[Glossary](index=3&type=section&id=GLOSSARY) This section provides definitions for key terms and abbreviations used throughout the report, ensuring clarity and consistent understanding - Defines terms like '2015 Plan', 'AFS', 'CODM', 'Delinquency rate', 'Efficiency ratio', 'FICO', 'Funded debt-to-equity ratio', 'GAAP', 'Net credit loss rate', 'QoQ', 'YoY', and various company-specific entities (RMR, RMIT, SPE, VIE)[6](index=6&type=chunk) [Part I – Financial Information](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section presents unaudited consolidated financial statements, including balance sheets, income statements, and cash flows, with detailed notes, management's discussion, market risk disclosures, and controls [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section provides the company's unaudited consolidated financial statements for the periods ended **June 30, 2025**, and **December 31, 2024**, including balance sheets, statements of comprehensive income, statements of stockholders' equity, and statements of cash flows, accompanied by detailed notes explaining the nature of business, accounting policies, and specific financial line items [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (June 30, 2025 vs. December 31, 2024) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------- | :------------ | :---------------- | :--------- | :--------- | | Total Assets | $1,967,131 | $1,909,109 | $58,022 | 3.0% | | Net Finance Receivables | $1,960,364 | $1,892,535 | $67,829 | 3.6% | | Allowance for Credit Losses | $(202,800)$ | $(199,500)$ | $(3,300)$ | 1.7% | | Total Liabilities | $1,604,180 | $1,552,031 | $52,149 | 3.4% | | Debt | $1,509,133 | $1,478,336 | $30,797 | 2.1% | | Total Stockholders' Equity | $362,951 | $357,078 | $5,873 | 1.6% | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Consolidated Statements of Comprehensive Income Highlights (Three Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :------------ | :------------ | :--------- | :--------- | | Total Revenue | $157,442 | $143,025 | $14,417 | 10.1% | | Provision for Credit Losses | $60,587 | $53,802 | $6,785 | 12.6% | | Total G&A Expenses | $62,945 | $60,136 | $2,809 | 4.7% | | Interest Expense | $20,426 | $17,865 | $2,561 | 14.3% | | Net Income | $10,140 | $8,445 | $1,695 | 20.1% | | Basic EPS | $1.07 | $0.88 | $0.19 | 21.6% | | Diluted EPS | $1.03 | $0.86 | $0.17 | 19.8% | Consolidated Statements of Comprehensive Income Highlights (Six Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :------------ | :------------ | :--------- | :--------- | | Total Revenue | $310,409 | $287,333 | $23,076 | 8.0% | | Provision for Credit Losses | $118,579 | $100,225 | $18,354 | 18.3% | | Total G&A Expenses | $128,988 | $120,584 | $8,404 | 7.0% | | Interest Expense | $40,197 | $35,369 | $4,828 | 13.7% | | Net Income | $17,147 | $23,650 | $(6,503)$ | (27.5)% | | Basic EPS | $1.79 | $2.47 | $(0.68)$ | (27.5)% | | Diluted EPS | $1.73 | $2.41 | $(0.68)$ | (28.2)% | [Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) Stockholders' Equity Changes (Three Months Ended June 30, 2025) | Item (in thousands) | Amount | | :------------------ | :----- | | Beginning balance | $357,876 | | Cash dividends | $(3,115)$ | | Share-based compensation | $2,934 | | Net income | $10,140 | | Other comprehensive income | $169 | | Ending balance | $362,951 | Stockholders' Equity Changes (Six Months Ended June 30, 2025) | Item (in thousands) | Amount | | :------------------ | :----- | | Beginning balance | $357,078 | | Cash dividends | $(6,072)$ | | Repurchase of common stock | $(11,572)$ | | Share-based compensation | $6,522 | | Net income | $17,147 | | Other comprehensive loss | $(64)$ | | Ending balance | $362,951 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Cash Flow Highlights (Six Months Ended June 30) | Cash Flow Activity (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :------------ | :------------ | :--------- | :--------- | | Net cash provided by operating activities | $142,323 | $129,966 | $12,357 | 9.5% | | Net cash used in investing activities | $(165,379)$ | $(84,561)$ | $(80,818)$ | 95.6% | | Net cash provided by (used in) financing activities | $9,351 | $(30,864)$ | $40,215 | N/A | | Net change in cash and restricted cash | $(13,705)$ | $14,541 | $(28,246)$ | N/A | | Cash and restricted cash at end of period | $121,930 | $143,214 | $(21,284)$ | (14.9)% | - Investing activities saw a significant increase in cash used, primarily due to higher originations of finance receivables (**$907.5 million** in **2025** vs. **$754.0 million** in **2024**)[18](index=18&type=chunk) - Financing activities shifted from a net cash outflow of **$30.9 million** in **2024** to a net cash inflow of **$9.4 million** in **2025**, driven by increased net advances on debt instruments (**$52.0 million increase**) partially offset by higher common stock repurchases (**$11.5 million increase**)[18](index=18&type=chunk) [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the consolidated financial statements, covering the company's business nature, accounting policies, finance receivables, debt, equity, and other financial instruments, as well as commitments, contingencies, and segment reporting [Note 1. Nature of Business](index=10&type=section&id=Note%201.%20Nature%20of%20Business) - Regional Management Corp. (the "Company") is a consumer finance business offering large loans, small loans, and related insurance products, operating online and in **19 states** as "Regional Finance" as of **June 30, 2025**[21](index=21&type=chunk) - Loan volume and contractual delinquency follow seasonal trends, with demand highest in Q2-Q4 (vacation, back-to-school, holiday spending) and lowest in Q1 (income tax refunds). Delinquencies typically rise in the second half of the year. Macroeconomic factors (inflation, higher interest rates, geopolitical conflict) have impacted these typical seasonal trends[23](index=23&type=chunk) [Note 2. Basis of Presentation and Significant Accounting Policies](index=10&type=section&id=Note%202.%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) - Financial statements are prepared in accordance with SEC regulations and GAAP for interim information, including normal recurring adjustments. They should be read in conjunction with the Annual Report on Form 10-K for **December 31, 2024**[24](index=24&type=chunk) - The Company consolidates Variable Interest Entities (VIEs) when it is the primary beneficiary, treating these transactions as secured borrowings where pooled receivables and related debts remain on the consolidated balance sheet[26](index=26&type=chunk)[27](index=27&type=chunk)[31](index=31&type=chunk) - Recent accounting pronouncements include ASU **2023-09** (income tax disclosures, effective after **Dec 15, 2024**) and ASU **2024-03** (expense disclosures, effective after **Dec 15, 2026**), with the Company currently evaluating their impact[34](index=34&type=chunk)[35](index=35&type=chunk) [Note 3. Finance Receivables, Credit Quality Information, and Allowance for Credit Losses](index=13&type=section&id=Note%203.%20Finance%20Receivables%2C%20Credit%20Quality%20Information%2C%20and%20Allowance%20for%20Credit%20Losses) Net Finance Receivables by Product (in thousands) | Product | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :---------- | :------------ | :---------------- | :--------- | :--------- | | Large loans | $1,413,367 | $1,336,780 | $76,587 | 5.7% | | Small loans | $546,997 | $555,755 | $(8,758)$ | (1.6)% | | Total | $1,960,364 | $1,892,535 | $67,829 | 3.6% | - The allowance for credit losses is estimated using a PD/LGD model, considering historical credit experience, current conditions, and reasonable and supportable economic forecasts, segmented by product type, FICO score, and delinquency status[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) Allowance for Credit Losses and Net Finance Receivables (in thousands) | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------------------- | :------------ | :------------ | | Allowance for Credit Losses (Total) | $202,800 | $185,400 | | Net Finance Receivables (Total) | $1,960,364 | $1,773,743 | | Allowance as percentage of net finance receivables | 10.3% | 10.5% | Contractual Delinquency of Net Finance Receivables (June 30, 2025) | Delinquency Status | Large Loans ($) | Large Loans (%) | Small Loans ($) | Small Loans (%) | Total ($) | Total (%) | | :----------------- | :-------------- | :-------------- | :-------------- | :-------------- | :-------- | :-------- | | Current | $1,225,581 | 86.7% | $446,446 | 81.7% | $1,672,027 | 85.3% | | 1 to 29 days past due | $111,096 | 7.9% | $47,855 | 8.7% | $158,951 | 8.1% | | Total delinquency | $76,690 | 5.4% | $52,696 | 9.6% | $129,386 | 6.6% | - The Company uses loan modification programs (payment deferrals, refinancing, settlements, principal forgiveness) as a loss mitigation strategy for borrowers experiencing financial difficulties[57](index=57&type=chunk)[58](index=58&type=chunk) [Note 4. Restricted Available-for-Sale Investments](index=22&type=section&id=Note%204.%20Restricted%20Available-for-Sale%20Investments) Restricted AFS Investments (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :---------------- | :------------ | :---------------- | | Amortized Cost | $22,124 | $21,633 | | Estimated Fair Value | $22,122 | $21,712 | | Gross Unrealized Losses | $(2)$ | $(13)$ | - Restricted AFS investments consist of highly rated U.S. Treasuries, measured at fair value, with no allowance for credit losses recorded due to their backing by the U.S. federal government[64](index=64&type=chunk) [Note 5. Variable Interest Entities](index=23&type=section&id=Note%205.%20Variable%20Interest%20Entities) - The Company transfers finance receivables to affiliated VIEs for asset-backed financing (securitizations and revolving warehouse credit facilities), which are consolidated as secured borrowings[66](index=66&type=chunk) - Assets transferred to SPEs are legally isolated from the Company, and collections are remitted to restricted cash accounts, totaling **$83.6 million** as of **June 30, 2025**[67](index=67&type=chunk)[68](index=68&type=chunk) Consolidated VIEs Assets and Liabilities (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total Assets | $1,413,319 | $1,315,180 | | Net Debt | $1,336,929 | $1,253,096 | | Total Liabilities | $1,336,950 | $1,253,115 | [Note 6. Debt](index=24&type=section&id=Note%206.%20Debt) Summary of Debt (in thousands) | Debt Type | June 30, 2025 Debt | June 30, 2025 Net Debt | December 31, 2024 Debt | December 31, 2024 Net Debt | | :------------------------ | :----------------- | :--------------------- | :--------------------- | :------------------------- | | Revolving credit facilities | $247,914 | $247,730 | $315,904 | $315,467 | | Securitizations | $1,261,219 | $1,254,541 | $1,162,432 | $1,156,531 | | Total | $1,509,133 | $1,502,271 | $1,478,336 | $1,471,998 | - The Company had **$117.3 million** of immediate available liquidity from its senior revolving credit facility as of **June 30, 2025**, and **$533.8 million** of unused capacity on its revolving credit facilities (subject to borrowing base)[71](index=71&type=chunk) - As of **June 30, 2025**, **84%** of the Company's debt (securitizations) was fixed-rate, while revolving credit facilities bear variable interest rates (e.g., 1-month SOFR)[73](index=73&type=chunk)[206](index=206&type=chunk) - The Company was in compliance with all debt covenants as of **June 30, 2025**[75](index=75&type=chunk) [Note 7. Stockholders' Equity](index=25&type=section&id=Note%207.%20Stockholders%27%20Equity) - In **December 2024**, the Board authorized a **$30 million** stock repurchase program through **December 31, 2026**. As of **June 30, 2025**, **$15.1 million** had been used to repurchase **0.5 million shares**[76](index=76&type=chunk) Quarterly Cash Dividends Declared per Common Share | Period | 2025 | 2024 | | :----- | :---- | :---- | | Q2 | $0.30 | $0.30 | | YTD | $0.60 | $0.60 | [Note 8. Disclosure About Fair Value of Financial Instruments](index=26&type=section&id=Note%208.%20Disclosure%20About%20Fair%20Value%20of%20Financial%20Instruments) - Fair values for cash and restricted cash approximate cost due to liquidity (Level 1). Restricted AFS investments are priced using external services (Level 2). Net finance receivables and debt fair values are estimated using discounted cash flow methodologies, involving estimates for prepayment, default, loss severity, and risk-adjusted discount rates (Level 3)[78](index=78&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk) Carrying Amounts and Estimated Fair Values of Financial Assets and Liabilities (in thousands) | Metric (Level) | June 30, 2025 Carrying Amount | June 30, 2025 Estimated Fair Value | December 31, 2024 Carrying Amount | December 31, 2024 Estimated Fair Value | | :-------------------------------------------------- | :---------------------------- | :--------------------------------- | :-------------------------------- | :------------------------------------- | | Cash (Level 1) | $4,272 | $4,272 | $3,951 | $3,951 | | Restricted cash (Level 1) | $117,658 | $117,658 | $131,684 | $131,684 | | Net finance receivables, less unearned insurance premiums and allowance for credit losses (Level 3) | $1,708,518 | $1,742,718 | $1,644,967 | $1,695,325 | | Debt (Level 3) | $1,509,133 | $1,481,788 | $1,478,336 | $1,428,607 | | Restricted AFS investments (Level 2) | $22,122 | $22,122 | $21,712 | $21,712 | [Note 9. Income Taxes](index=27&type=section&id=Note%209.%20Income%20Taxes) - Interim income tax provisions are based on an estimated annual effective tax rate, with discrete tax benefits/deficiencies primarily from share-based awards[83](index=83&type=chunk) Income Tax Components (in thousands) | Component (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Provision for corporate taxes | $3,322 | $2,814 | $5,548 | $7,600 | | Discrete tax (benefits) deficiencies | $22 | $(37)$ | $(50)$ | $(95)$ | | Total | $3,344 | $2,777 | $5,498 | $7,505 | [Note 10. Earnings Per Share](index=27&type=section&id=Note%2010.%20Earnings%20Per%20Share) Earnings Per Share (EPS) Reconciliation | Metric (in thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $10,140 | $8,445 | $17,147 | $23,650 | | Basic EPS | $1.07 | $0.88 | $1.79 | $2.47 | | Diluted EPS | $1.03 | $0.86 | $1.73 | $2.41 | | Weighted-average common shares outstanding (Basic) | 9,504 | 9,613 | 9,556 | 9,591 | | Weighted-average common shares outstanding (Diluted) | 9,843 | 9,863 | 9,934 | 9,805 | [Note 11. Share-Based Compensation](index=27&type=section&id=Note%2011.%20Share-Based%20Compensation) - The **2024** Long-Term Incentive Plan (LTIP) was approved, with **1.0 million shares** available for grant as of **May 16, 2024**, and **0.2 million shares** remaining available as of **June 30, 2025**. No further grants will be made under the **2015** Plan[85](index=85&type=chunk) Share-Based Compensation Expense (in thousands) | Period | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Share-based compensation expense | $2,800 | $3,300 | $6,300 | $5,100 | | Unrecognized share-based compensation expense (as of June 30, 2025) | N/A | N/A | $17,000 | N/A | - The Company issues various share-based awards including Performance Restricted Stock Units (PRSUs), service-based RSUs, Restricted Stock Awards (RSAs), and Non-Qualified Stock Options (NQSOs) under its LTIP, Key Team Member Incentive Program (KTIP), inducement/retention programs, and non-employee director compensation program[88](index=88&type=chunk)[90](index=90&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk) [Note 12. Commitments and Contingencies](index=32&type=section&id=Note%2012.%20Commitments%20and%20Contingencies) - The Company is involved in various legal proceedings in the normal course of business but does not believe these matters will have a material adverse effect on its financial condition, liquidity, or results of operations[102](index=102&type=chunk)[105](index=105&type=chunk) - Estimated losses are accrued when probable and reasonably estimable, but many legal actions are difficult to assess in early stages or when indeterminate damages are sought[103](index=103&type=chunk)[104](index=104&type=chunk) [Note 13. Segment Reporting](index=32&type=section&id=Note%2013.%20Segment%20Reporting) - The Company operates as one reportable segment: consumer finance. Consolidated net income is the primary measure used by the Chief Operating Decision Maker (CODM) to evaluate segment profit or loss[107](index=107&type=chunk) Key Financial Measures Reviewed by CODM (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest income | $130,244 | $118,658 | $257,013 | $238,554 | | Fee income | $10,451 | $9,240 | $20,235 | $18,162 | | Insurance income, net | $11,499 | $10,507 | $22,796 | $21,481 | | Other income | $5,248 | $4,620 | $10,365 | $9,136 | | Provision for credit losses | $60,587 | $53,802 | $118,579 | $100,225 | | Share-based compensation expense | $2,798 | $3,268 | $6,299 | $5,100 | | Depreciation and amortization expense | $2,397 | $2,287 | $4,697 | $4,533 | | Interest expense | $20,426 | $17,865 | $40,197 | $35,369 | | Income tax expense | $3,344 | $2,777 | $5,498 | $7,505 | [Note 14. Subsequent Events](index=33&type=section&id=Note%2014.%20Subsequent%20Events) - In **July 2025**, the Board declared a quarterly cash dividend of **$0.30 per share**, payable on **September 10, 2025**, to shareholders of record on **August 20, 2025**[109](index=109&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and future outlook, discussing key factors affecting operations, detailed comparisons of financial results for recent periods, liquidity, capital resources, and critical accounting policies and estimates [Overview](index=34&type=section&id=Overview) - Regional Management Corp. is a diversified consumer finance company providing installment loans, primarily to customers with limited access to traditional credit. As of **June 30, 2025**, it operates online and in **352 branch locations** across **19 states**, serving **579,100 active accounts**[111](index=111&type=chunk) - The company's core products are large loans (>**$2,500**) and small loans (≤**$2,500**), with most loans secured and structured on a fixed-rate, fixed-term basis. Optional insurance products are also offered[112](index=112&type=chunk) Loan Portfolio Breakdown (June 30, 2025) | Loan Type | Loans Outstanding (thousands) | Net Finance Receivables (millions) | | :---------- | :---------------------------- | :--------------------------------- | | Large Loans | 268.5 | $1,400 | | Small Loans | 310.7 | $547.0 | [Outlook](index=35&type=section&id=Outlook) - The Company continues to execute a "barbell strategy" balancing growth in higher-margin loan portfolios with growth in high-quality, auto-secured loans[114](index=114&type=chunk) - The portfolio of loans with an APR >**36%** grew by **$49.8 million** to **18.1% of the total portfolio**, while the auto-secured loan portfolio grew by **$66.2 million** to **12.5% of the total portfolio**[114](index=114&type=chunk) - The allowance for credit losses was **10.3% of net finance receivables** as of **June 30, 2025**. Macroeconomic conditions may necessitate changes to credit loss assumptions and outlook[115](index=115&type=chunk) - The Company maintains a strong liquidity profile with **$121.6 million** of available liquidity as of **June 30, 2025**, and **$533.8 million** of unused capacity on revolving credit facilities[116](index=116&type=chunk) [Factors Affecting Our Results of Operations](index=35&type=section&id=Factors%20Affecting%20Our%20Results%20of%20Operations) - Seasonal trends impact loan volume and delinquency, with demand highest in Q2-Q4 and delinquencies rising in the second half of the year. Macroeconomic factors (inflation, interest rates, geopolitical conflict) have altered these typical trends[117](index=117&type=chunk) - Revenue from interest and fees is driven by loan portfolio growth, sourced through branches, direct mail, digital partners, and the consumer website. The company aims to increase loans per branch and expand its state footprint[118](index=118&type=chunk) - Product mix influences credit risks and interest rates/fees, which vary by state due to competitive and regulatory environments[119](index=119&type=chunk) - Asset quality and allowance for credit losses are critical, depending on underwriting standards, diligent servicing, and responsiveness to economic conditions. Variable interest rates on credit facilities affect the cost of funds, though **84%** of funding was fixed-rate as of **June 30, 2025**[120](index=120&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk) [Components of Results of Operations](index=36&type=section&id=Components%20of%20Results%20of%20Operations) - **Interest and Fee Income:** Primarily from outstanding loans; accrual suspended at **90 days** delinquency. Loan origination, acquisition, and maintenance fees are recognized over the loan life[124](index=124&type=chunk)[125](index=125&type=chunk) - **Insurance Income, Net:** Earned premiums from optional payment and collateral protection insurance products, net of direct costs (claims paid, reserves, ceding fees, premium taxes)[126](index=126&type=chunk) - **Other Income:** Includes late charges, interest income from restricted cash, club membership commissions, and investment income from restricted AFS securities[127](index=127&type=chunk) - **Provision for Credit Losses:** Charged to income to maintain an adequate allowance for lifetime expected credit losses, influenced by credit experience, economic forecasts, delinquency, and portfolio growth[128](index=128&type=chunk) - **General and Administrative Expenses:** Comprised of personnel (largest component), occupancy, marketing, and other expenses (legal, compliance, software, bank fees)[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk) - **Interest Expense:** Paid and accrued interest for debt, unused line fees, and amortization of debt issuance costs[134](index=134&type=chunk) - **Income Taxes:** State and federal income taxes, with deferred tax assets/liabilities recognized for temporary differences[135](index=135&type=chunk) [Results of Operations](index=37&type=section&id=Results%20of%20Operations) This section provides a detailed comparison of the Company's financial performance for the three and six months ended **June 30, 2025**, against the corresponding periods in **2024**, highlighting changes in net income, revenue components, credit losses, general and administrative expenses, and income taxes [Net Finance Receivables by Product](index=39&type=section&id=Comparison%20of%20June%2030%2C%202025%2C%20versus%20June%2030%2C%202024) Net Finance Receivables by Product (YoY Change) | Product | 2Q 25 ($ thousands) | 2Q 24 ($ thousands) | YoY $ Inc (Dec) | YoY % Inc (Dec) | | :---------- | :------------------ | :------------------ | :-------------- | :-------------- | | Large loans | $1,413,367 | $1,266,032 | $147,335 | 11.6% | | Small loans | $546,997 | $507,711 | $39,286 | 7.7% | | Total | $1,960,364 | $1,773,743 | $186,621 | 10.5% | - The number of branches increased by **9 (2.6%)** to **352**, and net finance receivables per branch increased by **7.7%** to **$5,569 thousand**[142](index=142&type=chunk) [Three-Month Period Financial Performance](index=39&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202025%2C%20versus%20the%20Three%20Months%20Ended%20June%2030%2C%202024) Key Financial Performance (Three Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :---------------------------- | :------------ | :------------ | :--------- | :--------- | | Net Income | $10,140 | $8,445 | $1,695 | 20.1% | | Total Revenue | $157,442 | $143,025 | $14,417 | 10.1% | | Interest and Fee Income | $140,695 | $127,898 | $12,797 | 10.0% | | Insurance Income, Net | $11,499 | $10,507 | $992 | 9.4% | | Other Income | $5,248 | $4,620 | $628 | 13.6% | | Provision for Credit Losses | $60,587 | $53,802 | $6,785 | 12.6% | | Total G&A Expenses | $62,945 | $60,136 | $2,809 | 4.7% | | Interest Expense | $20,426 | $17,865 | $2,561 | 14.3% | | Income Taxes | $3,344 | $2,777 | $567 | 20.4% | - Interest and fee income increased due to a **9.4% increase** in average net finance receivables and a **0.1% increase** in annualized average yield, driven by improved credit performance. Total originations increased by **19.8%** to **$510.3 million**[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk) - Net credit losses increased by **2.5%** to **$56.9 million**, but the net credit loss rate improved by **80 basis points** to **11.9%** due to credit tightening and effective portfolio management. Delinquency rate improved to **6.6%** from **6.9%**[155](index=155&type=chunk)[156](index=156&type=chunk) - Personnel expenses increased by **$1.5 million (4.0%)** due to increased labor costs for **17 new branches**, partially offset by higher capitalized loan origination costs. Occupancy expenses rose by **$0.8 million (12.4%)** due to increased rent for new branches[157](index=157&type=chunk)[158](index=158&type=chunk) [Six-Month Period Financial Performance](index=42&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030%2C%202025%2C%20versus%20the%20Six%20Months%20Ended%20June%2030%2C%202024) Key Financial Performance (Six Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :---------------------------- | :------------ | :------------ | :--------- | :--------- | | Net Income | $17,147 | $23,650 | $(6,503)$ | (27.5)% | | Total Revenue | $310,409 | $287,333 | $23,076 | 8.0% | | Interest and Fee Income | $277,248 | $256,716 | $20,532 | 8.0% | | Insurance Income, Net | $22,796 | $21,481 | $1,315 | 6.1% | | Other Income | $10,365 | $9,136 | $1,229 | 13.5% | | Provision for Credit Losses | $118,579 | $100,225 | $18,354 | 18.3% | | Total G&A Expenses | $128,988 | $120,584 | $8,404 | 7.0% | | Interest Expense | $40,197 | $35,369 | $4,828 | 13.7% | | Income Taxes | $5,498 | $7,505 | $(2,007)$ | (26.7)% | - Net income decreased by **27.5%** primarily due to a significant increase in the provision for credit losses (**18.3%**) and interest expense (**13.7%**), despite an **8.0% increase** in total revenue[164](index=164&type=chunk)[172](index=172&type=chunk)[181](index=181&type=chunk) - Interest and fee income increased by **8.0%** due to an **8.4% increase** in average net finance receivables, though annualized average yield slightly decreased by **0.1%** due to a prior-year loan sale benefit. Total originations increased by **19.9%** to **$902.4 million**[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk) - Net credit losses increased by **12.8%** to **$115.3 million**, and the net credit loss rate was **12.1%** (vs. **11.7%** in prior year, which included a **130 basis point** benefit from a loan sale). Delinquency rate improved to **6.6%** from **6.9%**[174](index=174&type=chunk)[175](index=175&type=chunk) - Personnel expenses increased by **$4.8 million (6.4%)** due to higher labor costs for new branches and increased incentive costs. Marketing expenses increased by **$1.3 million (14.4%)** due to direct mail and digital marketing[177](index=177&type=chunk)[179](index=179&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) - The Company's primary cash needs are for lending activities, technology infrastructure, and branch expansion/maintenance, financed through operations cash flows and debt facilities[183](index=183&type=chunk) Liquidity and Capital Ratios | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Funded debt-to-equity ratio | 4.2 to 1.0 | 4.1 to 1.0 | | Stockholders' equity ratio | 18.5% | 18.7% | - As of **June 30, 2025**, the Company had **$4.3 million** in cash, **$117.3 million** in immediate available liquidity from revolving credit facilities, and **$533.8 million** in unused capacity on revolving credit facilities[184](index=184&type=chunk) - Net cash provided by operating activities increased by **$12.4 million** to **$142.3 million** for the six months ended **June 30, 2025**, primarily due to loan portfolio growth. Net cash used in investing activities increased by **$80.8 million** to **$165.4 million** due to increased loan originations. Net cash provided by financing activities was **$9.4 million**, a **$40.2 million increase** from the prior year's usage, driven by higher net advances on debt[190](index=190&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk) - The Company's debt arrangements include five revolving credit facilities and asset-backed securitizations, with **84%** of debt fixed-rate. Restricted cash collection accounts totaled **$83.6 million** as of **June 30, 2025**[193](index=193&type=chunk)[206](index=206&type=chunk) [Critical Accounting Policies and Estimates](index=46&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - The allowance for credit losses is a critical estimate based on historical credit experience, current conditions, and reasonable and supportable economic forecasts, using a PD/LGD model segmented by product type, FICO score, and delinquency status[196](index=196&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk) - Macroeconomic forecasts, particularly unemployment rates, are crucial inputs, and changes in these assumptions or credit loss performance outlook could significantly impact the allowance for credit losses[201](index=201&type=chunk)[202](index=202&type=chunk) - A hypothetical stress test with **10% increased weighting** towards slower near-term growth would have increased reserves by **$2.0 million** as of **June 30, 2025**, demonstrating sensitivity to macroeconomic conditions[203](index=203&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the Company's exposure to market risks, primarily interest rate risk, arising from its fixed-rate finance receivables and a mix of fixed and variable-rate debt, and quantifies the potential impact of interest rate changes on its financial performance - The Company is exposed to interest rate risk because its finance receivables are fixed-rate, while a portion of its debt (revolving credit facilities) is variable-rate. **84%** of the Company's debt was fixed-rate as of **June 30, 2025**[205](index=205&type=chunk)[206](index=206&type=chunk) Revolving Credit Facility Interest Rate Risk (June 30, 2025) | Revolving Credit Facility | Debt Balance (in thousands) | Effective Interest Rate | | :------------------------ | :-------------------------- | :---------------------- | | Senior | $165,526 | 7.4% | | RMR IV warehouse | $11,981 | 6.6% | | RMR V warehouse | $21,296 | 6.7% | | RMR VI warehouse | $27,813 | 6.4% | | RMR VII warehouse | $21,298 | 6.7% | | Total | $247,914 | | - A **100 basis point increase** in revolving credit facility rates would result in approximately **$2.5 million** of increased annual interest expense[206](index=206&type=chunk) [Item 4. Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms that management, including the CEO and CFO, evaluated the effectiveness of the Company's disclosure controls and procedures as of **June 30, 2025**, and concluded they were effective. It also states there were no material changes in internal control over financial reporting - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective as of **June 30, 2025**[208](index=208&type=chunk)[209](index=209&type=chunk) - No material changes in internal control over financial reporting were identified during the period covered by the report[210](index=210&type=chunk) [Part II – Other Information](index=50&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section provides additional information not covered in Part I, including legal proceedings, risk factors, details on equity security sales and repurchases, other information, and a list of exhibits filed with the report [Item 1. Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) - The Company is involved in various legal proceedings in the ordinary course of business but does not believe these will have a material adverse effect on its financial condition, liquidity, or results of operations[212](index=212&type=chunk) [Item 1A. Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) - No material changes to risk factors from the Annual Report on Form 10-K for **December 31, 2024**, other than those in the Quarterly Report on Form 10-Q for **March 31, 2025**. Readers should consider factors discussed in the 10-K[213](index=213&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Share Repurchase Transactions (Three Months Ended June 30, 2025) | Period | Total Number of Shares Purchased | Weighted-Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (1) | | :-------------------------- | :------------------------------- | :------------------------------------ | :--------------------------------------------------------------------- | :--------------------------------------------------------------------------------- | | April 1, 2025 — April 30, 2025 | 164,692 | $30.36 | 164,692 | $15,000,010 | | May 1, 2025 — May 31, 2025 | — | — | — | $15,000,010 | | June 1, 2025 — June 30, 2025 | — | — | — | $15,000,010 | | Total | 164,692 | $30.36 | 164,692 | | - The Board authorized a **$30.0 million** stock repurchase program in **December 2024**, effective through **December 31, 2026**[214](index=214&type=chunk) [Item 5. Other Information](index=50&type=section&id=Item%205.%20Other%20Information) - No officers or directors adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" during the three months ended **June 30, 2025**[215](index=215&type=chunk) [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits) - The report includes various exhibits, such as Amendment No. 6 to Credit Agreement, Rule 13a-14(a) / 15(d)-14(a) Certifications of Principal Executive and Financial Officers, Section 1350 Certifications, and XBRL Instance/Taxonomy documents[216](index=216&type=chunk) [Signature](index=52&type=section&id=SIGNATURE) This section formally concludes the Quarterly Report on Form 10-Q, confirming its submission by Regional Management Corp. and signed by the Executive Vice President and Chief Financial and Administrative Officer - The report was duly caused to be signed on behalf of Regional Management Corp. by Harpreet Rana, Executive Vice President and Chief Financial and Administrative Officer, on **August 1, 2025**[218](index=218&type=chunk)[220](index=220&type=chunk)

Core Viewpoint - Regional Management reported quarterly earnings of $1.03 per share, exceeding the Zacks Consensus Estimate of $0.72 per share, marking a year-over-year increase from $0.86 per share [1][2] Financial Performance - The company achieved revenues of $157.44 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 2.18% and showing an increase from $143.02 million year-over-year [2] - Over the last four quarters, Regional Management has consistently surpassed consensus EPS estimates [2] Stock Performance - Regional Management shares have declined approximately 8.2% since the beginning of the year, contrasting with the S&P 500's gain of 8.3% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.41 on revenues of $159.04 million, and for the current fiscal year, it is $4.27 on revenues of $632.98 million [7] - The trend of earnings estimate revisions prior to the earnings release was mixed, which may influence future stock performance [6] Industry Context - The Financial - Consumer Loans industry, to which Regional Management belongs, is currently ranked in the bottom 24% of over 250 Zacks industries, suggesting potential challenges ahead [8]

Financial Data and Key Metrics Changes - The company reported a net income of $10.1 million and diluted earnings per share of $1.30, representing a 20% year-over-year improvement [4][5] - Quarterly revenue reached a record level of $157 million, up 10% year-over-year [18] - Total originations were at a record high of $510 million, reflecting a 20% year-over-year increase [16][18] - The annualized operating expense ratio improved to 13.2%, a 60 basis point improvement year-over-year [21] Business Line Data and Key Metrics Changes - Net receivables grew by $70 million sequentially, with a year-over-year increase of 10.5% [6] - The auto secured loan portfolio grew by $66 million or 37% year-over-year, now representing 13% of the total portfolio [10] - Loans with APRs above 36% increased by $50 million or 16% year-over-year, now making up 18% of the total portfolio [10] Market Data and Key Metrics Changes - The thirty-day delinquency rate improved to 6.6%, a 50 basis point improvement sequentially and 30 basis points year-over-year [6][19] - The net credit loss rate was 11.9%, improving by 50 basis points sequentially and 80 basis points year-over-year [6][19] Company Strategy and Development Direction - The company plans to continue opening new branches, with 17 branches opened since September of the previous year and an expectation to open another 5 to 10 branches in the next six months [9] - The company is executing a barbell strategy focusing on growth in high-quality auto secured and high-margin small loan portfolios [9] - Investments in technology and advanced analytics are expected to enhance operational efficiency and customer experience [12][93] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the health of consumers in their target segment, which has allowed for responsible portfolio growth and improved credit performance [5][14] - For 2025, the company forecasts full-year net income between $42 million and $45 million, with potential for faster growth in the second half of the year [14][26] - Management noted that economic conditions, including wage growth and job availability, are favorable for their customer base [17][45] Other Important Information - The company returned $17.6 million in capital to shareholders through stock repurchases and dividends [8] - The allowance for credit losses increased by $3.7 million to support portfolio growth, with a reserve rate of 10.3% expected to remain steady [20] Q&A Session Summary Question: What are the most significant growth opportunities? - Management highlighted various growth levers, including geographic expansion, new branches, and digital underwriting, with a focus on optimizing returns based on market conditions [29][31] Question: Is the flat allowance rate an indication of normalization? - Management explained that the allowance rate is based on portfolio mix and macro conditions, and they will continue to evaluate it quarterly [36][39] Question: How should yields be expected to change? - Management indicated that pricing will be competitive and will adjust based on market conditions, with a focus on maintaining profitability [48][50] Question: What drove the increase in digital originations? - The increase was attributed to improved productivity in branches and successful partnerships with affiliates, which are expected to be sustainable [89][90] Question: What factors are leading to the guidance for Q3? - The guidance reflects expectations for continued top-line growth, expense discipline, and improvements in net credit losses [94][96]

July 30, 2025 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" ...

[Executive Summary](index=1&type=section&id=Executive%20Summary) [Second Quarter 2025 Performance Overview](index=1&type=section&id=Second%20Quarter%202025%20Performance%20Overview) Regional Management Corp. reported record Q2 2025 originations and revenue, with net income up 20% and improved credit performance - Regional Management Corp. delivered a very strong second quarter, marked by **record originations and revenue**, improving credit performance, and an **all-time best operating expense ratio**[3](index=3&type=chunk) Key Financial Highlights (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :-------------------------------- | :------ | :------ | :--------- | :--------- | | Net Income | $10.1 million | $8.4 million | $1.7 million | 20.1% | | Diluted EPS | $1.03 | $0.86 | $0.17 | 19.8% | | Net Finance Receivables | $2.0 billion | $1.8 billion | $186.6 million | 10.5% | | Total Originations | $510.3 million | $426.1 million | $84.2 million | 19.8% | | Total Revenue | $157.4 million | $143.0 million | $14.4 million | 10.1% | | 30+ Day Delinquency Rate | 6.6% | 6.9% | -0.3% | -4.3% | | Net Credit Loss Rate | 11.9% | 12.7% | -0.8% | -6.3% | | Operating Expense Ratio | 13.2% | 13.8% | -0.6% | -4.3% | - The company returned **$17.6 million** to shareholders year-to-date through buybacks and dividends, with book value per share increasing to **$36.43**[3](index=3&type=chunk) - The company continues strategic investments in its footprint and innovation, opening **17 new branches** and expecting 5 to 10 more[3](index=3&type=chunk) [Second Quarter 2025 Detailed Financial Highlights](index=2&type=section&id=Second%20Quarter%202025%20Detailed%20Financial%20Highlights) [Financial Performance](index=2&type=section&id=Financial%20Performance) Q2 2025 saw significant financial growth, with net income and diluted EPS up over 20% and record revenue from portfolio expansion [Net Income and EPS](index=2&type=section&id=Net%20Income%20and%20EPS) Net income for Q2 2025 increased to **$10.1 million**, up 20.1% YoY, with diluted EPS rising to **$1.03** Net Income and Diluted EPS (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | YoY Change (%) | | :------------------ | :------ | :------ | :------------- | | Net Income | $10.1 million | $8.4 million | 20.1% | | Diluted EPS | $1.03 | $0.86 | 19.8% | [Revenue](index=2&type=section&id=Revenue) Total revenue reached a record **$157.4 million** in Q2 2025, up 10.1% YoY, with yield improving to **32.9%** Total Revenue and Yield (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | YoY Change ($ million) | YoY Change (%) | | :------------------ | :------ | :------ | :------------- | :------------- | | Total Revenue | $157.4 million | $143.0 million | $14.4 million | 10.1% | | Total Revenue Yield | 32.9% | 32.7% | - | +0.2% | | Interest and Fee Yield | - | - | - | +0.1% | [Expenses and Operating Efficiency](index=3&type=section&id=Expenses%20and%20Operating%20Efficiency) Operating expense ratio improved to an all-time best of **13.2%** in Q2 2025, with revenue growth outpacing G&A by over 5x General and Administrative Expenses & Operating Expense Ratio (Q2 2025 vs. Prior Periods) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | QoQ Change ($ million) | YoY Change ($ million) | | :------------------------------------------------ | :------ | :------ | :------ | :--------------- | :--------------- | | General and Administrative Expenses | $62.9 million | $66.0 million | $60.1 million | -$3.1 million | +$2.8 million | | Operating Expense Ratio (annualized) | 13.2% | 14.0% | 13.8% | -80 bps | -60 bps | - Revenue growth outpaced G&A expense growth by more than **5x** in the second quarter[6](index=6&type=chunk) [Portfolio and Credit Quality](index=2&type=section&id=Portfolio%20and%20Credit%20Quality) Record net finance receivables and originations were achieved, with credit performance improving through lower net credit loss rates and delinquencies [Net Finance Receivables and Originations](index=2&type=section&id=Net%20Finance%20Receivables%20and%20Originations) Net finance receivables reached a record **$2.0 billion**, up 10.5% YoY, with total originations at a record **$510.3 million** Net Finance Receivables and Originations (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | YoY Change ($ million) | YoY Change (%) | | :-------------------------------- | :------ | :------ | :------------- | :------------- | | Net Finance Receivables | $2.0 billion | $1.8 billion | $186.6 million | 10.5% | | Total Originations | $510.3 million | $426.1 million | $84.2 million | 19.8% | | Large Loan NFR | $1.4 billion | $1.3 billion | $147.3 million | 11.6% | | Auto-secured NFR | $245.7 million | $179.5 million | $66.2 million | 36.9% | | Small Loan NFR | $547.0 million | $507.7 million | $39.3 million | 7.7% | | NFR with APRs > 36% | - | - | - | 16.3% | | Customer Accounts | - | - | - | 6.1% | - The barbell strategy balances growth in higher-quality, auto-secured products with higher-margin small loan portfolio growth[5](index=5&type=chunk) [Credit Performance and Delinquencies](index=2&type=section&id=Credit%20Performance%20and%20Delinquencies) Net credit loss rate improved by **80 basis points** YoY to **11.9%**, with 30+ day delinquencies decreasing to **6.6%** Credit Performance Metrics (Q2 2025 vs. Prior Periods) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | QoQ Change (bps) | YoY Change (bps) | | :------------------------------------------------ | :------ | :------ | :------ | :--------------- | :--------------- | | Provision for Credit Losses ($ million) | $60.6 | $58.0 | $53.8 | +$2.6 | +$6.8 | | Net Credit Loss Rate (annualized) | 11.9% | 12.4% | 12.7% | -50 bps | -80 bps | | Allowance for Credit Losses (% of NFR) | 10.3% | 10.5% | 10.5% | -20 bps | -20 bps | | 30+ Day Contractual Delinquencies (% of NFR) | 6.6% | 7.1% | 6.9% | -50 bps | -30 bps | | Large Loan Delinquency Rate | 5.4% | 5.9% | 6.0% | -50 bps | -60 bps | | Small Loan Delinquency Rate | 9.6% | 10.0% | 9.1% | -40 bps | +50 bps | - The net credit loss rate included a **40 basis point** impact from prior-year hurricane activity losses[6](index=6&type=chunk) - The decline in the allowance for credit losses rate was attributable to the release of remaining hurricane reserves[6](index=6&type=chunk) [Shareholder Returns](index=3&type=section&id=Shareholder%20Returns) In Q2 2025, the company repurchased **164,692 shares** at **$30.36** per share under its **$30 million** repurchase program Share Repurchase Activity (Q2 2025) | Metric | Value | | :-------------------------- | :---------- | | Shares Repurchased | 164,692 | | Weighted-Average Price | $30.36 | | Program | $30 million stock repurchase program | [Capital and Liquidity](index=4&type=section&id=Capital%20and%20Liquidity) [Third Quarter 2025 Dividend](index=4&type=section&id=Third%20Quarter%202025%20Dividend) The Board declared a **$0.30** per common share dividend for Q3 2025, payable September 10, 2025 Third Quarter 2025 Dividend Details | Metric | Value | | :------------------ | :------ | | Dividend Per Share | $0.30 | | Payment Date | September 10, 2025 | | Record Date | August 20, 2025 | [Liquidity and Debt Structure](index=4&type=section&id=Liquidity%20and%20Debt%20Structure) As of June 30, 2025, the company held **$2.0 billion** in net finance receivables and **$1.5 billion** in debt, with **84%** fixed-rate Liquidity and Debt Metrics (as of June 30, 2025) | Metric | Value | | :------------------------------------ | :---------- | | Net Finance Receivables | $2.0 billion | | Total Debt | $1.5 billion | | Unused Capacity on Revolving Facilities | $534 million (68.4%) | | Available Liquidity | $121.6 million | | Fixed-Rate Debt (% of total debt) | 84% | | Weighted-Average Coupon | 4.5% | | Funded Debt-to-Equity Ratio | 4.2 to 1.0 | | Stockholders' Equity Ratio | 18.5% | | Book Value Per Share | $36.43 | - Debt consisted of **$165.5 million** on a **$355 million** senior revolving credit facility, **$82.4 million** on **$425 million** warehouse facilities, and **$1.3 billion** through securitizations[12](index=12&type=chunk) [Company Information](index=5&type=section&id=Company%20Information) [About Regional Management Corp.](index=5&type=section&id=About%20Regional%20Management%20Corp.) Regional Management Corp. is a diversified consumer finance company operating as 'Regional Finance' in 19 states, providing secured installment loans - Regional Management Corp. (NYSE: RM) is a diversified consumer finance company providing installment loan products to customers with limited traditional credit access[14](index=14&type=chunk) - The company operates as 'Regional Finance' online and in branch locations across **19 states**[14](index=14&type=chunk) - Most loan products are secured, fixed-rate, fixed-term, and fully amortizing, sourced via branches, direct mail, digital partners, and its website[14](index=14&type=chunk) [Forward-Looking Statements and Risk Factors](index=5&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) This section disclaims forward-looking statements, noting actual results may differ due to risks like growth, credit, economic, and regulatory changes - Forward-looking statements are subject to inherent risks and uncertainties, many outside the company's control[15](index=15&type=chunk) - Factors causing actual results to differ include managing growth, underwriting, loan collection, credit risk, competition, and economic conditions[16](index=16&type=chunk)[17](index=17&type=chunk) - Additional risks include third-party failures, security breaches, IT reliance, revenue/expense trends, public health crises, interest rates, liquidity, and regulatory changes[16](index=16&type=chunk)[17](index=17&type=chunk) [Contact Information](index=6&type=section&id=Contact%20Information) Investor relations contact details are provided for inquiries - For investor relations inquiries, contact Garrett Edson at **(203) 682-8331** or **investor.relations@regionalmanagement.com**[19](index=19&type=chunk) [Consolidated Financial Statements](index=7&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Statements of Income](index=7&type=section&id=Consolidated%20Statements%20of%20Income) Consolidated statements show strong YoY growth in total revenue and net income for Q2 and YTD, despite increased credit loss provision Consolidated Statements of Income (Q2 2025 & YTD 2025 vs. Prior Year) | Metric (dollars in thousands) | 2Q 25 | 2Q 24 | 2Q $ Change | 2Q % Change | YTD 25 | YTD 24 | YTD $ Change | YTD % Change | | :---------------------------- | :---- | :---- | :---------- | :---------- | :----- | :----- | :----------- | :----------- | | **Revenue** | | | | | | | | | | Interest and fee income | $140,695 | $127,898 | $12,797 | 10.0% | $277,248 | $256,716 | $20,532 | 8.0% | | Insurance income, net | 11,499 | 10,507 | 992 | 9.4% | 22,796 | 21,481 | 1,315 | 6.1% | | Other income | 5,248 | 4,620 | 628 | 13.6% | 10,365 | 9,136 | 1,229 | 13.5% | | **Total revenue** | **157,442** | **143,025** | **14,417** | **10.1%** | **310,409** | **287,333** | **23,076** | **8.0%** | | **Expenses** | | | | | | | | | | Provision for credit losses | 60,587 | 53,802 | (6,785) | (12.6)% | 118,579 | 100,225 | (18,354) | (18.3)% | | Total general and administrative | 62,945 | 60,136 | (2,809) | (4.7)% | 128,988 | 120,584 | (8,404) | (7.0)% | | Interest expense | 20,426 | 17,865 | (2,561) | (14.3)% | 40,197 | 35,369 | (4,828) | (13.7)% | | Income before income taxes | 13,484 | 11,222 | 2,262 | 20.2% | 22,645 | 31,155 | (8,510) | (27.3)% | | Income taxes | 3,344 | 2,777 | (567) | (20.4)% | 5,498 | 7,505 | 2,007 | 26.7% | | **Net income** | **$10,140** | **$8,445** | **$1,695** | **20.1%** | **$17,147** | **$23,650** | **$(6,503)** | **(27.5)%** | | **Net income per common share:** | | | | | | | | | | Basic | $1.07 | $0.88 | $0.19 | 21.6% | $1.79 | $2.47 | $(0.68) | (27.5)% | | Diluted | $1.03 | $0.86 | $0.17 | 19.8% | $1.73 | $2.41 | $(0.68) | (28.2)% | | Return on average assets (annualized) | 2.1% | 1.9% | | | 1.8% | 2.7% | | | | Return on average equity (annualized) | 11.3% | 10.0% | | | 9.6% | 14.1% | | | [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet as of June 30, 2025, shows a **10.0%** YoY increase in total assets, driven by net finance receivables growth Consolidated Balance Sheets (as of June 30, 2025 vs. June 30, 2024) | Metric (dollars in thousands) | 2Q 25 | 2Q 24 | $ Change | % Change | | :---------------------------------------------------- | :------ | :------ | :------- | :------- | | **Assets** | | | | | | Cash | $4,272 | $4,323 | $(51) | (1.2)% | | Net finance receivables | 1,960,364 | 1,773,743 | 186,621 | 10.5% | | Allowance for credit losses | (202,800) | (185,400) | (17,400) | (9.4)% | | Restricted cash | 117,658 | 138,891 | (21,233) | (15.3)% | | Restricted available-for-sale investments | 22,122 | 2,157 | 19,965 | 925.6% | | **Total assets** | **$1,967,131** | **$1,789,052** | **$178,079** | **10.0%** | | **Liabilities and Stockholders' Equity** | | | | | | Debt | $1,509,133 | $1,378,449 | $130,684 | 9.5% | | Other liabilities | 57,141 | 34,030 | 23,111 | 67.9% | | **Total liabilities** | **1,604,180** | **1,444,149** | **160,031** | **11.1%** | | Total stockholders' equity | 362,951 | 344,903 | 18,048 | 5.2% | | **Total liabilities and stockholders' equity** | **$1,967,131** | **$1,789,052** | **$178,079** | **10.0%** | [Selected Financial Data & Trends](index=9&type=section&id=Selected%20Financial%20Data%20%26%20Trends) [Net Finance Receivables and Originations Data](index=9&type=section&id=Net%20Finance%20Receivables%20and%20Originations%20Data) Net finance receivables grew **10.5%** YoY to **$1.96 billion**, with total originations up **19.8%**, driven by large loans Net Finance Receivables (Q2 2025 vs. Prior Periods) | Metric (dollars in thousands) | 2Q 25 | 1Q 25 | QoQ $ Inc (Dec) | QoQ % Inc (Dec) | 2Q 24 | YoY $ Inc (Dec) | YoY % Inc (Dec) | | :---------------------------- | :---- | :---- | :-------------- | :-------------- | :---- | :-------------- | :-------------- | | Large loans | $1,413,367 | $1,345,825 | $67,542 | 5.0% | $1,266,032 | $147,335 | 11.6% | | Small loans | 546,997 | 544,526 | 2,471 | 0.5% | 507,711 | 39,286 | 7.7% | | **Total** | **$1,960,364** | **$1,890,351** | **$70,013** | **3.7%** | **$1,773,743** | **$186,621** | **10.5%** | | Number of branches | 352 | 353 | (1) | (0.3)% | 343 | 9 | 2.6% | | Net finance receivables per branch | $5,569 | $5,355 | $214 | 4.0% | $5,171 | $398 | 7.7% | Loans Originated (Q2 2025 vs. Prior Periods) | Metric (dollars in thousands) | 2Q 25 | 1Q 25 | QoQ $ Inc (Dec) | QoQ % Inc (Dec) | 2Q 24 | YoY $ Inc (Dec) | YoY % Inc (Dec) | | :---------------------------- | :---- | :---- | :-------------- | :-------------- | :---- | :-------------- | :-------------- | | Large loans | $336,473 | $241,809 | $94,664 | 39.1% | $254,779 | $81,694 | 32.1% | | Small loans | 173,856 | 150,311 | 23,545 | 15.7% | 171,282 | 2,574 | 1.5% | | **Total** | **$510,329** | **$392,120** | **$118,209** | **30.1%** | **$426,061** | **$84,268** | **19.8%** | [Revenue Yields Analysis](index=9&type=section&id=Revenue%20Yields%20Analysis) Total revenue yield improved to **32.9%** in Q2 2025, up **0.2%** YoY, driven by large loan yield increases Revenue Yields (Annualized as % of Average Net Finance Receivables) | Metric | 2Q 25 | 1Q 25 | QoQ Inc (Dec) | 2Q 24 | YoY Inc (Dec) | | :------------------------ | :---- | :---- | :------------ | :---- | :------------ | | Large loans | 26.6% | 26.1% | 0.5% | 26.1% | 0.5% | | Small loans | 36.5% | 35.9% | 0.6% | 37.2% | (0.7)% | | Total interest and fee yield | 29.4% | 28.9% | 0.5% | 29.3% | 0.1% | | Total revenue yield | 32.9% | 32.4% | 0.5% | 32.7% | 0.2% | Components of Increase in Interest and Fee Income (Q2 2025 vs. Q2 2024) | Component (dollars in thousands) | Volume | Rate | Volume & Rate | Total | | :------------------------------- | :----- | :--- | :------------ | :---- | | Large loans | $7,644 | $1,654 | $154 | $9,452 | | Small loans | 4,380 | (945) | (90) | 3,345 | | Product mix | (22) | 17 | 5 | — | | **Total** | **$12,002** | **$726** | **$69** | **$12,797** | Revenue Yields (YTD 2025 vs. YTD 2024) | Metric | YTD 25 | YTD 24 | YoY Inc (Dec) | | :------------------------ | :----- | :----- | :------------ | | Large loans | 26.4% | 26.1% | 0.3% | | Small loans | 36.2% | 37.5% | (1.3)% | | Total interest and fee yield | 29.2% | 29.3% | (0.1)% | | Total revenue yield | 32.7% | 32.8% | (0.1)% | [Credit Quality Metrics](index=10&type=section&id=Credit%20Quality%20Metrics) Net credit loss rate improved to **11.9%** in Q2 2025, down **80 basis points** YoY, with total delinquency decreasing to **6.6%** Credit Loss and Delinquency Metrics (Q2 2025 vs. Prior Periods) | Metric | 2Q 25 | 1Q 25 | 2Q 24 | | :------------------------------------------------ | :---- | :---- | :---- | | Net credit losses ($ thousands) | $56,887 | $58,392 | $55,502 | | Percentage of average net finance receivables (annualized) | 11.9% | 12.4% | 12.7% | | Provision for credit losses ($ thousands) | $60,587 | $57,992 | $53,802 | | Percentage of average net finance receivables (annualized) | 12.7% | 12.3% | 12.3% | | Allowance for credit losses ($ thousands) | $202,800 | $199,100 | $185,400 | | Allowance for credit losses (% of NFR) | 10.3% | 10.5% | 10.5% | | Total delinquency (% of NFR) | 6.6% | 7.1% | 6.9% | | Large loans delinquency (% of NFR) | 5.4% | 5.9% | 6.0% | | Small loans delinquency (% of NFR) | 9.6% | 10.0% | 9.1% | Other Key Metrics (YTD 2025 vs. YTD 2024) | Metric | YTD 25 | YTD 24 | | :------------------------------------------------ | :----- | :----- | | Net credit losses ($ thousands) | $115,279 | $102,225 | | Percentage of average net finance receivables (annualized) | 12.1% | 11.7% | | Provision for credit losses ($ thousands) | $118,579 | $100,225 | | Percentage of average net finance receivables (annualized) | 12.5% | 11.4% | | Percentage of total revenue (Provision for credit losses) | 38.2% | 34.9% | [General and Administrative Expenses](index=10&type=section&id=General%20and%20Administrative%20Expenses) Operating expense ratio improved to **13.2%** in Q2 2025, down **0.6%** YoY, with efficiency ratio improving to **40.0%** General and Administrative Expenses & Ratios (Q2 2025 vs. Prior Periods) | Metric | 2Q 25 | 1Q 25 | 2Q 24 | | :------------------------------------------------ | :---- | :---- | :---- | | General and administrative expenses ($ thousands) | $62,945 | $66,043 | $60,136 | | Percentage of average net finance receivables (annualized) | 13.2% | 14.0% | 13.8% | | Percentage of total revenue | 40.0% | 43.2% | 42.0% | General and Administrative Expenses & Ratios (YTD 2025 vs. YTD 2024) | Metric | YTD 25 | YTD 24 | | :------------------------------------------------ | :----- | :----- | | General and administrative expenses ($ thousands) | $128,988 | $120,584 | | Percentage of average net finance receivables (annualized) | 13.6% | 13.8% | | Percentage of total revenue | 41.6% | 42.0% | [Quarterly Financial Trends](index=11&type=section&id=Quarterly%20Financial%20Trends) Quarterly trends show consistent total revenue growth to **$157.4 million** in Q2 2025, with improving operating expense and delinquency rates Income Statement Quarterly Trend (Q2 2024 - Q2 2025) | Metric (dollars in thousands) | 2Q 24 | 3Q 24 | 4Q 24 | 1Q 25 | 2Q 25 | QoQ $ B(W) | YoY $ B(W) | | :---------------------------- | :---- | :---- | :---- | :---- | :---- | :--------- | :--------- | | Total revenue | 143,025 | 146,338 | 154,832 | 152,967 | 157,442 | 4,475 | 14,417 | | Provision for credit losses | 53,802 | 54,349 | 57,626 | 57,992 | 60,587 | (2,595) | (6,785) | | Total general and administrative | 60,136 | 62,468 | 64,646 | 66,043 | 62,945 | 3,098 | (2,809) | | Interest expense | 17,865 | 19,356 | 19,805 | 19,771 | 20,426 | (655) | (2,561) | | Net income | $8,445 | $7,663 | $9,914 | $7,007 | $10,140 | $3,133 | $1,695 | | Diluted EPS | $0.86 | $0.76 | $0.98 | $0.70 | $1.03 | $0.33 | $0.17 | Balance Sheet & Other Key Metrics Quarterly Trends (Q2 2024 - Q2 2025) | Metric | 2Q 24 | 3Q 24 | 4Q 24 | 1Q 25 | 2Q 25 | QoQ $ Inc (Dec) | YoY $ Inc (Dec) | | :-------------------------------- | :---- | :---- | :---- | :---- | :---- | :-------------- | :-------------- | | Total assets ($ thousands) | $1,789,052 | $1,821,831 | $1,909,109 | $1,900,683 | $1,967,131 | $66,448 | $178,079 | | Net finance receivables ($ thousands) | $1,773,743 | $1,819,756 | $1,892,535 | $1,890,351 | $1,960,364 | $70,013 | $186,621 | | Allowance for credit losses ($ thousands) | $185,400 | $192,100 | $199,500 | $199,100 | $202,800 | $3,700 | $17,400 | | Debt ($ thousands) | $1,378,449 | $1,395,892 | $1,478,336 | $1,477,860 | $1,509,133 | $31,273 | $130,684 | | Interest and fee yield (annualized) | 29.3% | 29.9% | 29.8% | 28.9% | 29.4% | 0.5% | 0.1% | | Efficiency ratio | 42.0% | 42.7% | 41.8% | 43.2% | 40.0% | (3.2)% | (2.0)% | | Operating expense ratio | 13.8% | 13.9% | 14.0% | 14.0% | 13.2% | (0.8)% | (0.6)% | | Delinquency rate | 6.9% | 6.9% | 7.7% | 7.1% | 6.6% | (0.5)% | (0.3)% | | Net credit loss rate | 12.7% | 10.6% | 10.8% | 12.4% | 11.9% | (0.5)% | (0.8)% | | Book value per share | $33.96 | $34.72 | $35.67 | $35.48 | $36.43 | $0.95 | $2.47 | [Year-to-Date Financial Data](index=13&type=section&id=Year-to-Date%20Financial%20Data) YTD 2025 data shows average net finance receivables up **8.4%** YoY, total originations up **19.9%**, and net credit loss rate at **12.1%** Average Net Finance Receivables (YTD 2025 vs. YTD 2024) | Metric (dollars in thousands) | YTD 25 | YTD 24 | YoY $ Inc (Dec) | YoY % Inc (Dec) | | :---------------------------- | :----- | :----- | :-------------- | :-------------- | | Large loans | $1,356,543 | $1,259,611 | $96,932 | 7.7% | | Small loans | 544,520 | 494,149 | 50,371 | 10.2% | | **Total** | **$1,901,063** | **$1,753,760** | **$147,303** | **8.4%** | Loans Originated (YTD 2025 vs. YTD 2024) | Metric (dollars in thousands) | YTD 25 | YTD 24 | YTD $ Inc (Dec) | YTD % Inc (Dec) | | :---------------------------- | :----- | :----- | :-------------- | :-------------- | | Large loans | $578,282 | $439,853 | $138,429 | 31.5% | | Small loans | 324,167 | 312,563 | 11,604 | 3.7% | | **Total** | **$902,449** | **$752,416** | **$150,033** | **19.9%** | Other Key Metrics (YTD 2025 vs. YTD 2024) | Metric | YTD 25 | YTD 24 | | :------------------------------------------------ | :----- | :----- | | Net credit losses ($ thousands) | $115,279 | $102,225 | | Percentage of average net finance receivables (annualized) | 12.1% | 11.7% | | Provision for credit losses ($ thousands) | $118,579 | $100,225 | | Percentage of average net finance receivables (annualized) | 12.5% | 11.4% | | Percentage of total revenue (Provision for credit losses) | 38.2% | 34.9% | | General and administrative expenses ($ thousands) | $128,988 | $120,584 | | Percentage of average net finance receivables (annualized) | 13.6% | 13.8% | | Percentage of total revenue (G&A) | 41.6% | 42.0% | [Non-GAAP Financial Measures](index=14&type=section&id=Non-GAAP%20Financial%20Measures) [Reconciliation of Non-GAAP Measures](index=14&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) Non-GAAP measures, including tangible equity and funded debt-to-tangible equity ratio, provide additional insights into capital and leverage - Non-GAAP measures like tangible equity and funded debt-to-tangible equity ratio provide additional metrics for evaluating capital and leverage[36](index=36&type=chunk) Non-GAAP Reconciliation (Q2 2025) | Metric | 2Q 25 (dollars in thousands) | | :------------------------------------ | :--------------------------- | | Debt | $1,509,133 | | Total stockholders' equity | 362,951 | | Less: Intangible assets | 28,810 | | **Tangible equity (non-GAAP)** | **$334,141** | | Funded debt-to-equity ratio | 4.2x | | **Funded debt-to-tangible equity ratio (non-GAAP)** | **4.5x** |

Core Insights - Regional Management Corp. (RM) reported a decline of 11.6% in its shares following the release of its first-quarter 2025 results, despite better-than-expected earnings driven by increased loan originations and net finance receivables per branch, which were offset by rising general and administrative expenses [1] Financial Performance - The company achieved adjusted earnings per share (EPS) of 70 cents, exceeding the Zacks Consensus Estimate by 4.5%, although this was a decrease from $1.56 per share in the same quarter last year [2] - Total revenues increased by 6% year over year to $153 million, but fell short of the consensus estimate by 0.9% [2] - Interest and fee income rose 6% year over year to $136.6 million, yet was below the Zacks Consensus Estimate of $138 million [3] - Net insurance income grew 2.9% year over year to $11.3 million, missing the consensus mark of $12 million [3] - Provision for credit losses surged 24.9% year over year to $58 million [3] Expense and Efficiency Metrics - General and administrative expenses totaled $66 million, up 9.3% year over year, primarily due to the timing of incentive expenses [4] - The efficiency ratio improved by 130 basis points year over year to 43.2% [4] - Interest expenses increased by 13% year over year to $19.8 million [4] Loan and Receivables Growth - Net finance receivables reached $1.9 billion at the end of the first quarter, reflecting an 8.4% year-over-year growth [5] - Small loans increased by 10.8% year over year to $543.8 million, while large loans rose 7.6% year over year to $1.3 billion [5] - Total loan originations for the quarter were $392.1 million, marking a 20.2% year-over-year improvement [6] Financial Position - The company ended the first quarter with a cash balance of $4.2 million, up from $4 million at the end of 2024 [6] - Total assets decreased by 0.4% year over year to $1.9 billion [6] - Net debt was $1.5 billion, down 0.1% year over year, with total liabilities also declining by 0.6% to $1.5 billion [7] - Total shareholders' equity increased by 0.2% year over year to $357.9 million [7] Shareholder Returns - RM repurchased shares worth $6.5 million in the first quarter of 2025 [8] - A dividend of 30 cents per share has been announced for the second quarter, payable on June 11, 2025 [8] Future Outlook - Management aims for at least 10% portfolio growth and a significant increase in net income for 2025 [10] - Expected general and administrative expenses for the second quarter are projected to be between $65.5 million and $66 million [10] - Interest expenses are anticipated to range from $19.8 million to $21 million in the second quarter [10] - Total revenue yield is expected to increase by 20 basis points sequentially in the second quarter, with net credit losses projected around $57 million [11]

[GLOSSARY](index=3&type=section&id=GLOSSARY) [PART I – FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Regional Management Corp., covering Balance Sheets, Income, Equity, and Cash Flows [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheets (in thousands) | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------------------ | :----------------------------- | :------------------------------ | | **Assets** | | | | Cash | $4,158 | $3,951 | | Net finance receivables | $1,890,351 | $1,892,535 | | Total assets | $1,900,683 | $1,909,109 | | **Liabilities** | | | | Debt | $1,477,860 | $1,478,336 | | Total liabilities | $1,542,807 | $1,552,031 | | **Stockholders' Equity** | | | | Total stockholders' equity | $357,876 | $357,078 | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Consolidated Statements of Comprehensive Income (in thousands) | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | **Revenue** | | | | Interest and fee income | $136,553 | $128,818 | | Total revenue | $152,967 | $144,308 | | **Expenses** | | | | Provision for credit losses | $57,992 | $46,423 | | Total general and administrative expenses | $66,043 | $60,448 | | Interest expense | $19,771 | $17,504 | | Income before income taxes | $9,161 | $19,933 | | Income taxes | $2,154 | $4,728 | | Net income | $7,007 | $15,205 | | Basic EPS | $0.73 | $1.59 | | Diluted EPS | $0.70 | $1.56 | | Total comprehensive income | $6,774 | $15,358 | - Net income **decreased by 53.9% YoY**, from **$15.2 million** in Q1 2024 to **$7.0 million** in Q1 2025, primarily due to increased provision for credit losses and general and administrative expenses[14](index=14&type=chunk)[146](index=146&type=chunk) [Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Consolidated Statements of Stockholders' Equity (in thousands) | Item | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Beginning balance | $357,078 | $322,273 | | Cash dividends | $(2,957) | $(2,993) | | Repurchase of common stock | $(6,527) | — | | Share-based compensation | $3,588 | $1,832 | | Net income | $7,007 | $15,205 | | Other comprehensive loss (income) | $(233) | $153 | | Ending balance | $357,876 | $336,460 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows (in thousands) | Activity | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net cash provided by operating activities | $63,665 | $58,471 | | Net cash used in investing activities | $(60,267) | $(20,329) | | Net cash used in financing activities | $(12,563) | $(44,406) | | Net change in cash and restricted cash | $(9,165) | $(6,264) | | Cash and restricted cash at end of period | $126,470 | $122,409 | - Net cash provided by operating activities **increased by $5.2 million YoY**, primarily due to loan portfolio growth[174](index=174&type=chunk) - Net cash used in investing activities **increased by $39.9 million YoY**, mainly driven by increased originations of finance receivables[175](index=175&type=chunk) - Net cash used in financing activities **decreased by $31.8 million YoY**, primarily due to increased net advances on debt instruments, partially offset by higher common stock repurchases and debt issuance costs[176](index=176&type=chunk) [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures and explanations for the consolidated financial statements, covering business operations, accounting policies, and financial instruments [Note 1. Nature of Business](index=10&type=section&id=Note%201.%20Nature%20of%20Business) - The Company is engaged in the consumer finance business, offering large loans, small loans, and related insurance products, operating in 19 states under the name 'Regional Finance'[23](index=23&type=chunk) - The Company ceased accepting applications for retail loan products in November 2022 to focus on core loan portfolio growth, but continues to service existing retail loans[23](index=23&type=chunk)[117](index=117&type=chunk) - Loan volume and contractual delinquency follow seasonal trends, with demand highest in Q2-Q4 and lowest in Q1, and delinquencies generally rising in the second half of the year, though macroeconomic factors have impacted these trends[25](index=25&type=chunk)[123](index=123&type=chunk) [Note 2. Basis of Presentation and Significant Accounting Policies](index=10&type=section&id=Note%202.%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) - Financial statements are prepared in accordance with SEC regulations and GAAP for interim financial information, including normal recurring adjustments[26](index=26&type=chunk) - The Company consolidates Variable Interest Entities (VIEs) when it is the primary beneficiary, treating these transactions as secured borrowings, with pooled receivables and related debts remaining on the consolidated balance sheet[28](index=28&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk) - Key estimates susceptible to change include the allowance for credit losses, valuation of deferred tax assets/liabilities, and fair value of financial instruments[34](index=34&type=chunk) - Recent accounting pronouncements (ASU 2023-09 on income tax disclosures and ASU 2024-03 on expense disclosures) are being evaluated for their impact on consolidated financial statements[35](index=35&type=chunk)[36](index=36&type=chunk) [Note 3. Finance Receivables, Credit Quality Information, and Allowance for Credit Losses](index=13&type=section&id=Note%203.%20Finance%20Receivables%2C%20Credit%20Quality%20Information%2C%20and%20Allowance%20for%20Credit%20Losses) Net Finance Receivables by Loan Type (in thousands) | Loan Type | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :---------- | :----------------------------- | :------------------------------ | | Large loans | $1,345,825 | $1,336,780 | | Small loans | $543,824 | $554,686 | | Retail loans | $702 | $1,069 | | Total Net Finance Receivables | $1,890,351 | $1,892,535 | - The allowance for credit losses is estimated using a PD/LGD model, considering historical credit experience, current conditions, and reasonable economic forecasts, segmented by product type, FICO score, and delinquency status[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk) Allowance for Credit Losses (in thousands) | Metric | March 31, 2025 (in thousands) | March 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Beginning balance (Allowance for credit losses) | $199,500 | $187,400 | | Provision for credit losses | $57,992 | $46,423 | | Credit losses | $(61,709) | $(49,193) | | Recoveries | $3,317 | $2,470 | | Ending balance (Allowance for credit losses) | $199,100 | $187,100 | | Allowance as percentage of net finance receivables | 10.5% | 10.7% | Delinquency Status of Net Finance Receivables | Delinquency Category | March 31, 2025 | December 31, 2024 | | :------------------- | :-------------

Group 1 - Regional Management reported quarterly earnings of $0.70 per share, exceeding the Zacks Consensus Estimate of $0.67 per share, but down from $1.56 per share a year ago, representing an earnings surprise of 4.48% [1] - The company posted revenues of $152.97 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 0.94%, compared to $144.31 million in the same quarter last year [2] - Over the last four quarters, Regional Management has surpassed consensus EPS estimates four times, but has only topped consensus revenue estimates once [2] Group 2 - The stock has lost about 0.2% since the beginning of the year, while the S&P 500 has declined by 5.5% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to those expectations [4] - The current consensus EPS estimate for the coming quarter is $1.04 on revenues of $156.69 million, and for the current fiscal year, it is $4.71 on revenues of $640.74 million [7] Group 3 - The Zacks Industry Rank indicates that the Financial - Consumer Loans sector is currently in the top 22% of over 250 Zacks industries, suggesting a favorable outlook for stocks in this category [8] - The estimate revisions trend for Regional Management is currently favorable, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6]

Financial Data and Key Metrics Changes - The company reported a net income of $7 million and diluted EPS of $0.70 for Q1 2025, consistent with guidance but lower than Q1 2024 due to a special loan sale in the prior year [4][21] - The portfolio experienced a modest seasonal liquidation of $2 million, significantly lower than the $27 million decline in Q1 2024 [5] - Ending net receivables increased by 8% year over year, marking the fastest growth rate since 2023 [5] - Total revenue reached $153 million in Q1 2025, up 6% from the prior year, or 7.4% when adjusted for loan sale revenue benefits [25][26] Business Line Data and Key Metrics Changes - The auto secured loan portfolio grew by $59 million or 37% year over year, now representing 12% of the total portfolio [8][23] - The small loan portfolio increased by 11% year over year, with 18% of the portfolio carrying an APR greater than 36%, up from 16% a year ago [23] - New branches opened in September 2024 generated $1.5 million in revenue against $1.1 million in G&A expenses, demonstrating strong performance [7][30] Market Data and Key Metrics Changes - The company opened 15 new branches, 10 of which are in new markets, including California, Arizona, and Louisiana, all performing well [5][6] - The delinquency rate for the auto secured portfolio was 1.7%, the lowest among all products [24] Company Strategy and Development Direction - The company is focused on maintaining a tight credit box while pursuing growth through branch expansion and geographic diversification [12][14] - The barbell strategy emphasizes growth in high-quality auto secured loans and higher margin small loans [8][23] - The company aims for a minimum of 10% portfolio growth in 2025 despite economic uncertainties [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating economic uncertainties due to a strong credit box and capital reserves [15][19] - The company is closely monitoring macroeconomic conditions, including inflation and consumer behavior, to adjust strategies as needed [11][45] - Management expects net credit losses to decrease in the latter part of the year, contributing to improved net income [75] Other Important Information - The company has consented to CFPB supervision until January 2026 and has cooperated fully with the examination process, receiving no adverse findings [19] - The allowance for credit losses was $199 million, with a reserve rate of 10.5% as of the end of Q1 2025 [13][28] Q&A Session Summary Question: Long-term outlook on NIM - Management indicated that as fixed-rate funding matures, the cost of funds will increase, but higher margin business will help balance this [40][42] Question: Signs of consumer behavior changes - Management noted that consumer behavior remains stable, with no significant pull forward in spending observed [44][45] Question: Clarification on capital generation - Management explained that Q1 typically sees lower net income, but expects increases as the year progresses due to lower net credit losses and higher revenue [60][61] Question: Credit tightening context - Management stated that they apply stress factors in underwriting, varying by portfolio segment, rather than a uniform approach [64] Question: Guidance on expenses - Management provided Q2 guidance for G&A expenses at approximately $65.5 million, with increases expected as loan volumes rise [86] Question: Consumer spending patterns - Management observed that consumer spending is steady, with no signs of accelerated spending due to economic conditions [89]

Financial Data and Key Metrics Changes - The company reported a net income of $7 million and diluted EPS of $0.70 for Q1 2025, consistent with guidance but lower than Q1 2024 due to a prior year loan sale benefit [5][21] - Ending net receivables increased by 8% year over year, marking the fastest growth rate since 2023 [6] - Total revenue reached $153 million in Q1 2025, up 6% from the prior year, or 7.4% when adjusted for loan sale revenue benefits [25][26] Business Line Data and Key Metrics Changes - The auto secured loan portfolio grew by $59 million or 37% year over year, now representing 12% of the total portfolio [8][23] - The small loan portfolio increased by 11% year over year, with 18% of the portfolio carrying an APR greater than 36%, up from 16% a year ago [23][24] - Total originations reached record levels for Q1, up 20% year over year, with branch, direct mail, and digital originations increasing by 17%, 18%, and 46% respectively [22] Market Data and Key Metrics Changes - The thirty plus day delinquency rate was 7.1% at the end of Q1, flat year over year but improved by 60 basis points sequentially [26] - Net credit losses were $58.4 million, better than guidance by $1.6 million, with an annualized net credit loss rate of 12.4%, which is 90 basis points better year over year [26][27] Company Strategy and Development Direction - The company is focused on maintaining a tight credit box while pursuing growth through branch expansion, having opened 15 new branches in September 2024 [6][14] - The barbell strategy emphasizes growth in high-quality auto secured and higher margin small loan portfolios, which are expected to support customer graduation strategies [8][24] - The company aims for a minimum of 10% portfolio growth in 2025 despite economic uncertainties [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating economic uncertainties due to a strong credit box and capital reserves [15][19] - The company is closely monitoring macroeconomic conditions, including wage growth and inflation, which are favorable for its customer base [15][45] - Management anticipates a gradual improvement in delinquency rates and net credit losses in the upcoming quarters [27][28] Other Important Information - The company has consented to CFPB supervision for a two-year period ending in January 2026, with no adverse findings reported from recent examinations [19] - The effective tax rate for Q1 was 23.5%, with an expected increase to approximately 24.5% for Q2 [32] Q&A Session Summary Question: Long-term outlook on NIM - Management indicated that as fixed-rate funding matures, the cost of funds will increase, but higher margin business will help balance this [40][42] Question: Signs of consumer behavior changes - Management noted that consumer behavior remains stable, with no significant pull forward in spending observed [44][45] Question: Clarification on capital generation - Management explained that Q1 typically sees lower net income, but expects capital generation to increase as the year progresses [60] Question: Credit tightening context - Management applies different stress factors based on portfolio segments, indicating a nuanced approach to underwriting [64] Question: Guidance on expenses - Management provided Q2 expense guidance of approximately $65.5 million, with a focus on prudent expense control [86]