Regional Management's Q1 Earnings Beat Estimates, Stock Dips 11.6%

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]