Regional Management Corp. · NYSE:RM
Regional Management — Debt Investor Presentation (January 2022)
37 slides from Regional Management's debt investor presentation, Jan 31, 2022
Slide 1: ABS Investor Presentation January 31, 2022
Exhibit 99.1 ABS Investor Presentation st January 31 , 2022
Slide 2: Legal Disclosures
Legal Disclosures 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, by you. The Informatio
Slide 3: Legal Disclosures
Legal Disclosures 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 pandemic and its impact
Slide 4: Company Overview
G@REGIONAL MANAGEMENT Company Overview ee
Slide 5: Company Highlights
Company Highlights Geographic, Product, and Channel Expansion Omni-Channel Drive Growth Growth Strong Balance Strategy with Sheet Supports Capital Abundant Returns Market Opportunity Controlled Deep Growth with Management Stable Credit Experience Using Through Credit Modern Advanced Cycles Infrastru
Slide 6: Company Overview
Company Overview • Consumer Finance Installment Lender (Near Prime to Non-Prime customers) • Parent company is a Delaware Corp., Initial Public Offering in 2012 (NYSE: RM) • Headquartered in Greer SC with 30+ years of operating history Profile • Omni-channel origination platform (branches, direct ma
Slide 7: Operating History
Operating History RM has operated successfully through multiple credit cycles RM Closes Closes $125 RM Enters RM Founded Portfolio New $150 Million Private RM Enters Private Equity RM Enters Million Missouri and ABS (Allows in South Reaches $500 Invests in RM Oklahoma Virginia Wisconsin Carolina Mil
Slide 8: Deep and Tested Management Experience
Deep and Tested Management Experience • 30+ years of finance and accounting experience Rob Beck President and • Also spent 29 years at Citi, including service as COO of the US Retail Bank CEO • Prior to joining Regional, was EVP and COO for the Leukemia and Lymphoma Society • 30+ years of consumer f
Slide 9: Experienced Board of Directors
Experienced Board of Directors Board of Directors (Non-Employee Directors) 9
Slide 10: Abundant Market Opportunity to Serve the Underserved
Abundant Market Opportunity to Serve the Underserved • Approximately 75 million Americans generally align with Regional’s customer base • $76 billion market opportunity – RM has less than 2% market share; significant runway for growth (1) (2) $4.1 Trillion Consumer Finance Market 29% of US Populatio
Slide 11: Branch Network and Originations
Branch Network and Originations
Slide 12: Our Typical Customer
Our Typical Customer Our customer demographics… How we solve their financial needs… (1) Originations Cash needs Average age Auto-related 12% 10% 53 years Debt Home-related consolidation 9% 17% (1) Annual income $45,000 Medical 6% Family event- related 7% Homeownership 52% Household bills Other 24% 1
Slide 13: Originations Increase & Delinquencies Remain Low
Originations Increase & Delinquencies Remain Low Quarterly Origination Trend Monthly Origination Trend $200.0 $450.0 $420.7 $175.0 $377.7 $400.0 $156.1 $363.9 $364.0 $147.6 $353.7 $353.5 $150.0 $133.0 $350.0 2020 $135.7 $312.5 $128.9 $300.0 $125.0 $97.1 $232.6 $234.8 $250.0 $100.0 $83.9 $80.4 $174.2
Slide 14: Omni-Channel Originations Provide Market Opportunities
Omni-Channel Originations Provide Market Opportunities • Branches continue to be an integral part of Regional’s omni-channel strategy (1) • Mail campaigns attracted approximately 150,000 new customers to Regional within the last 12 months • Majority of new customers come through the Direct Mail and
Slide 15: Multi-Product Offering Fits Customer Needs
Multi-Product Offering Fits Customer Needs • 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 larger loans at
Slide 16: Omni-Channel Approach to Growth
Omni-Channel Approach to Growth • Multiple channels and products provide attractive market opportunities • 3Q 21 year-over-year record loan growth of $255 million, or 24.0% • Plan to enter at least 5 new states by the end of 2022 (1) Net Finance Receivables Geographic Footprint Date of Entry: $1,400
Slide 17: <=36% APR Origination Metrics by Product
<=36% APR Origination Metrics by Product FICO Original Term 670 50 660 40 650 640 30 630 620 20 610 600 10 590 580 0 Branch Check Branch Check APR Original Balance 34% $6,000 33% $5,000 32% $4,000 31% $3,000 30% $2,000 29% $1,000 28% $- 27% Branch Check Branch Check 17
Slide 18: Branch Oversight and Audits
Branch Oversight and Audits Risk-Based Audits by Internal Audit Department Monthly Branch Annually Self- Required Assessments Training Program Monthly Detailed Policy Monitoring of and Procedure Critical Analytics Manuals Incentive Detailed Program Based Supervisory on Delinquency, Visits by Distric
Slide 19: Underwriting and Servicing
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Slide 20: Robust Loan Approval Process
Robust Loan Approval Process • Custom automated decision engine used to determine if customer qualifies for product offerings based on risk profile and ability to repay • Maintained rigorous pre-pandemic underwriting standards with the addition of enhanced verification processes and the use of alter
Slide 21: Robust Underwriting Standards
Robust Underwriting Standards Collateral Verifications •Soft Secured Loans (Personal •Identity Property) •Employment •Hard Secured (Titled Assets) •Income •Unsecured Credit Scoring Repayment Ability •Implementation of custom •Debt to Income Calculation scorecards in 2018 •Minimum Annual Income •Dive
Slide 22: 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 • Late-stage co-collection support for the branches by performed in
Slide 23: 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 Deferral (Delinquent Renewal) • Refinance of
Slide 24: Payment Channel Mix
Payment Channel Mix • Significant reduction in cash and check payments in branch • Above 75% of payments received by RM are now made electronically (ACH, Debit) 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 Electronic Payments Cash
Slide 25: Credit Performance
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Slide 26: Total Portfolio Net Credit Loss Rates
Total Portfolio Net Credit Loss Rates Net credit loss rate improved 280 basis points versus the prior-year period on low delinquency levels Net Credit Loss Rates 12.0% 10.5% 10.6% 10.4% 10.0% 9.0% 8.1% 7.7% 7.8% 7.4% 8.0% 6.9% 6.0% 5.0% 4.0% 2Q 19 3Q 19 4Q 19 1Q 20 2Q 20 3Q 20 4Q 20 1Q 21 2Q 21 3Q 2
Slide 27: Total Portfolio Delinquency Rates
Total Portfolio Delinquency Rates 3Q 21 delinquency is flat year-over-year and down 180 basis points from 3Q 19 • 30+ days past due of 4.7% is equal to prior year • 30+ days past due of $61.3 million (loan loss reserves of $150.1 million) 30+ & 90+ Delinquency Rates $90.0 12.0% $79.5 $72.4 $75.0 10.
Slide 28: Vintage Gross Loss Curves – Branch <=36% APR
Vintage Gross Loss Curves – Branch <=36% APR 11.0% 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% 1.5% 2.5% 3.2% 3.9% 4.4% 4.9% 5.4% 5.9% 6.3% 6.6% 6.9% 7.1% 7.3% 7.5% 7.9% 8.2% 8.4%
Slide 29: Vintage Gross Loss Curves – Checks <=36% APR
Vintage Gross Loss Curves – Checks <=36% APR 11.0% 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% 0.1% 0.1% 0.3% 0.4% 0.7% 2.6% 3.7% 4.7% 5.5% 6.2% 6.8% 7.2% 7.6% 7.9% 8.2% 8.4% 8.7% 8.8% 8.9% 9.1% 9.3% 9.4%
Slide 30: 30+ Delinquency Trend
30+ Delinquency Trend Branch <=36% APR Checks <=36% APR 10% 10% 8% 8% 6% 6% 4% 4% 2% 2% 0% 0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2018 2019 2020 2021 2018 2019 2020 2021 30
Slide 31: Historical <=36% APR Gross Loss Rate (Branch & Check)
Historical <=36% APR Gross Loss Rate (Branch & Check) 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 3Q 21 Note: Gross loss numbers do not include benefit of non-file payments and are annualized for each quarter 31
Slide 32: Liquidity and Financial Results
Liquidity and Financial Results
Slide 33: 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 $500 m
Slide 34: Strong Profitability - Now & Through the Cycle
Strong Profitability - Now & Through the Cycle Net Income & Diluted Earnings Per Share ($ in millions) $3.80 $6.29 Net income $2.93 Diluted EPS $2.54 $2.40 $1.99 $67.9 $44.7 $35.3 $1.11 $30.0 $26.7 $24.0 $12.4 (1) (1) YTD 20 YTD 21 2016 2017 2018 2019 2020 Net income Diluted EPS Return on Assets & R
Slide 35: Consolidated Income Statements
Consolidated Income Statements in thousands 3Q 21 3Q 20 YTD 21 YTD 20 2020 2019 2018 2017 Revenue Interest and fee income $ 99,355 $ 81,306 $ 2 75,427 $ 2 48,370 $ 3 35,215 $ 321,169 $ 280,121 $ 249,034 Insurance income, net 9,418 6,861 26,059 20,460 28,349 20,817 14,793 13,061 Other income 2,687 2,
Slide 36: Consolidated Balance Sheets
Consolidated Balance Sheets in thousands 3Q 21 3Q 20 2020 2019 2018 2017 Cash $ 8,146 $ 4,292 $ 8,052 $ 2,263 $ 3,657 $ 5,230 Net finance receivables 1,314,233 1,059,554 1,136,259 1,133,404 9 51,183 834,045 Unearned insurance premiums ( 44,142) (30,024) (34,545) (28,591) (18,940) (16,582) Allowance
Slide 37: CREGIONAL
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