Regional Management Corp. · NYSE:RM
Regional Management — Q1 2024 Earnings Presentation
26 slides from Regional Management's earnings presentation, May 1, 2024
Slide 1: 1Q 24 Earnings Presentation
1Q 24 Earnings Presentation May 1, 2024
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: 1Q 24 Highlights
1Q 24 Highlights 540,600 32.8% $1.56 Customer Accounts Total Revenue Yield(1) Diluted Earnings Per Share Up 6.4% YoY Up 80 basis points from 1Q 23 Up from $0.90 per share in 1Q 23 $1.74 billion 7.1% 5.0% Net Finance Receivables 30+ Delinquencies Dividend Yield(2) Up 4.1% YoY 1Q 24 $0.30 dividend per
Slide 4: 1Q 24 Financial Highlights
1Q 24 Financial Highlights • Net income of $15.2 million and diluted EPS of $1.56, up $0.66, or 73%, versus 1Q 23 $ Chg % Chg • Total revenue increased $8.9 million, or 6.6%, due to price increases, product mix, and an increase in ANR $ in millions (except per share amounts) 1Q 24 1Q 23 B/(W) B/(W)
Slide 5: Originations Trend
Originations Trend Record originations for a first Quarterly Origination Trend ($ in millions) quarter and up 7.6% year-over-year $470.3 $434.4 $426.3 $418.7 $425.1 Record direct mail originations for $407.8 $399.0 a first quarter of $98.8 million, up $326.0 $326.4 from $76.0 million in 1Q 23 $303.2
Slide 6: Controlled Portfolio Growth Year-Over-Year
Controlled Portfolio Growth Year-Over-Year Ending Net Finance Receivables (ENR) ($ in millions) vs. 4Q 23 vs. 1Q 23 4Q 21 1Q 22 2Q 22 3Q 22 4Q 22 1Q 23 2Q 23 3Q 23 4Q 23 1Q 24 $ Chg I/(D) % Chg I/(D) $ Chg I/(D) % Chg I/(D) Large loans (> $2,500) $971 $997 $1,060 $1,116 $1,208 $1,212 $1,238 $1,272 $
Slide 7: Revenue Up 6.6% on Controlled Receivable Growth
Revenue Up 6.6% on Controlled Receivable Growth Revenue grew 6.6% year-over- Total Revenue ($ in millions) year to a record $144.3 million $140.9 $141.7 $144.3 in 1Q 24 $131.5 $132.0 $135.4 $133.5 $122.9 $119.5 $120.8 Loan sale decreased 4Q 23 Other Income Insurance Income total revenue by $1.9 mill
Slide 8: Revenue Yield
Revenue Yield • Total revenue yield increased 80 basis points year-over-year due to the impact of pricing changes flowing into the portfolio and product mix • 4Q 23 loan sale decreased total revenue yield by 30 basis points and is estimated to have increased 1Q 24 total revenue yield by 50 basis poi
Slide 9: Recent Credit Trends
Recent Credit Trends 1Q 24 delinquency of 7.1% 30+ & 90+ Delinquency Rates ($ in millions) compared to 6.9% in 4Q 23 (inclusive $119.8 $121.2 $128.4 $122.9 $124.2 of a 0.9% reduction from the loan sale in 4Q 23) $116.0 $116.3 $64.6 $66.0 $55.4 $67.6 $52.6 $57.7 $58.6 30-89 Days $94.7 90-179 Days $84
Slide 10: Front Book 78% of Total Portfolio
Front Book 78% of Total Portfolio Front Book/Back Book Mix ($ in millions) (March 31, 2024) $1,744 $124 $187(4) • ENR from higher-credit-quality front book is becoming a larger portion of the portfolio • Front book is 78% of the total portfolio, but only 71% of the 30+ DQ ENR • Front and back book d
Slide 11: Reserved For Stressed Credit Losses
Reserved For Stressed Credit Losses In 1Q 24, we decreased our loan loss reserves by $0.3 million related to 1Q 24 ENR liquidation and changes in estimated future macroeconomic impacts on credit losses. Loan Loss Reserves ($ in millions) $187.4 $187.1 $183.8 $184.9 $179.8 $181.4 $178.8 $167.5 $159.3
Slide 12: Continued Focus on Operating Leverage & Expense Control
Continued Focus on Operating Leverage & Expense Control Operating Expense Ratio ($ in millions) $64.8 $62.1 $60.4 $59.3 $58.2 $56.9 $55.5 $55.1 $55.1 $54.1 Total G&A Expense % of ANR⁽¹⁾ 16.3% 1Q 24 operating expense ratio 15.4% 14.9% improved 30 basis points from 14.7% 14.4% 14.8% the prior-year per
Slide 13: Cost of Funds
Cost of Funds • 1Q 24 interest expense as an annualized percentage of ANR was consistent year-over-year • 1Q 23 includes accelerated debt issue costs amortization of $0.6 million, or 10 basis points, related to the early payoff of a $75 million warehouse facility Interest Expense ($ in millions) $17
Slide 14: Strong Funding Profile
Strong Funding Profile Unused Debt Capacity ($ in millions) $557 $555 $552 As of March 31, 2024, total unused capacity was $478 million $478 (subject to borrowing base) Available liquidity of $169 million as of March 31, 2024 2021 2022 2023 1Q 24 Fixed vs. Variable Debt Fixed-rate debt represented 8
Slide 15: 1Q 24 Results and FY 24 Outlook
1Q 24 Results and FY 24 Outlook Key Metrics 1Q 24 Results 2Q 24 Outlook FY 24 Outlook ENR Growth/(Liquidation) ($27.1) million ~$30.0 - $35.0 million ~5 - 7% 50 basis points ~50 basis points ~40 - 50 basis points Total Revenue Yield sequential increase sequential decrease year-over-year increase Net
Slide 16: Appendix
Appendix CRERIQNAL 16
Slide 17: Higher ENR Per Branch is Driving Efficiency
Higher ENR Per Branch is Driving Efficiency • Branch consolidations and our new-state, lighter-footprint strategy with larger branches are driving higher ENR per branch • Same store(1) year-over-year growth rate of 2.8% in 1Q 24 vs. 12.3% in the prior-year period ENR Per Branch ($ in thousands) ENR
Slide 18: Digitally Sourced Originations
Digitally Sourced Originations • Digital volume represented 23.4% of our total new borrower volume in 1Q 24 • Large loans represented 72.4% of new borrower digitally sourced loans booked in 1Q 24 • Digital originations decreased sequentially in 1Q 24 due to credit tightening Digitally Sourced Origin
Slide 19: Significant Capacity to Absorb Losses
Significant Capacity to Absorb Losses $ in millions 1Q 24 Total stockholders' equity $336.5 Allowance for credit losses 187.1 TTM(1) net income 22.5 Absorption capacity including TTM net income $546.0 Absorption capacity as % of net finance receivables 31.3% Total stockholders' equity $336.5 Allowan
Slide 20: 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 $355 milli
Slide 21: Consolidated Income Statements
Consolidated Income Statements $ in thousands 1Q 24 1Q 23 2023 2022 2021 2020 Revenue Interest and fee income $ 128,818 $ 120,407 $ 489,698 $ 450,854 $ 382,544 $ 335,215 Insurance income, net 10,974 10,959 44,529 43,502 35,482 28,349 Other income 4,516 4,012 17,172 12,831 10,325 10,342 Total revenue
Slide 22: Consolidated Balance Sheets
Consolidated Balance Sheets $ in thousands 1Q 24 1Q 23 2023 2022 2021 2020 Cash $ 4,215 $ 7,108 $ 4,509 $ 3,873 $ 10,507 $ 8,052 Net finance receivables 1,744,286 1,676,230 1,771,410 1,699,393 1,426,257 1,136,259 Unearned insurance premiums (45,675) (49,126) (47,892) (51,008) (47,837) (34,545) Allow
Slide 23: 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 24: 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 $22.5 Income taxes 6.6 Provision for credit losses 218.8 Pre-tax pre-provision income (non-GAAP) $247.9 $ in millions 1Q 24 % of ENR Absorption Capacity Non-GAAP Reconciliation
Slide 25: Non-GAAP Financial Measures (Cont'd)
Non-GAAP Financial Measures (Cont’d) $ in thousands 1Q 24 1Q 23 2023 2022 2021 2020 Total assets $ 1,756,748 $ 1,701,114 $ 1,794,527 $ 1,724,987 $ 1,459,662 $ 1,103,856 Less: Intangible assets 17,360 12,972 15,846 12,122 9,517 8,689 Tangible assets (non-GAAP) 1,739,388 1,688,142 1,778,681 1,712,865
Slide 26: Regional Management
¢ REGIONAL =" MANAGEMENT. nyse NYSE