Regional Management Corp. · NYSE:RM
Regional Management — Q3 2022 Earnings Presentation
21 slides from Regional Management's earnings presentation, Nov 1, 2022
Slide 1: 3Q 2022 Earnings Presentation
3Q 2022 Earnings Presentation November 1st, 2022
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: 3Q 2022 Financial Highlights
3Q 2022 Financial Highlights $ Chg % Chg $ in millions (except per share amounts) Net income of $10.1 million, or $1.06 diluted EPS 3Q 22 3Q 21 B/(W) B/(W) Interest & Fee Income $ 116.0 $ 99.4 $ 16.7 16.8% Total revenue increased $20.0 million, or 17.9% Insurance Income, Net 12.0 9.4 2.6 27.3% • Int
Slide 4: Originations and Delinquency Trend
Originations and Delinquency Trend ($ in millions) Quarterly Origination Trend $364.0 $377.7 $420.7 $434.4 $426.3 $418.7 Year-over-year growth rate Digital Originations $312.5 $234.8 $326.0 intentionally reduced from credit Direct Mail $174.2 tightening actions Branch Originations 3Q 22 branch origi
Slide 5: Digitally Sourced Originations – Record High
Digitally Sourced Originations – Record High Record originations driven by affiliate expansion; offset by credit tightening actions Digital originations are sourced from either our affiliate partnerships or directly from our website All digitally sourced loans are underwritten by our custom credit s
Slide 6: Controlled Portfolio Growth and Solid Small Loan Growth
Controlled Portfolio Growth and Solid Small Loan Growth Ending Net Receivables (ENR) vs. 2Q 22 vs. 3Q 21 ($ in millions) 2Q 20 3Q 20 4Q 20 1Q 21 2Q 21 3Q 21 4Q 21 1Q 22 2Q 22 3Q 22 $ Chg I/(D) % Chg I/(D) $ Chg I/(D) % Chg I/(D) Small Loans (≤ $2,500) $380 $383 $403 $371 $381 $420 $445 $438 $455 $48
Slide 7: Higher ENR Per Branch is Driving Efficiency
Higher ENR Per Branch is Driving Efficiency Branch consolidations and our new state, lighter footprint strategy with larger branches, are driving strong ENR per branch in all age cohorts Same store(1) year-over-year growth rate of 19.2% in 3Q 22 vs. 22.7% in the prior-year period Considerable growth
Slide 8: Revenue Up 17.9% on Controlled Receivable Growth
Total revenue yield decreased 230 basis Revenue Up 17.9% on Controlled Receivable Growth points year-over-year and increased 20 ($ in millions) Total Revenue $131.5 basis points sequentially $120.8 $122.9 $119.5 $111.5 Other Income $97.4 $97.7 $99.7 Interest and fee yield decreased 240 Insurance Inc
Slide 9: Recent Credit Trends
Recent Credit Trends ($ in millions) 30+ & 90+ Delinquency Rates $116.0 $57.7 $94.7 30+ days past due of 7.2% included 30 basis $84.9 $82.0 $51.2 points from three high APR segments with 30-89 Days $45.7 $36.2 profitable net credit margins 90-179 Days $60.5 $61.3 90+ DQ % $49.5 $49.9 $33.3 $47.7 $35
Slide 10: Reserved For Stressed Credit Losses
Reserved For Stressed Credit Losses In 3Q 22, we increased our loan loss reserves by $12.3 million, including an incremental $4.1 million in reserves related to macroeconomic impacts. The 3Q 22 ending reserve included $19.0 million, or 10.6% of total loan loss reserves, associated with potential fut
Slide 11: Achieving Operating Leverage While Investing in Our Business
Achieving Operating Leverage While Investing in Our Business Operating expense ratio improved 0.5% from the prior year and 1.2% ($ in millions) Operating Expense Ratio excluding non-operating items $58.2 $55.5 $55.1 $54.1 (non-GAAP) $41.5 $43.8 $44.8 $45.8 $46.4 $47.8 • Costs for discontinuing the T
Slide 12: Cost of Funds
Cost of Funds Sold $100 million of interest rate caps in 3Q 22 and locked in $2.3 million of lifetime market value gains Interest expense as a percentage of ANR increased 20 basis points year-over-year ($ in millions) Interest Expense $11.9 $9.1 $9.3 $9.3 $8.8 $7.1 $7.8 $7.6 $7.6 $11.8 $9.1 $9.2 $9.
Slide 13: Strong Funding Profile
Strong Funding Profile ($ in millions) Debt Capacity As of September 30, 2022, total unused capacity was $565 Unused Warehouse Capacity $722 $671 million (subject to borrowing base) Unused Senior Revolver Capacity $647 $611 $573 $557 $565 $212 $493 $507 $151 $216 $438 $89 $189 Available liquidity of
Slide 14: Appendix
Appendix 14
Slide 15: Significant Capacity to Absorb Losses
Significant Capacity to Absorb Losses $ in millions 3Q 22 Total stockholders' equity $308.5 Allowance for credit losses 179.8 TTM(1) net income 69.6 Absorption capacity including TTM net income $557.9 Absorption capacity as % of net finance receivables 34.7% Total stockholders' equity $308.5 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 $500 milli
Slide 17: Consolidated Income Statements
Consolidated Income Statements $ in thousands 3Q 22 3Q 21 2021 2020 2019 2018 Revenue Interest and fee income $ 116,020 $ 99,355 $ 382,544 $ 335,215 $ 321,169 $ 280,121 Insurance income, net 11,987 9,418 35,482 28,349 20,817 14,793 Other income 3,445 2,687 10,325 10,342 13,727 11,792 Total revenue 1
Slide 18: Consolidated Balance Sheets
Consolidated Balance Sheets $ in thousands 3Q 22 3Q 21 2021 2020 2019 2018 Cash $ 3,140 $ 8,146 $ 10,507 $ 8,052 $ 2,263 $ 3,657 Net finance receivables 1,607,598 1,314,233 1,426,257 1,136,259 1,133,404 951,183 Unearned insurance premiums (49,789) (44,142) (47,837) (34,545) (28,591) (18,940) Allowan
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) (1) $ in millions TTM Pre-Tax Pre-Provision Income (Non-GAAP) Reconciliation Net income $69.6 Income taxes 19.8 Provision for credit losses 155.3 Pre-tax pre-provision income (non-GAAP) $244.8 $ in millions 3Q 22 % of ENR Absorption Capacity Non-GAAP Reconciliati
Slide 21: Non-GAAP Financial Measures (Cont’d)
Non-GAAP Financial Measures (Cont’d) $ in thousands 3Q 22 3Q 21 2021 2020 2019 2018 Total assets $ 1,606,550 $ 1,313,558 $ 1,459,662 $ 1,103,856 $ 1,158,540 $ 956,395 Less: Intangible assets 11,305 9,184 9,517 8,689 9,438 10,010 Tangible assets (non-GAAP) 1,595,245 1,304,374 1,450,145 1,095,167 1,14