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7/29/2019 $RM Regional Management Jan 2013 Corporate Investor ICR Presentation Slides Deck PPT PDF
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Investor Presentation
January 2013
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Safe Harbor Statement
This presentation and the responses to various questions contain forward-looking statements, which reflect our current
views with respect to, among other things, the Companys operations and financial performance. You can identify theseforward-looking statements by the use of words such as outlook, believes, expects, potential, continues may,will, should, seeks, approximately, predicts, intends, plans, estimates, anticipates or the negative version ofthese words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties.Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from thoseindicated in these statements. These factors include but are not limited to those described under Risk Factors andManagement's Discussion and Analysis of Financial Condition and Results of Operations - Factors Affecting Our Results ofOperations in the registration statement. We cannot guarantee future events, results, actions, levels of activity,performance or achievements.
Neither the Company, nor any of its respective agents, employees or advisors intend or have any duty or obligation tosupp ement, amen , up ate or rev se any orwar - oo ng statement, w et er as a resu t o new n ormat on, uturedevelopments or otherwise.
The information and opinions contained in this document are provided as at the date of this presentation and are subject tochange without notice. This document has not been approved by any regulatory or supervisory authority.
This document will not be left behind after this presentation and by accepting this document and attending the presentation
you agree to be bound by the foregoing limitations.
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Specialty consumer finance provider focused on installment lending
Branch-based lender with 223 storefronts in 8 states as of January 3, 2013
Loans ranging from $300 to $30,000 with maturities 6 to 72 months, no real estate
As of September 30, 2012:
- Gross receivables book of $483.8 million- Serve over 219,000 individual borrowers
Company Overview
- verage outstan ng oan a ance o ~ 2,200 per account
Partner with 600+ retailers to offer point-of-sale financing on showroom floor
Serve 2,100+ independent auto dealers and 800+ franchised auto dealers to financepurchases by their showroom customers
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Regional is a Unique Investment Opportunity in the AlternativeFinancial Services Sector
Who We Are Who We Arent
Organic growth story - driven by de novo storeopenings and repeat business from satisfied customers
Secured lender - with proven credit performancethrough multiple economic cycles
Responsible lender - utilizing credit checks on allnew borrowers combined with in-person underwriting
Rollup strategy - lacking consistent focus / culture
High volume small balance lender - more focusedon quantity than quality
Formula-based lender - relying on high rates to
compensate for limited underwriting criteria
Diverse product offering - serving a broad range of
customer needs
Traditional funding structure - asset-based creditfacility from a syndicate of traditional commercial banks
Significant runway for domestic growth - recentlyentered our 8th state with attractive demographics andregulatory environment in a number of additional states
Your Hometown Credit Source
Flexible, affordable loans for everyday Americans
ono ne en er - one s ze s a men a y adoesnt meet customers individual needs
Overlevered - with expensive high yield debt
Fully saturated - from overexpansion with limitedopportunity for continued domestic growth
Undifferentiated, high-rate monoline lender
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Attractive Market Opportunity
~ 160.0 (2)
60
80
180
illion
s)
Large Addressable Population in U.S.; Over Half ofAdult Americans Earn Less than $75,000
43.0 (1)
0
20
40
Underbanked
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Diverse Product Offering Differentiates Regional from Monoline Lenders
SmallInstallment
Loans
LargeInstallment
Loans
AutomobilePurchase Loans
Furniture andAppliance Loans
Maximum Size $2,500 $20,000 $30,000 $7,500
Avg. Size at
Origination $1,179 $3,810 $11,584 $1,519
Avg. Term atOrigination
17 Months 33 Months 55 Months 26 Months
FinanceReceivables
$158.5 Million $56.9 Million $155.3 Million $26.2 Million
Note: Data as of September 30, 2012.
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Diverse Product Offering Fulfills Broad Range of Customer Needs
Short-term cash needs
Bill payment
Back-to-school expenses
Auto repair
Customer Need Regional Solution
Small Installment Loans
Broader product offerings and lower rates benefit the consumer
Diverse product offerings also provide a competitive advantage versus monoline lenders
Home furnishings
Appliances
Televisions and electronics
Furniture and AppliancePurchase Loans
Education expenses
Home improvement
Medical expenses
Large Installment Loans
New and used car purchases Automobile Purchase Loans
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Attractive Products for Consumers
Alternative Financial ServiceProviders
(e.g. Payday Loans and Title Loans)
Regional Management
Loan Size
Flexible Maturity
AmortizingPayments
Flexible loan sizes from $300 - $30,000
Maturities of up to 72 months
Typically small loan sizes
Generally short term with limited flexibility
Attractive Rates
Prepayment
Credit Reporting
,
Allows customers to affordably makepayments out of discretionary income
No prepayment penalty
Monthly reporting provides opportunity toestablish and potentially repair credit history
Typically triple digit APR
Fixed fee generally not refundable inthe event of early repayment
Often short duration products notconducive to credit reporting
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Branch Network Overview and Growth Profile
Branch Overview
Geographic Footprint as of January 3, 2013
219,000+ customer accounts as of 9/30/12
-All loans serviced and collected through branches
Branch personnel establish and develop customerrelationships throughout life of loan
Loan proceeds distributed as checks-Allows open, welcoming retail environment facilitating development
of personal customer relationships
From 2007 to 2011, annual same-store revenue
growth averaged 14.7%
Same-store revenue growth in Q3 2012 was 18.3%
58.2% of branches less than 5 years old representsignificant embedded growth in the existing store base
- First Oklahoma branch opened in December 2011, first New Mexicobranch opened May 2012, first Georgia branch opened January 2013
Opportunity for over 800+ additional branches
Entry:
SC: 1987
TX: 2001
NC: 2004
TN: 2007
AL: 2009
OK: 2011
NM: 2012
GA: 2013
2
57
42 1
69
20 26
6
Attractive States for Expansion
Current States of Operation
9
223Branch
Locations
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Growth Potential
New branch model proven over time
Mitigates execution risk one store closure in 25 years
Minimal opening costs (approx. $62k for FF&E and software licenses)
Branch receivables generally ramp to approximately $1.o million during the second year of operation
New branches typically achieve positive operating income in under 12 months
Embedded Upside in Existing Branches Driven by Strong Branch Economics
Expected Growth as Branches Mature
$944
$1,045
$1,924
$2,322
$8$162
$319
$516
$0
$200
$400
$600
$0
$500
$1,000
$1,500
$2,000
$2,500Avg.BranchContribution
toOperatin
gIncome(1)R
eceivab
lesperBranch
($ in 000s) ($ in 000s)
Branch Maturity 5 years
Note: As of December 31, 2011.(1) Calculated as total revenues generated by the branch less the expenses directly attributable to the branch,
including provision for losses and operating expenses such as personnel, lease and interest expenses .General corporate overhead is excluded from the calculation.
Branches 36 23 23 88
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Multi-Channel Origination Platform Provides Broad Reach
Branches are foundation of Regionals multi-channel strategy
Primary point of customer contact
Dealership and retailers serve as virtual branches
All loans serviced and collected through company branches
Frequent, in-person contact with customers contributes to credit performance and customer loyalty
FranchiseDealerships(Relationships
with approx. 800dealerships)
Direct Mail(Over 1.8 million
live checksmailed in 2012)
Furniture andAppliance
Retailers(Relationshipswith approx.
600+ retailers)
IndependentDealerships(Relationships
with over 2,100+dealerships)
Regional Branch Network Supports All Origination Channels
BranchOriginated
Loans(223 branches as
of 1/3/13)
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Expansion Furniture and Appliance Purchase Loans RMC Retail
Provide loans of up to $7,500; term length between 6 and 48 months offered at 600+furniture and appliance retail locations
Total receivables of $26.2 million as of 9/30/12, up 257% from third quarter2011
Loans are centrally underwritten; center staffed 7 days a week to matchretail hours
Financin at com etitive rates to customers turned down b other financin sources
Additional way to introduce customer to Regional provides opportunityfor cross-selling auto or installment loans
15-20% cross-sell attachment rate
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Favorable Regulatory Environment
ProductDifferentiation
Regionals loans distinguishable from many alternative financial services products under
regulatory scrutiny Fully amortizing loans with fixed rates and no prepayment penalties
Reports performance to credit bureaus, creating potential for customers to enhancecredit profile
Many regulators and legislators have been focused on less attractive credit options (paydayloans, title loans)
Strong relationships with state regulators proactively working with regulators on any issues
that arise
Regulation
FederalRegulation
by respective state of operation
State auditors typically visit a branch at least once per year for compliance audit
No material adverse legislation currently pending at state level
Non-banks that offer consumer finance products subject to new federal regulation and oversightfrom the Consumer Financial Protection Bureau (CFPB)
No authority to impose rate caps
CFPB seeks to promote the development of consumer financial products and services that arefair, transparentand competitive
All of these characteristics are key strengths of Regionals products
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Strong Performance Relative to Other Asset Classes
10.5%
11.0%
8.0%
10.0%
12.0%
14.0%
16.0%
90+ Day Delinquency as a Percent of Receivable Balance
Credit Card
Student Loan
Source: Federal Reserve Quarterly Household Debt and Credit Report
(November 2012), based on data from Equifax. 14
5.9%
4.9%
4.3%
2.1%
0.0%
2.0%
4.0%
6.0%
2006 2007 2008 2009 2010 201 2012
Auto
Mortgage
HELOC
Regional
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Total Receivables and Net Charge-Offs as % of Average Receivables
Total Revenue
$120$306.6
16.0%
20.0%
$300
$350
Attractive Financial Performance and Resilient Growth
Strong historical growth while maintaining low and consistent net
charge-offs, particularly during the latest recession
$56.6
$66.7$72.8
$86.8
.
$0
$20
$40
$60
$80
$100
2007 2008 2009 2010 2011
$167.5
$192.3$214.9
.
7.8%8.4% 8.6% 7.9%
6.3%
0.0%
4.0%
8.0%
12.0%
$0
$50
$100
$150
$200
$250
2007 2008 2009 2010 2011
NetCharge-Offs
TotalReceivables
15
Net Charge-OffsReceivables
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$24
$28 $25.1 (1)
Net Income
Attractive Financial Performance and Resilient Growth
($ in millions)
61.7% Annual CAGR of Net Income from 2007-2011, excluding pro formaadjustments
$3.1
$6.5
$9.9
$16.4
$21.2
$0
$4
$8
$12
$16
$20
2007 2008 2009 2010 2011
Note: CAGR calculated on historical numbers, excluding pro forma adjustments.
(1) Pro Forma adjustments include tax-effected: interest savings from pay down of revolving credit facility, interestsavings from payoff of mezzanine debt and the add-back of advisory fees which terminated following the IPO.
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Actual Pro Forma
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Income Statement Highlights 3Q12
(in 000s) 3 Months Ended
Sept 30, 2012
3 Months Ended
Sept 30, 2011
Int. and fee income $31,089 $23,406
Total revenue $35,490 $26,721
Prov. for loan losses $7,384 $4,569
G&A expenses $14,304 $10,268
Income before tax $11 907 $8 378
Net income $6,988 $5,185
Diluted EPS $0.55 $0.54
Efficiency ratio 40.3% 38.4%
Net charge-offs as %of avg. financialreceivables
6.5% 6.0%
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Future Channel Growth
Branch Growth:
51 branches opened in 2012 significant embedded growth as new branches ramp to maturity
19 net branches acquired in January 2012; 32 de novo branches in 2012
Opportunity for over 800+ additional branches 450 of which are in states Regional currentlyconducts business
Auto Dealership Network:
Currently work with 2,100+ direct dealerships and 800 indirect franchise dealerships ,
network
Furniture and Appliance Retail Network:
Network of 600+ retailers has more than doubled in last year; 257% growth in receivables sinceSeptember 30, 2011
3,400+ potential partners in existing geographic footprint
Direct Mail:
Over 1.8 million live checks in 2012
Highly scalable origination channel driving significant volume to branches
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AttractiveMarket
Opportunity
IntegratedBranch Model
NumerousAvenues for
Potential Growth
Investment Highlights
SoundUnderwritingMethodology
AttractiveFinancial
Performance
Diverse ProductOffering
Consistent
Portfolio Qualityand Credit
Performance
Multi-ChannelOrigination
Platform
Your Hometown Credit Source
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Presentation to Investors