Regional Management(RM) - 2025 Q2 - Quarterly Report

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] Part I – Financial Information 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 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 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 | $5,873 | 1.6% | Consolidated Statements of Comprehensive Income Consolidated Statements of Comprehensive Income Highlights (Three Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | Change ($) | 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 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 | $362,951 | Consolidated Statements of Cash Flows Consolidated Cash Flow Highlights (Six Months Ended June 30) | Cash Flow Activity (in thousands) | 2025 | 2024 | Change ($) | 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] - 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 ($11.5 million increase)[18] Notes to Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the consolidated financial statements, covering the company's business nature, accounting policies, finance receivables, debt, equity, and other financial instruments, as well as commitments, contingencies, and segment reporting Note 1. Nature of Business - Regional Management Corp. (the "Company") is a consumer finance business offering large loans, small loans, and related insurance products, operating online and in 19 states as "Regional Finance" as of June 30, 2025[21] - Loan volume and contractual delinquency follow seasonal trends, with demand highest in Q2-Q4 (vacation, back-to-school, holiday spending) and lowest in Q1 (income tax refunds). Delinquencies typically rise in the second half of the year. Macroeconomic factors (inflation, higher interest rates, geopolitical conflict) have impacted these typical seasonal trends[23] Note 2. Basis of Presentation and Significant Accounting Policies - Financial statements are prepared in accordance with SEC regulations and GAAP for interim information, including normal recurring adjustments. They should be read in conjunction with the Annual Report on Form 10-K for December 31, 2024[24] - The Company consolidates Variable Interest Entities (VIEs) when it is the primary beneficiary, treating these transactions as secured borrowings where pooled receivables and related debts remain on the consolidated balance sheet[26][27][31] - Recent accounting pronouncements include ASU 2023-09 (income tax disclosures, effective after Dec 15, 2024) and ASU 2024-03 (expense disclosures, effective after Dec 15, 2026), with the Company currently evaluating their impact[34][35] Note 3. Finance Receivables, Credit Quality Information, and Allowance for Credit Losses Net Finance Receivables by Product (in thousands) | Product | June 30, 2025 | December 31, 2024 | Change ($) | 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][41][42] 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][58] Note 4. Restricted Available-for-Sale Investments 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] Note 5. Variable Interest Entities - 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] - 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][68] 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 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] - 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][206] - The Company was in compliance with all debt covenants as of June 30, 2025[75] Note 7. Stockholders' Equity - 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] 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 - 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][79][80][81] 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 - Interim income tax provisions are based on an estimated annual effective tax rate, with discrete tax benefits/deficiencies primarily from share-based awards[83] 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 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 - 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] 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][90][92][93][94] Note 12. Commitments and Contingencies - 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][105] - 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][104] Note 13. Segment Reporting - 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] 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 - 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] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 - 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] - 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] 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 - The Company continues to execute a "barbell strategy" balancing growth in higher-margin loan portfolios with growth in high-quality, auto-secured loans[114] - 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] - 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] - 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] Factors Affecting Our Results of Operations - 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] - 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] - Product mix influences credit risks and interest rates/fees, which vary by state due to competitive and regulatory environments[119] - 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][121][122] Components of Results of Operations - 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][125] - 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] - Other Income: Includes late charges, interest income from restricted cash, club membership commissions, and investment income from restricted AFS securities[127] - 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] - General and Administrative Expenses: Comprised of personnel (largest component), occupancy, marketing, and other expenses (legal, compliance, software, bank fees)[129][130][131][132][133] - Interest Expense: Paid and accrued interest for debt, unused line fees, and amortization of debt issuance costs[134] - Income Taxes: State and federal income taxes, with deferred tax assets/liabilities recognized for temporary differences[135] Results of Operations 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 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 $5,569 thousand[142] Three-Month Period Financial Performance Key Financial Performance (Three Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | Change ($) | 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][146][147] - 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][156] - 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 $0.8 million (12.4%) due to increased rent for new branches[157][158] Six-Month Period Financial Performance Key Financial Performance (Six Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | Change ($) | 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][172][181] - 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][167][168] - 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][175] - 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][179] Liquidity and Capital Resources - 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] 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] - 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][191][192] - 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][206] Critical Accounting Policies and Estimates - 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][197][198] - 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][202] - 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] Item 3. Quantitative and Qualitative Disclosures About Market Risk 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][206] 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] Item 4. Controls and Procedures 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][209] - No material changes in internal control over financial reporting were identified during the period covered by the report[210] Part II – Other Information 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 - 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] Item 1A. Risk Factors - 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] Item 5. Other Information - 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] Item 6. Exhibits - 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] 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][220]