Regional Management Corp. · NYSE:RM
Regional Management — Q2 2024 Earnings Presentation
26 slides from Regional Management's earnings presentation, Jul 31, 2024
Slide 1: 2Q 24 Earnings Presentation
2Q 24 Earnings Presentation July 31, 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: 2Q 24 Highlights
2Q 24 Highlights 545,900 32.7% $0.86 Customer Accounts Total Revenue Yield* Diluted Earnings Per Share Up 7.4% YoY Up 80 basis points YoY Up from $0.63 per share in 2Q 23 $1.77 billion 6.9% 4.2% Net Finance Receivables 30+ Delinquencies Dividend Yield* Up 5.0% YoY 2Q 24 $0.30 dividend per share Down
Slide 4: 2Q 24 Financial Highlights
2Q 24 Financial Highlights • Net income of $8.4 million and diluted EPS of $0.86, up $0.23, or 36.5%, versus 2Q 23 • Total revenue increased $9.5 million, or 7.1%, due to the impact of pricing changes $ Chg % Chg flowing into the portfolio, growth in our $ in millions (except per share amounts) 2Q 2
Slide 5: Originations Trend
Originations Trend Quarterly Origination Trend ($ in millions) • Record direct mail originations $470.3 for a second quarter of $104.7 $426.3 $418.7 $425.1 $407.8 $426.1 million, up from $97.4 million in $399.0 2Q 23 $326.0 $326.4 $303.2 Digital Originations • Originations were concentrated Direct M
Slide 6: Controlled Portfolio Growth and Solid Small Loan Growth
Controlled Portfolio Growth and Solid Small Loan Growth Ending Net Finance Receivables ($ in millions) vs. 1Q 24 vs. 2Q 23 1Q 22 2Q 22 3Q 22 4Q 22 1Q 23 2Q 23 3Q 23 4Q 23 1Q 24 2Q 24 $ Chg I/(D) % Chg I/(D) $ Chg I/(D) % Chg I/(D) Large loans (> $2,500) $997 $1,060 $1,116 $1,208 $1,212 $1,238 $1,272
Slide 7: Revenue Up 7.1% on Controlled Receivable Growth
Revenue Up 7.1% on Controlled Receivable Growth Total Revenue ($ in millions) $140.9 $141.7 $144.3 $143.0 $132.0 $135.4 $133.5 $131.5 $120.8 $122.9 Other Income • Revenue grew 7.1% year-over- Insurance Income year to $143.0 million in 2Q 24 Interest and Fee Income 1Q 22 2Q 22 3Q 22 4Q 22 1Q 23 2Q 23
Slide 8: Recent Credit Trends – Starting to See Improvement in 2Q 24
Recent Credit Trends – Starting to See Improvement in 2Q 24 30+ & 90+ Delinquency Rates ($ in millions) $128.4 $122.9 $124.2 $122.7 13.9% $119.8 $121.2 $116.0 $116.3 $64.6 $66.0 $55.4 $62.6 $67.6 $52.6 30-89 Days $94.7 $57.7 $58.6 11.9% • 2Q 24 delinquency of 6.9% improved $51.2 9.9% 20 basis points
Slide 9: Front Book 83% of Total Portfolio
Front Book 83% of Total Portfolio Front Book/Back Book Mix ($ in millions) (June 30, 2024) • Higher-credit-quality ENR from the front book is $1,774 $123 (1) $185 (2) performing as expected and becoming a larger portion of the portfolio • Front book is 83% of the total portfolio, an increase from 78
Slide 10: Reserved For Stressed Credit Losses
Reserved For Stressed Credit Losses • In 2Q 24, we decreased our loan loss reserves by $1.7 million primarily due to changes in estimated future macroeconomic impacts on credit losses, partially offset by portfolio growth during the quarter • Changes in our product mix may impact our loan loss reser
Slide 11: Continued Focus on Operating Leverage & Expense Control
Continued Focus on Operating Leverage & Expense Control Operating Expense Ratio ($ in millions) $64.8 $62.1 $60.4 $60.1 $59.3 $58.2 $56.9 $55.1 $54.1 $55.1 • 2Q 24 operating expense ratio Total G&A Expense increased 20 basis points from Operating Expense Ratio the prior-year period 15.4% 14.9% 14.8%
Slide 12: Cost of Funds – Flat for 4 Quarters Due to Proactive Interest Rate Management
Cost of Funds – Flat for 4 Quarters Due to Proactive Interest Rate Management • 2Q 24 cost of funds* increased 20 basis points year-over-year on higher interest rates and portfolio growth Interest Expense ($ in millions) $17.5 $17.5 $17.9 $16.8 $16.9 $14.9 $16.2 $11.9 $7.6 $16.8 $16.9 $17.5 $17.5 $1
Slide 13: Strong Funding Profile
Strong Funding Profile Unused Capacity ($ in millions) $564 $557 $555 $552 • As of June 30, 2024, total unused capacity was $564 million (subject to borrowing base) • Available liquidity of $149 million as of June 30, 2024 2021 2022 2023 2Q 24 • Fixed-rate debt represented 88% of total debt as of Ju
Slide 14: 2Q 24 Results and Outlooks
2Q 24 Results and Outlooks Key Metrics 2Q 24 Results 3Q 24 Outlook FY 24 Outlook ENR Growth $29.5 million ~$48.0 million ~6.0% ANR Growth/(Liquidation) $(10.0) million ~$43.0 million ~4.0 - 4.5% 10 basis points ~60 - 70 basis points ~40 basis points Total Revenue Yield sequential year-over-year sequ
Slide 15: Appendix
Appendix REGIONAL 15 MANAGEMENT
Slide 16: Higher ENR Per Branch is Driving Efficiency
Higher ENR Per Branch is Driving Efficiency • Branch consolidations and our new-state, lighter-footprint strategy with larger branches are driving higher ENR per branch • Same store* year-over-year growth rate of 4.5% in 2Q 24 vs. 7.2% in the prior-year period • Less than one year branch cohort cons
Slide 17: Digitally Sourced Originations
Digitally Sourced Originations • Digital volume represented 30.5% of our total new borrower volume in 2Q 24 • Large loans represented 72.0% of new borrower digitally sourced loans booked in 2Q 24 Digitally Sourced Origination Volume ($ in millions) $56.3 $53.5 $50.7 $50.6 $47.7 $43.4 $40.3 $39.9 Lar
Slide 18: Significant Capacity to Absorb Losses
Significant Capacity to Absorb Losses $ in millions 2Q 24 Total stockholders' equity $344.9 Allowance for credit losses 185.4 TTM* net income 24.9 Absorption capacity including TTM net income $555.2 Absorption capacity as % of ending net finance receivables 31.3% Total stockholders' equity $344.9 Al
Slide 19: 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 m
Slide 20: Consolidated Income Statements
Consolidated Income Statements $ in thousands 2Q 24 2Q 23 2023 2022 2021 2020 Revenue Interest and fee income $ 127,898 $ 118,083 $ 489,698 $ 450,854 $ 382,544 $ 335,215 Insurance income, net 10,507 11,203 44,529 43,502 35,482 28,349 Other income 4,620 4,198 17,172 12,831 10,325 10,342 Total revenue
Slide 21: Consolidated Balance Sheets
Consolidated Balance Sheets $ in thousands 2Q 24 2Q 23 2023 2022 2021 2020 Cash $ 4,323 $ 10,330 $ 4,509 $ 3,873 $ 10,507 $ 8,052 Net finance receivables 1,773,743 1,688,937 1,771,410 1,699,393 1,426,257 1,136,259 Unearned insurance premiums (46,081) (49,059) (47,892) (51,008) (47,837) (34,545) Allo
Slide 22: 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 23: Non-GAAP Financial Measures (Cont’d)
Non-GAAP Financial Measures (Cont’d) $ in millions TTM Pre-Tax Pre-Provision Income Non-GAAP Reconciliation Net income $24.9 Income taxes 7.6 Provision for credit losses 220.0 Pre-tax pre-provision income (non-GAAP) $252.6 $ in millions 2Q 24 % of ENR Absorption Capacity Non-GAAP Reconciliation Abso
Slide 24: Non-GAAP Financial Measures (Cont’d)
Non-GAAP Financial Measures (Cont’d) $ in thousands 2Q 24 2Q 23 2023 2022 2021 2020 Total assets $ 1,789,052 $ 1,723,616 $ 1,794,527 $ 1,724,987 $ 1,459,662 $ 1,103,856 Less: Intangible assets 19,264 13,949 15,846 12,122 9,517 8,689 Tangible assets (non-GAAP) 1,769,788 1,709,667 1,778,681 1,712,865
Slide 25: Glossary
Glossary • ANR – average net finance receivables • Back book – loans originated from 4Q 21 to 3Q 22 and all delinquent renewals associated with loans originated prior to 4Q 22 • Cost of funds – annualized interest expense as a percentage of average net finance receivables • DQ % – delinquent loans o
Slide 26: C REGIONAL ="
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