Regional Management (RM) Q1 2025 Earnings Call April 30, 2025 05:00 PM ET Company Participants Garrett Edson - Managing DirectorRobert Beck - President & CEOHarp Rana - EVP, Chief Financial & Administrative OfficerKyle Joseph - Managing DirectorDavid Scharf - Managing DirectorJohn Rowan - Managing DirectorAlexander Villalobos-Morsink - Senior Associate Equity Research Operator Greetings, and welcome to the Regional Management First Quarter twenty twenty five Earnings Call. At this time, all participants are ...

Regional Management (RM) Q1 2025 Earnings Call April 30, 2025 05:00 PM ET Company Participants Garrett Edson - Managing DirectorRobert Beck - President & CEOHarp Rana - EVP, Chief Financial & Administrative OfficerKyle Joseph - Managing DirectorDavid Scharf - Managing DirectorJohn Rowan - Managing DirectorAlexander Villalobos-Morsink - Senior Associate Equity Research Operator Greetings, and welcome to the Regional Management First Quarter twenty twenty five Earnings Call. At this time, all participants are ...

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 [4][20] - 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 [24] 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 [7] - 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 [22] - New branches opened in September 2024 generated $1.5 million in revenue against $1.1 million in G&A expenses, demonstrating strong performance [6] Market Data and Key Metrics Changes - The company opened 15 new branches, 10 of which are in new markets, and these branches are performing well with an average portfolio balance of $2.2 million [5][6] - The thirty plus day delinquency rate was 7.1%, flat year over year, but improved by 20 basis points when adjusted for the impact of growth in higher margin portfolios [9][25] Company Strategy and Development Direction - The company aims for a minimum of 10% portfolio growth in 2025 despite economic uncertainties, supported by a conservative credit box and strong capital generation [12][33] - The barbell strategy focuses on growth in high-quality auto secured and higher margin small loan portfolios, which are expected to continue performing well [7][22] - The company is prepared to tighten credit further if necessary, having already entered a potential downturn with a tightened credit box [11][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating economic uncertainties due to a strong credit performance and a conservative underwriting approach [12][13] - The company is closely monitoring macroeconomic conditions, including inflation and consumer behavior, to adjust strategies as needed [10][45] - Management highlighted the resilience of their customer base, supported by wage growth and job availability [13][45] Other Important Information - The company generated $9.9 million in total capital in Q1 2025, with total capital generation since 2020 amounting to $339 million [17] - The allowance for credit losses was $199 million, with a reserve rate of 10.5%, expected to decline to 10.3% in Q2 2025 [12][27] - The company declared a dividend of $0.30 per share for Q2 2025, with a share repurchase program in place [33] 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 balance this [39][40] Question: Changes in consumer behavior - Management noted that consumer credit results are tracking as expected, with no significant changes in demand or payment behavior observed [44][45] Question: Guidance on expenses - Management provided Q2 guidance of approximately $65.5 million in G&A expenses, with increases expected as loan volumes rise [28][85] Question: Clarification on capital generation - Management explained that Q1 capital generation was lower due to seasonal factors, with expectations for improvement as the year progresses [58][59] Question: Credit box tightening - Management confirmed that they apply stress factors in underwriting, adjusting based on portfolio risk, rather than a uniform tightening approach [62][63]

1Q 25 Earnings Presentation April 30, 2025 Legal Disclosures 575,000 Customer Accounts Up 6.4% YoY $1.89 billion Net Finance Receivables Up $146MM or 8.4% YoY 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 ...