REGIONAL MANAGEMENT CORP. SFVegas Presentation
February 2024
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, statistical, and business information, please see the Company's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the U.S. Securities and Exchange Commission (the "SEC"), as well as the Company's other reports filed with the SEC from time to time. Such reports are or will be available on the Company's website (www.regionalmanagement.com) and on the SEC's website (www.sec.gov). The information and opinions contained in this document are provided as of the date of this presentation and are subject to change without notice. This document has not been approved by any regulatory or supervisory authority.
This presentation, the related remarks, and the responses to various questions may contain various "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact but instead represent the Company's expectations or beliefs concerning future events. Forward-looking statements include, without limitation, statements concerning financial outlook or future plans, objectives, goals, projections, strategies, events, or performance, and underlying assumptions and other statements related thereto. Words such as "may," "will," "should," "likely," "anticipates," "expects," "intends," "plans," "projects," "believes," "estimates," "outlook," and similar expressions may be used to identify these forward-looking statements. Such forward-looking statements speak only as of the date on which they were made and are about matters that are inherently subject to risks and uncertainties, many of which are outside of the control of the Company. As a result, actual performance and results may differ materially from those contemplated by these forward-looking statements. Therefore, investors should not place undue reliance on such statements.
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 Regional Management's growth strategy, and opening new branches as planned; Regional Management's convenience check strategy; Regional Management's policies and procedures for underwriting, processing, and servicing loans; Regional Management's ability to collect on its loan portfolio; Regional Management's insurance operations; exposure to credit risk and repayment risk, which risks may increase in light of adverse or recessionary economic conditions; the implementation of evolving underwriting models and processes, including as to the effectiveness of Regional Management's custom scorecards; changes in the competitive environment in which Regional Management operates or a decrease in the demand for its products; the geographic concentration of Regional Management's loan portfolio; the failure of third-party service providers, including those providing information technology products; changes in economic conditions in the markets Regional Management serves, including levels of unemployment and bankruptcies; the ability to achieve successful acquisitions and strategic alliances; the ability to make technological improvements as quickly as competitors; security breaches, cyber-attacks, failures in information systems, or fraudulent activity; the ability to originate loans; reliance on information technology resources and providers, including the risk of prolonged system outages; changes in current revenue and expense trends, including trends affecting delinquencies and credit losses; any future public health crises (including the resurgence of COVID- 19), including the impact of such crisis on our operations and financial condition; changes in operating and administrative expenses; the departure, transition, or replacement of key personnel; the ability to timely and effectively implement, transition to, and maintain the necessary information technology systems, infrastructure, processes, and controls to support Regional Management's operations and initiatives; changes in interest rates; existing sources of liquidity may become insufficient or access to these sources may become unexpectedly restricted; exposure to financial risk due to asset-backed securitization transactions; risks related to regulation and legal proceedings, including changes in laws or regulations or in the interpretation or enforcement of laws or regulations; changes in accounting standards, rules, and interpretations and the failure of related assumptions and estimates; the impact of changes in tax laws and guidance, including the timing and amount of revenues that may be recognized; risks related to the ownership of Regional Management's common stock, including volatility in the market price of shares of Regional Management's common stock; the timing and amount of future cash dividend payments; and anti-takeover provisions in Regional Management's charter documents and applicable state law. The foregoing factors and others are discussed in greater detail in the Company's filings with the SEC. The Company will not update or revise forward-looking statements to reflect events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events or the non-occurrence of anticipated events, whether as a result of new information, future developments, or otherwise, except as required by law.
2
Company Overview
Company Overview
Diversified consumer finance company operating under the name "Regional Finance"
Provide installment loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies, and other lenders
Goal to consistently grow finance receivables and soundly manage portfolio risk, while providing customers with attractive, safe, easy-to-understand loan products serving their varied financial needs
Founded 1987 | 346 branches |
NYSE Listed: RM | 19 states |
Total receivables of | Multi-channel marketing: |
$1.77 billion | branches, digital, and direct mail |
1 | 10 | ||
2 | 8 | 5 | |
16 | |||
6 | 21 | ||
16 | 19 | 39 | |
1 | 9 | 41 | |
3 | 32 | 12 |
103 2
Legacy States (prior to 2021) | |
2021 New States (IL, UT) | |
2022 New States (MS, IN, CA, LA) | |
2023 New States (AZ) (ID - entered digitally in 2022 and branch in 2023) | |
Potential Future State Expansion | 4 |
Geographic footprint and net finance receivables as of 12/31/2023 | |
Growth Strategy
Geographic Expansion | Accelerated Innovation | Product and Channel Expansion |
Identified states with favorable | Deploy new technology to further | Execute on distribution of larger |
economics for expansion | omni-channel experience | auto-secured loans and E2E |
originations | ||
Continue to identify opportunities to | Leverage data and analytics to | |
optimize branch network within | improve credit underwriting, | Assess new product offerings in the |
existing footprint | customer acquisition and retention, | marketplace |
and back-office capabilities | ||
Continue to drive scale using | National scale should enable | |
centralized originations and | additional strategic partnerships | |
servicing |
5
Investment Highlights
Strong balance sheet supports capital
returns
Geographic, product, and channel
expansion drive growth
High customer satisfaction and loyalty
Omni-channel growth strategy with
abundant market opportunity
Controlled growth with stable credit using
advanced credit tools
Modern infrastructure and digital
capabilities
Scale, digital capabilities, and lighter footprint will drive operating leverage
Deep management experience through
credit cycles
6
Financial Results
Continued growth in account base and portfolio in controlled and profitable manner
Net Finance Receivables |
$1,771 |
$1,699 |
Revenue
Other Income Insurance Income Interest and Fee Income
48.1%
$551.4
$507.2
Efficiency Ratio
47.2%
Digital initiatives, new state expansion, and new product development have driven strong
$1,426 |
$1,136 |
$1,133 |
$951 |
$834 |
$428.4
$355.7 $373.9
$306.7
$272.5
45.7% | 45.6% |
44.1% |
43.9% | 44.1% |
growth
Enhanced prequalification capabilities and tighter integration with digital affiliate
2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
In millions | |||||||
Net Income and Diluted EPS | |||||||
Diluted EPS | Net Income | ||||||
$88.7 |
2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
In millions
ROA and ROE
ROAROE
31.6%
2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
Funded Debt Ratios | ||||||
Funded Debt Ratio (Debt/Assets) | Funded Debt-to-Equity Ratio | |||||
4.39 | 4.34 | |||||
3.92 |
partners drive better digital leads
Branch consolidations and our new-state,lighter-footprint
$8.33 | ||||||
$44.7 | $51.2 | |||||
$30.0 | $35.3 | $26.7 | $5.30 | |||
$3.80 | $16.0 | |||||
$2.93 | ||||||
$2.54 | $2.40 | |||||
$1.66 | ||||||
2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
15.4% | 17.0% | |||||
13.5% | 13.6% | |||||
10.0% | ||||||
7.2% | 5.0% | |||||
4.0% | 4.0% | 4.3% | 3.3% | |||
2.5% | 0.9% | |||||
2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
2.83
0.700.760.790.78
2020 | 2021 | 2022 | 2023 |
strategy with larger branches are driving better efficiencies through higher ENR per branch
Net income in millions | 7 |
Abundant Total Addressable Market
Approximately 72 million Americans generally align with Regional's customer base(1)(3)
$91 billion market opportunity - RM has less than 2% market share and increased our addressable market by over 80% since 2020; still significant runway for growth
$4.7 Trillion Consumer Finance Market (2) | 28% of US Population with FICO Between 550 & 700 (3) |
Personal Installment Loans Account for ~$91 billion (1)
Personal Lending (3%)
100%
90% Other (11%)
300-549 | ||
800-850 | 8% | 550-599 |
23% | 7% |
80%
70%
60%
Credit Cards (21%)
600-649
9%
50% |
650-699
Auto Loans (34%) |
40% |
750-799
24%
12%
30%
20%
10%
0%
Student Loans (31%)
700-749
17%
(1) | Adult US Population sourced from US Census Bureau www.census.gov/library/stories/2021/08/united-states-adult-population-grew-faster-than-nations- | |
total-population-from-2010-to-2020.html | ||
(2) | Sourced from Equifax US National Consumer Credit Trends Report; June 2023 | 8 |
(3) | Sourced from Arkali, Can. "Average U.S. FICO® Score Stays Steady at 716" FICO.com, 30 Aug. 2022, www.fico.com/blogs/average-us-fico-score-stays- |
steady-716-missed-payments-and-consumer-debt-rises
Our Customer
90%+ favorable ratings for key attributes (1):
- Loan process was quick, easy, and understandable
- People are professional, responsive, respectful, knowledgeable, helpful, and friendly
- Continued investment in digital channels, remote servicing options, and laser focus on delivering a positive customer experience has allowed us to maintain strong metrics
- 89% of customers would apply to Regional Finance first the next time they need a loan
- Net promoter score of 64 representing our customers' strong loyalty and willingness to recommend our products to others (1)
35% | ||||||
21% | ||||||
11% | 10% | 8% | 8% | 7% | ||
Household bills | Debt | Auto-related | Home-related | Medical | Family event- | Other |
consolidation | related | |||||
Average Age (2) | Annual Income (2) | |||||
55 Years | $51,000 |
Some College or Advanced Degree (1)
54%
(1) Fall 2023 Customer Satisfaction Survey (performed by third-party and commissioned by RM) | 9 |
(2) Data as of 12/31/2023 | |
Product Offering
Multi-Channel Acquisition
In Branch
$947.8MM Originated
68% Large/32% Small
Direct Mail
$418.9MM Originated
Convenience Check Loans
Digital
$168.3MM Originated
Digital Lead Generation
Partnership Affiliates
Small Loans
Customer Need | Characteristics | Portfolio |
Short-term cash needs | Size: $500 to $2,500 | Outstanding Balance: |
Bill payment | Average Origination: ~$2,100 | $493.5MM |
# of Loans: 289,300 | ||
Back-to-school expenses | Average Origination APR: 45.2% | |
Auto repair |
Large Loans
Customer Need | Characteristics | Portfolio |
Debt consolidation | Size: $2,501 to $25,000 | Outstanding Balance: |
Medical expenses | Average Origination: ~$5,800 | $1,274.1MM |
# of Loans: 246,600 | ||
Home repairs | Average Origination APR: 29.7% | |
Originations and portfolio metrics YTD and as of 12/31/2023
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Disclaimer
Regional Management Corp. published this content on 23 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 April 2024 14:52:08 UTC.
