Slide 1: 4Q 2022 Earnings Presentation
4Q 2022 Earnings Presentation February 8th, 2023
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 2022 Financial Highlights
4Q 2022 Financial Highlights $ Chg % Chg $ in millions (except per share amounts) 4Q 22 4Q 21 B/(W) B/(W) Net income of $2.4 million and diluted EPS of $0.25, inclusive of a $2.7 million, or Interest & Fee Income $ 117.4 $ 107.1 $ 10.3 9.6% $0.29 per share, reduction from the sale of non-performing
Slide 4: Originations and Delinquency Trend
Originations and Delinquency Trend Year-over-year growth rate reduced from ($ in millions) Quarterly Origination Trend credit tightening actions; lower $434.4 $470.3 originations were offset by direct mail $420.7 $426.3 $418.7 $364.0 $377.7 $326.0 programs to former borrowers, which $312.5 Digital O
Slide 5: Digitally Sourced Originations
Digitally Sourced Originations • Digital originations are sourced from either our affiliate partnerships or directly from our website, underwritten by our custom credit scorecards, and serviced by our branches • Digital originations decreased sequentially in 4Q 22 due to credit tightening; 93% of 4Q
Slide 6: Controlled Portfolio Growth
Controlled Portfolio Growth Ending Net Receivables (ENR) vs. 3Q 22 vs. 4Q 21 ($ in millions) 3Q 20 4Q 20 1Q 21 2Q 21 3Q 21 4Q 21 1Q 22 2Q 22 3Q 22 4Q 22 $ Chg I/(D) % Chg I/(D) $ Chg I/(D) % Chg I/(D) Small Loans (≤ $2,500) $383 $403 $371 $381 $420 $445 $438 $455 $480 $482 $1 0.3% $37 8.2% Large Loa
Slide 7: Higher ENR Per Branch is Driving Efficiency
Higher ENR Per Branch is Driving Efficiency • Branch consolidations and our new state, lighter footprint strategy with larger branches, are driving strong ENR per branch in all age cohorts • Same store(1) year-over-year growth rate of 14.8% in 4Q 22 vs. 23.3% in the prior-year period • Considerable
Slide 8: Revenue Up 10.5% on Controlled Receivable Growth
Revenue Up 10.5% on Controlled Receivable Growth Revenue grew 10.5% year-over-year to a record $132 million in 4Q 22 ($ in millions) Total Revenue $132.0 $131.5 $119.5 $120.8 $122.9 Total revenue yield decreased 300 basis $111.5 Other Income points and interest and fee yield declined 290 $99.7 Insur
Slide 9: Recent Credit Trends
Recent Credit Trends 4Q 22 delinquency was 7.1%, which included ($ in millions) 30+ & 90+ Delinquency Rates $116.0 $119.8 20 basis points from three eliminated high $57.7 $67.6 APR segments with profitable net credit $94.7 margins; 4Q 22 delinquency, excluding the 30-89 Days $84.9 $82.0 $51.2 loan s
Slide 10: Reserved For Stressed Credit Losses
Reserved For Stressed Credit Losses In 4Q 22, we increased our loan loss reserves by $9.1 million on ENR growth of $91.8 million, increased reserves $1.7 million for macroeconomic impacts, and decreased reserves $11.8 million related to the loan sale. The 4Q 22 ending reserve included $20.7 million,
Slide 11: Achieving Operating Leverage While Investing in Our Business
Achieving Operating Leverage While Investing in Our Business 4Q 22 operating expense ratio ($ in millions) Operating Expense Ratio improved 290 basis points from $58.2 $55.5 $55.1 $54.1 $55.1 the prior year $47.8 $43.8 $44.8 $45.8 $46.4 • 4Q 22 includes a reduction to Total G&A Expense 17.0% incenti
Slide 12: Cost of Funds
Cost of Funds 4Q 22 interest expense as an annualized percentage of ANR increased 130 basis points year-over-year, 60 basis points of which related to favorable market value increases on interest rate caps in 4Q 21, with the remaining 70 basis points due to higher interest rates on ENR growth ($ in
Slide 13: Strong Funding Profile
Strong Funding Profile ($ in millions) Debt Capacity Unused Warehouse Capacity $722 Unused Senior Revolver Capacity $671 $647 As of December 31, 2022, total unused capacity was $555 $573 $557 $611 $565 $555 $212 million (subject to borrowing base) $507 $438 $89 $151 $216 $189 $94 $168 $178 $83 $282
Slide 14: Appendix
Appendix 14
Slide 15: Significant Capacity to Absorb Losses
Significant Capacity to Absorb Losses $ in millions 4Q 22 Total stockholders' equity $308.6 Allowance for credit losses 178.8 TTM(1) net income 51.2 Absorption capacity including TTM net income $538.7 Absorption capacity as % of net finance receivables 31.7% Total stockholders' equity $308.6 Allowan
Slide 16: 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 facilities, and securitizations Senior Revolver Warehouse Facilities Private Securitization Securitizations Size $420 milli
Slide 17: Consolidated Income Statements
Consolidated Income Statements $ in thousands 4Q 22 4Q 21 2022 2021 2020 2019 Revenue Interest and fee income $ 117,432 $ 107,117 $ 450,854 $ 382,544 $ 335,215 $ 321,169 Insurance income, net 10,751 9,423 43,502 35,482 28,349 20,817 Other income 3,833 2,944 12,831 10,325 10,342 13,727 Total revenue
Slide 18: Consolidated Balance Sheets
Consolidated Balance Sheets $ in thousands 2022 2021 2020 2019 Cash $ 3,873 $ 10,507 $ 8,052 $ 2,263 Net finance receivables 1,699,393 1,426,257 1,136,259 1,133,404 Unearned insurance premiums (51,008) (47,837) (34,545) (28,591) Allowance for credit losses (178,800) (159,300) (150,000) (62,200) Net
Slide 19: 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 20: Non-GAAP Financial Measures (Cont'd)
Non-GAAP Financial Measures (Cont’d) Non-GAAP Reconcilation Non-GAAP Reconcilation in thousands GAAP Adjustments Non-GAAP in thousands GAAP Adjustments Non-GAAP 4Q 22 Non-GAAP Reconciliation 4Q 22 Non-GAAP Reconciliation Interest and fee income $117,432 $1,914 (1) $119,346 30+ Delinquencies $119,843
Slide 21: Non-GAAP Financial Measures (Cont'd)
Non-GAAP Financial Measures (Cont’d) Non-GAAP Reconcilation $ in thousands GAAP Adjustments Non-GAAP 3Q 20 Non-GAAP Reconciliation G&A expense $43,754 ($778) (2) $42,976 Average net finance receivables $1,032,133 - $1,032,133 Operating expense ratio (1) 17.0% (0.3%) 16.7% 3Q 21 Non-GAAP Reconciliati
Slide 22: Non-GAAP Financial Measures (Cont'd)
Non-GAAP Financial Measures (Cont’d) $ in millions TTM (1) Pre-Tax Pre-Provision Income (Non-GAAP) Reconciliation Net income $51.2 Income taxes 14.1 Provision for credit losses 185.1 Pre-tax pre-provision income (non-GAAP) $250.4 $ in millions 4Q 22 % of ENR Absorption Capacity Non-GAAP Reconciliati
Slide 23: Non-GAAP Financial Measures (Cont'd)
Non-GAAP Financial Measures (Cont’d) $ in thousands 2022 2021 2020 2019 Total assets $ 1,724,987 $ 1,459,662 $ 1,103,856 $ 1,158,540 Less: Intangible assets 12,122 9,517 8,689 9,438 Tangible assets (non-GAAP) 1,712,865 1,450,145 1,095,167 1,149,102 Debt 1,355,359 1,107,953 768,909 808,218 Total stoc