — Debt Investor Presentation (June 2021)
37 slides from Regional Management's debt investor presentation, Jun 28, 2021
Slide 1: ABS Investor Presentation June 2021
Exhibit 99.1 REGIONAL® MANAGEMENT ABS Investor Presentation June 2021
Slide 2: Legal Disclosures
Legal Disclosures REGIONAL® MANAGEMENT The information contained in this electronic presentation (the “Information”) is being provided to you on a confidential basis solely for your review and may not be downloaded, copied, reproduced, or redistributed, in whole or in part, directly or indirectly, b
Slide 3: Legal Disclosures
Legal Disclosures REGIONAL® MANAGEMENT Factors that could cause actual results or performance to differ from the expectations expressed or implied in forward-looking statements include, but are not limited to, the following: risks related to Regional Management’s business, including the COVID-19 pan
Slide 4: Company Overview
REGIONAL® MANAGEMENT Company Overview
Slide 5: Company Highlights
Company Highlights REGIONAL® MANAGEMENT REGIONAL® MANAGEMENT Clear Path Forward for Sustainable Long-Term Growth Abundant Market Opportunity Deep Management Experience Modern Infrastructure Advanced Credit Tools Successful Differentiated Growth Strategy 5
Slide 6: Company Overview
Company Overview REGIONAL® MANAGEMENT Consumer Finance Installment Lender 30+ years of operating history Operating subsidiaries in each state Omni-channel origination platform (branch & digital) 365 branches in 11 States as of March 31, 2021 Entered Illinois in 2Q 2021 $1.1 billion total portfolio s
Slide 7: Operating History
Operating History REGIONAL® MANAGEMENT RM has operated successfully through multiple credit cycles RM Founded in South Carolina Private Equity Invests in RM RM Enters Oklahoma Portfolio Reaches $500 Million in Size RM Enters Virginia RM Completes System Migration and Closes on First Securitization R
Slide 8: Deep and Tested Management Experience
Deep and Tested Management Experience REGIONAL® MANAGEMENT Rob Beck President and CEO 30+ years of finance and accounting experience Spent 29 years at Citi, including service as COO of the US Retail Bank Prior to joining Regional, was EVP and COO for the Leukemia and Lymphoma Society John Schachtel
Slide 9: Experienced Board of Directors
Experienced Board of Directors REGIONAL® MANAGEMENT Board of Directors (Non-Employee Directors) Steve Freiberg Senior Advisor to The Boston Consulting Group Former CEO of E*TRADE Former Co-Chairman/CEO of Citigroup Global Consumer Group Mike Dunn Former CEO and Executive Chairman of RM Former Partne
Slide 10: Abundant Market Opportunity to Serve the Underserved
Abundant Market Opportunity to Serve the Underserved REGIONAL® MANAGEMENT Approximately 80 million Americans generally align with Regional’s customer base $77 billion market opportunity – RM has less than 2% market share; significant runway for growth $4.1 Trillion Consumer Finance Market (1) 30% of
Slide 11: Branch Network and Originations
REGIONAL® MANAGEMENT Branch Network and Originations
Slide 12: Our Typical Customer
Our Typical Customer REGIONAL® MANAGEMENT Our customer demographics… Average age 54 years Annual income (1) $45,000 Homeownership 55% Some college or advanced degree (1) 61% How we solve their financial needs… Originations(1) Cash needs 12% Debt consolidation 16% Household bills 23% Other 14% Family
Slide 13: Quarterly Total Portfolio Origination Trends
Quarterly Total Portfolio Origination Trends REGIONAL® MANAGEMENT Quarterly Origination Trend Millions $400.0 $350.0 $300.0 $250.0 $200.0 $150.0 $100.0 $50.0 $- $295.2 $219.5 $349.0 $348.9 $359.1 $229.2 $172.2 $308.1 $358.7 $231.4 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 2Q 20 3Q 20 4Q 20 1Q 21 Branch Or
Slide 14: Omni-Channel Originations Provide Market Opportunities
Omni-Channel Originations Provide Market Opportunities REGIONAL® MANAGEMENT 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
Slide 15: Multi-Product Offering Fits Customer Needs
Multi-Product Offering Fits Customer Needs REGIONAL® MANAGEMENT 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
Slide 16: Hybrid Approach to Growth
Hybrid Approach to Growth REGIONAL® MANAGEMENT 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 si
Slide 17: <=36% APR Origination Metrics by Product
<=36% APR Origination Metrics by Product REGIONAL® MANAGEMENT FICO 670 660 650 640 630 620 610 600 590 580 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Branch (Small & Large) Check Original Term 50 45 40 35 30 25 20 15 10 5 0 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20
Slide 18: Branch Oversight and Audits
Branch Oversight and Audits REGIONAL® MANAGEMENT Risk-Based Audits by Internal Audit Department Monthly Branch Self-Assessments Monthly Monitoring of Critical Analytics Detailed Supervisory Visits at Least Twice per Year by District Supervisors Incentive Program Based on Delinquency, Profitability,
Slide 19: Underwriting and Servicing
REGIONAL® MANAGEMENT Underwriting and Servicing
Slide 20: Robust Loan Approval Process
Robust Loan Approval Process REGIONAL® MANAGEMENT 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 Applicatio
Slide 21: Robust Underwriting Standards
Robust Underwriting Standards REGIONAL® MANAGEMENT Collateral Soft Secured Loans (Personal Property) Hard Secured (Titled Assets) Unsecured Verifications Identity Employment Income Credit Scoring Diverse data attributes Review of credit bureau information Implementation of custom scorecards in 2018
Slide 22: Servicing Overview
Servicing Overview REGIONAL® MANAGEMENT Regional employs a hybrid strategy of localized collection efforts through the branches and centralized support for late-stage collections Current 1-29 30-59 60-89 90-119 120-149 150-179 180+ Post Charge-off In-Branch Servicing Collection efforts primarily per
Slide 23: Loss Mitigation / Borrower Assistance Tools
Loss Mitigation / Borrower Assistance Tools REGIONAL® MANAGEMENT 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) Refina
Slide 24: Payment Channel Mix
Payment Channel Mix REGIONAL® MANAGEMENT Significant reduction in cash and check payments in branch Greater than 75% of all payments received by RM are now made electronically (ACH, Debit) 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Jan-2018 Mar-2018 May-2018 Jul-2018 Sep-2018 Nov-2018 Jan-2019 Mar-201
Slide 25: Credit Performance
REGIONAL® MANAGEMENT Credit Performance
Slide 26: Total Portfolio Net Credit Loss Rates
Total Portfolio Net Credit Loss Rates REGIONAL® MANAGEMENT Net credit loss rate decreased 280 basis points versus the prior-year period on low delinquency levels Net Credit Loss Rates Annualized % of ANR 11.0% 9.0% 7.0% 5.0% 8.9% 10.7% 10.4% 8.1% 9.0% 10.5% 10.6% 7.8% 6.9% 7.7% 4Q 18 1Q 19 2Q 19 3Q
Slide 27: Delinquency at Historically Low Levels
Delinquency at Historically Low Levels REGIONAL® MANAGEMENT 1Q 21 delinquency is down from the prior year as a result of government stimulus and enhanced credit standards 30+ days past due of 4.3% is 230 basis points lower than prior year 30+ days past due of $47.7 million (loan loss reserves of $13
Slide 28: Vintage Gross Loss Curves – Branch (Small & Large)
Vintage Gross Loss Curves – Branch (Small & Large) REGIONAL® MANAGEMENT Consolidated: Large & Small Loans <=36% APR: Gross Loss Curves 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 24 27 30 33 36 2017 0.0% 0.1% 0.2% 0.3% 0.4% 0.6% 0.8%
Slide 29: Vintage Gross Loss Curves – Checks
Vintage Gross Loss Curves – Checks REGIONAL® MANAGEMENT Check <=36% APR: Gross Loss Curves 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 24 27 30 33 36 2017 0.0% 0.0% 0.0% 0.1% 0.2% 0.3% 0.6% 2.5% 3.5% 4.5% 5.3% 5.9% 6.4% 6.9% 7.3% 7.5%
Slide 30: RM 30+ Delinquency Trend
RM 30+ Delinquency Trend REGIONAL® MANAGEMENT Large Loans <=36% APR 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 2018 2019 2020 2021 5.5% 4.6% 5.0% 3.3% 4.9% 4.9% 3.8% 5.6% 5.0% 3.9% 6.0% 5.3% 4.4% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Small Loans <=36% APR 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2018
Slide 31: Historical <=36% APR Gross Loss Rate (Small, Large, Check)
Historical <=36% APR Gross Loss Rate (Small, Large, Check) REGIONAL® MANAGEMENT 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 1Q 14 3Q 14 1Q 15 3Q 15 1Q 16 3Q 16 1Q 17 3Q 17 1Q 18 3Q 18 1Q 19 3Q 19 1Q 20 3Q 20 1Q 21 Note: Gross loss numbers do not include benefit of non-file payments and are annualized for e
Slide 32: Financial Results and Liquidity
REGIONAL® MANAGEMENT Financial Results and Liquidity
Slide 33: Diversified Liquidity Profile
Diversified Liquidity Profile REGIONAL® MANAGEMENT Long history of liquidity support from a strong group of banking partners Diversified funding platform with a senior revolving facility, warehouse facilities, and securitizations Senior Revolver Size: $640 million Interest Type: Floating Maturity: S
Slide 34: Historical Financial Performance
Historical Financial Performance REGIONAL® MANAGEMENT Reduced earnings in 2020 driven by COVID reserves Receivables and revenue have grown in parallel Net Income ($ in millions) $50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 $23.4 $24.0 $30.0 $35.3 $44.7 $26.7 2015 2016 2017 2018 2019 2020 Total Revenue
Slide 35: Consolidated Income Statements
Consolidated Income Statements REGIONAL® MANAGEMENT in thousands 1Q 21 1Q 20 2020 2019 2018 2017 Revenue Interest and fee income $ 87,279 $ 86,997 $ 335,215 $ 321,169 $ 280,121 $ 249,034 Insurance income, net 7,985 5,949 28,349 20,817 14,793 13,061 Other income 2,467 3,128 10,342 13,727 11,792 10,36
Slide 36: Consolidated Balance Sheets
Consolidated Balance Sheets REGIONAL® MANAGEMENT in thousands 1Q 21 1Q 20 2020 2019 2018 2017 Cash $ 7,226 $ 14,668 $ 8,052 $ 2,263 $ 3,657 $ 5,230 Net finance receivables 1,105,603 1,102,285 1,136,259 1,133,404 951,183 834,045 Unearned insurance premiums (34,751) (28,183) (34,545) (28,591) (18,940)
Slide 37: Regional Management – Listed NYSE: RM
REGIONAL® MANAGEMENT REGIONAL® MANAGEMENT RM LISTED NYSE
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