Regional Management Corp. · NYSE:RM
Regional Management — Q1 2023 Earnings Presentation
21 slides from Regional Management's earnings presentation, May 3, 2023
Slide 1: 1Q 2023 Earnings Presentation
1Q 2023 Earnings Presentation May 3rd, 2023
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 2023 Financial Highlights
1Q 2023 Financial Highlights $ Chg % Chg $ in millions (except per share amounts) 1Q 23 1Q 22 B/(W) B/(W) Net income of $8.7 million and diluted EPS of $0.90 Interest & Fee Income $ 120.4 $ 107.6 $ 12.8 11.9% Insurance Income, Net 11.0 10.5 0.4 3.9% Total revenue increased $14.5 million, or 12.0% Ot
Slide 4: Originations Trend
Originations Trend ($ in millions) Quarterly Origination Trend Year-over-year growth rate reduced from credit tightening actions; $470.3 $434.4 originations were more $426.3 $420.7 $418.7 concentrated on programs to $364.0 $377.7 present and former borrowers, $326.0 which perform better than new $30
Slide 5: Digitally Sourced Originations
Digitally Sourced Originations • Digital originations are sourced from either our affiliate partnerships or directly from our website, underwritten by our custom credit scorecards, and serviced by our branches • Digital originations decreased sequentially in 1Q 23 due to seasonality and credit tight
Slide 6: Controlled Portfolio Growth Year-Over-Year
Controlled Portfolio Growth Year-Over-Year Ending Net Receivables (ENR) vs. 4Q 22 vs. 1Q 22 ($ in millions) 4Q 20 1Q 21 2Q 21 3Q 21 4Q 21 1Q 22 2Q 22 3Q 22 4Q 22 1Q 23 $ Chg I/(D) % Chg I/(D) $ Chg I/(D) % Chg I/(D) Small Loans (≤ $2,500) $403 $371 $381 $420 $445 $438 $455 $480 $482 $456 ($25) (5.3%
Slide 7: Higher ENR Per Branch is Driving Efficiency
Higher ENR Per Branch is Driving Efficiency • Branch consolidations and our new state, lighter footprint strategy with larger branches, are driving higher ENR per branch • Same store(1) year-over-year growth rate of 12.3% in 1Q 23 vs. 27.3% in the prior-year period ($ in thousands) Ending Net Financ
Slide 8: Revenue Up 12.0% on Controlled Receivable Growth
Revenue Up 12.0% on Controlled Receivable Growth ($ in millions) Total Revenue $135.4 $131.5 $132.0 $119.5 $120.8 $122.9 Revenue grew 12.0% year-over-year to a $111.5 Other Income $97.4 $97.7 $99.7 record $135 million in 1Q 23 Insurance Income Interest and Fee Income Total revenue yield decreased 1.
Slide 9: Recent Credit Trends
Recent Credit Trends ($ in millions) 30+ & 90+ Delinquency Rates $119.8 $121.2 $116.0 13.9% $67.6 $52.6 $57.7 $94.7 11.9% 30-89 Days $84.9 $82.0 $51.2 1Q 23 delinquency was 7.2% compared 9.9% 90-179 Days $45.7 $36.2 to 7.1% in 4Q 22 (inclusive of a 0.9% 90+ DQ % 30+ DQ % $60.5 $61.3 7.9% reduction f
Slide 10: Reserved For Stressed Credit Losses
Reserved For Stressed Credit Losses In 1Q 23, we increased our loan loss reserves by $5.0 million related to the combined impacts of the 4Q 22 loan sale, 1Q 23 ENR liquidation, and the potential future macroeconomic impacts on credit losses. ($ in millions) Loan Loss Reserves $179.8 $5.0 $183.8 $12
Slide 11: Improving Operating Leverage While Investing in Our Business
Improving Operating Leverage While Investing in Our Business ($ in millions) Operating Expense Ratio $58.2 $59.3 1Q 23 operating expense ratio $55.5 $55.1 $54.1 $55.1 Total G&A Expense improved 140 basis points % of ANR (1) $44.8 $45.8 $46.4 $47.8 from the prior year 16.4% 16.5% 16.3% 16.3% 1Q 23 re
Slide 12: Cost of Funds
Cost of Funds 1Q 23 interest expense as an annualized percentage of ANR increased 400 basis points year-over-year due to the following: • Favorable market value increases on interest rate caps in 1Q 22 (240 basis points) • Higher interest rates on ENR growth (150 basis points) • Accelerated amortiza
Slide 13: Strong Funding Profile
($ in millions) Debt Capacity Strong Funding Profile $557 $555 $581 Unused Warehouse $438 Capacity $168 $265 As of March 31, 2023, total unused capacity was $581 million Unused Senior $83 $282 (subject to borrowing base) Revolver Capacity $355 $388 $274 $316 Available liquidity of $182 million as of
Slide 14: Appendix
Appendix 14
Slide 15: Significant Capacity to Absorb Losses
Significant Capacity to Absorb Losses $ in millions 1Q 23 Total stockholders' equity $316.7 Allowance for credit losses 183.8 TTM(1) net income 33.1 Absorption capacity including TTM net income $533.6 Absorption capacity as % of net finance receivables 31.8% Total stockholders' equity $316.7 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 $420 milli
Slide 17: Consolidated Income Statements
Consolidated Income Statements $ in thousands 1Q 23 1Q 22 2022 2021 2020 2019 Revenue Interest and fee income $ 120,407 $ 107,631 $ 450,854 $ 382,544 $ 335,215 $ 321,169 Insurance income, net 10,959 10,544 43,502 35,482 28,349 20,817 Other income 4,012 2,673 12,831 10,325 10,342 13,727 Total revenue
Slide 18: Consolidated Balance Sheets
Consolidated Balance Sheets $ in thousands 1Q 23 1Q 22 2022 2021 2020 2019 Cash $ 7,108 $ 17,635 $ 3,873 $ 10,507 $ 8,052 $ 2,263 Net finance receivables 1,676,230 1,446,071 1,699,393 1,426,257 1,136,259 1,133,404 Unearned insurance premiums (49,126) (47,075) (51,008) (47,837) (34,545) (28,591) Allo
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 $33.1 Income taxes 8.8 Provision for credit losses 201.9 Pre-tax pre-provision income (non-GAAP) $243.9 $ in millions 1Q 23 % of ENR Absorption Capacity Non-GAAP Reconciliatio
Slide 21: Non-GAAP Financial Measures (Cont'd)
Non-GAAP Financial Measures (Cont’d) $ in thousands 1Q 23 1Q 22 2022 2021 2020 2019 Total assets $ 1,701,114 $ 1,497,671 $ 1,724,987 $ 1,459,662 $ 1,103,856 $ 1,158,540 Less: Intangible assets 12,972 9,475 12,122 9,517 8,689 9,438 Tangible assets (non-GAAP) 1,688,142 1,488,196 1,712,865 1,450,145 1,