$RM Regional Management Jan 2013 Corporate Investor ICR Presentation Slides Deck PPT PDF

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

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Attractive States for Expansion

Current States of Operation

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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

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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

Documents

$RM Regional Management Jan 2013 Corporate Investor ICR Presentation Slides Deck PPT PDF