Regional Management Corp. · NYSE:RM
Regional Management — Debt Investor Presentation (October 2022)
37 slides from Regional Management's debt investor presentation, Oct 5, 2022
Slide 1: ABS Investor Presentation October 2022
REGIONAL MANAGEMENT RM LISTED NYSE ABS Investor Presentation October 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: managing growth effectively, implementing the Company’s growth strategy, and opening new branche
Slide 4: Company Overview
Company Overview
Slide 5: Regional Overview
Regional Overview Regional Management Corp. is a diversified consumer finance company operating under the name “Regional Finance” in branch locations across the United States. We provide installment loan products primarily to customers with limited access to consumer credit from banks, thrifts, cred
Slide 6: Company Highlights
Company Highlights Strong balance sheet supports capital returns Controlled growth with stable credit using returns advanced credit tools Geographic, product, and channel Modern infrastructure and digital expansion drive growth capabilitie scale, digital capabilities, and lighter High customer satis
Slide 7: Evolution of Regional Management
Evolution of Regional Management Regional Management has operated successfully through multiple credit cycles RM Founded in South Carolina Private Equity Invests in RM RM Enters Oklahoma RM Enters Georgia and Private Equity Exits Ownership RM Enters Virginia RM Completes System Migration and Closes
Slide 8: Key Financial and Operating Results
Key Financial and Operating Results Low use of leverage and ample funding for portfolio growth al $ Record originations for a second quarter in 2Q 22, and up 12.9% year-over-year (2Q 21 to 2Q 22) Digital initiatives, new state expansion, and new product development drive record growth Credit perform
Slide 9: Public Company Discipline and Transparency
Public Company Discipline and Transparency Full Transparency—Public SEC Filings and Disclosures Internal Controls—SOX controls in place since 2013 External Audits—Deloitte & Touche LLP Internal Audit—Covers corporate office functions and branch activities Compliance—Team of over 20 led by Chief Comp
Slide 10: Deep Management Experience
Deep Management Experience Accomplished team with extensive backgrounds in consumer finance John Schachtel Chief Operating Officer Harp Rana Chief Financial Officer Manish Parmar Chief Credit Risk Officer Rob Beck President and Chief Executive Officer Catherine Atwood General Counsel David Korn Chie
Slide 11: Strong Corporate Governance and Diverse Board of Directors
Strong Corporate Governance and Diverse Board of Directors Board of Directors (Non-Employee Directors) Philip Bancroft -Former CFO of Chubb -Former CFO of ACE Limited -Former Partner-in- Charge for the New York Regional Insurance Group of PricewaterhouseCo opers Steve Freiberg -Senior Advisor to The
Slide 12: Market Opportunity
Market Opportunity • 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 Personal Installment Loans Account for ~$76 billion (1) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Slide 13: Our Customer
Our Customer 90%+ favorable ratings for key attributes (1): • Continued investment in digital • Net promoter score of channels, remote servicing options, and 63 representing our • Loan process was quick, easy, and laser focus on delivering a positive customers’ strong understandable customer experie
Slide 14: Strong Origination Trends
Strong Origination Trends Record originations for a second quarter in 2Q 22, and up 12.9% year-over-year (2Q 21 to 2Q 22) Year-over-year growth rate (2Q 21 to 2Q 22) intentionally slowed starting in 2Q 22 from credit tightening actions Proactive growth initiative originations of $56.3 million in 2Q
Slide 15: Product Offering
Product Offering In Branch $471.0MM Originated 72% Large/28% Small Direct Mail $182.3MM Originated Convenience Check Loans Digital $93.9MM Originated Digital Lead Generation Partnership Affiliates Retailers $5.1MM Originated Furniture and Appliance Approx. 300 Retail Partners Customer Need Character
Slide 16: What Makes Regional Different?
What Makes Regional Different? Customer Value Proposition Branch Network Expansion Runway • Small Loans provide a unique acquisition opportunity to convert a portion of our most Unique Acquisition qualified customers into larger personal loans Channel for Large • Regional has a total portfolio custo
Slide 17: ABS Program Highlights
ABS Program Highlights OF B a- Exhibit 99.1.pdf Strength of Sponsor Seasoned Program Revolving Period Recent ‘AAA’ Rating from DBRS Credit Enhancement Rapid Deleveraging Use of Proceeds Regional has been in business since 1987 and has seen multiple economic and business cycles Executive Management t
Slide 18: Diversified Liquidity Profile
Diversified Liquidity Profile Long history of liquidity support from several banking partners Diversified funding platform with a senior revolving facility, warehouse facilities, and securitizations Senior Revolver Warehouse Facilities Private Securitization Securitizations Size $500 million $300 mi
Slide 19: Origination Metrics by Product
Origination Metrics by Product (Less than or equal to 36% APR loans) FICO Original Term 680 50 660 40 640 30 620 20 600 10 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Jun-22 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Jun-22 Branch Checks Branch Checks APR Original Loan Balance 35% 5,500 33% 4,500 31% 3
Slide 20: Portfolio Growth Driven by Large Loans
Portfolio Growth Driven by Large Loans $1,600 $1,400 $1,200 $1,000 ion s Mill $800 $600 $400 $200 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 SMALL LARGE AUTO RETAIL Data as of 6/30/2022 REGIONAL MANAGEMENT 20
Slide 21: Underwriting and Servicing
Underwriting and Servicing
Slide 22: Robust Procedures and Controls
Robust Procedures and Controls Oversight Risk-Based Audits by Internal Audit Department Yearly Required Training Program Detailed Policy and Procedure Manuals for Branch Consistency Incentive Program Based on Delinquency, Profitability & Growth Detailed Supervisory Visits and Oversight Monitoring of
Slide 23: Compliance and Audit
Compliance and Audit Internal Audit - Operates under a board approved plan - Regularly review servicing and collection records - Review internal policies and procedures to ensure compliance Branch and Central Employees - Annual compliance trainings and re- certification - Strong culture of complianc
Slide 24: Strong Servicing Capabilities and Loss Mitigation
Strong Servicing Capabilities and Loss Mitigation • Tools are designed to lower overall loss in the Regional employs a hybrid strategy of localized collection efforts through the portfolio by helping qualified customers branches and centralized support for late-stage collections • These programs are
Slide 25: Payment Channel Mix
Payment Channel Mix (Less than or equal to 36% APR loans) • Significant reduction in cash and check payments in branch • Roughly 80% of payments received by RM are currently made electronically (ACH and Debit) 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Mar-18 Jun-18 Sep-18 Dec-18 Mar
Slide 26: Credit Performance
Credit Performance
Slide 27: Total Portfolio Credit Trends
Total Portfolio Credit Trends ($ in millions) 30+ & 90+ Delinquency Rates $94.7 $84.9 $82.0 $72.4 90-179 Days $60.5 $61.3 30-89 Days $49.5 $49.9 30+ DQ % $47.7 $42.8 90+ DQ % 1Q 20 2Q 20 3Q 20 4Q 20 1Q 21 2Q 21 3Q 21 4Q 21 1Q 22 2Q 22 30+ DQ Sequential Δ (0.4%) (1.8%) (0.1%) 0.6% (1.0%) (0.7%) 1.1%
Slide 28: Gross Loss Curves – Branch
Gross Loss Curves – Branch (Less than or equal to 36% APR loans) 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 2018 2019 2020 2021 REGIONAL MANAGEMENT 28 Data as of 6/30/2022
Slide 29: Gross Loss Curves – Checks
Gross Loss Curves – Checks (Less than or equal to 36% APR loans) 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 2018 2019 2020 2021 REGIONAL MANAGEMENT 29 Data as of 6/30/2022
Slide 30: 30+ Delinquency Trend
30+ Delinquency Trend (Less than or equal to 36% APR loans) Branch Loans Convenience Checks 10.0% 12.0% 10.0% 8.0% 8.0% 6.0% 6.0% 4.0% 4.0% 2.0% 2.0% 0.0% 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 2022 2018 2019 2020 2021
Slide 31: Quarterly Gross Loss Rate
Quarterly Gross Loss Rate (Branch and Check – Less than or equal to 36% APR loans) 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2Q 14 4Q 14 2Q 15 4Q 15 2Q 16 4Q 16 2Q 17 4Q 17 2Q 18 4Q 18 2Q 19 4Q 19 2Q 20 4Q 20 2Q 21 4Q 21 2Q 22 REGIONAL MANAGEMENT 31 Data as of 6/30/2022
Slide 32: Renewals Perform Better than New Borrowers
Renewals Perform Better than New Borrowers “On us” payment behavior factors into Income verification on renewal of Ability-to-pay calculation occurs at renewal decision for increasing customer’s account renewal customer’s available credit Existing customers outperform new borrowers 12.00% • ~23% lo
Slide 33: Appendix
Appendix
Slide 34: Consolidated Income Statements
Consolidated Income Statements 2Q 22 2Q 21 2021 2020 2019 2018 $ in thousands Revenue Interest and fee income $ 109,771 $ 88,793 $ 382,544 $ 335,215 $ 321,169 $ 280,121 Insurance income, net 10,220 8,656 35,482 28,349 20,817 14,793 Other income 2,880 2,227 10,325 10,342 13,727 11,792 Total revenue 1
Slide 35: Consolidated Balance Sheets
Consolidated Balance Sheets 2Q 22 2Q 21 2021 2020 2019 2018 $ in thousands Cash $ 7,928 $ 6,086 $ 10,507 $ 8,052 $ 2,263 $ 3,657 Net finance receivables 1,525,659 1,183,387 1,426,257 1,136,259 1,133,404 951,183 Unearned insurance premiums (48,986) (39,469) (47,837) (34,545) (28,591) (18,940) Allowan
Slide 36: 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 37: Regional Management NYSE RM Listed
REGIONAL MANAGEMENT NYSE RM LISTED
Regional Management — Debt Investor Presentation (October 2022) on 6ix