[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]

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]

Financial Performance - Net income for Q1 2025 was $7.0 million, with diluted earnings per share of $0.70, reflecting a decrease compared to Q1 2024 due to prior-year loan sales[6] - Record first quarter revenue reached $153 million, an increase of 6.0% year-over-year, primarily driven by growth in average net finance receivables[7] - Total revenue for Q1 2025 was $152.967 million, an increase of 6.0% compared to $144.308 million in Q1 2024[26] - Net income decreased to $7.007 million in Q1 2025, down 53.9% from $15.205 million in Q1 2024[26] - Interest and fee income for Q1 25 was $136,553,000, a decrease of $1,693,000 QoQ but an increase of $7,735,000 YoY[34] Credit and Delinquency Metrics - The net credit loss rate for Q1 2025 was 12.4%, improving 120 basis points year-over-year after adjusting for prior-year loan sale impacts[4] - Provision for credit losses for Q1 2025 was $58.0 million, a 24.9% increase from the prior-year period, driven by portfolio growth[7] - Net credit losses rose to $58,392 million in 1Q 25, compared to $50,226 million in 4Q 24 and $46,723 million in 1Q 24, indicating a year-over-year increase of 24.9%[32] - The percentage of net credit losses to average net finance receivables increased to 12.4% in 1Q 25 from 10.8% in 4Q 24 and 10.6% in 1Q 24[32] - Total delinquency rate was 7.1% in 1Q 25, down from 7.7% in 4Q 24, remaining consistent with 7.1% in 1Q 24[33] Asset and Liability Overview - Total assets grew to $1.900 billion, an increase of 8.2% from $1.756 billion in Q1 2024[28] - Total liabilities increased to $1.543 billion, an 8.6% rise from $1.420 billion in Q1 2024[28] - The debt level in Q1 25 was $1,477,860,000, a decrease of $476,000 QoQ and an increase of $119,065,000 YoY[34] Branch and Customer Growth - The company opened 15 new branches since September 2024, with 10 new branches in entirely new markets contributing to rapid growth[8] - Customer accounts increased by 6.4% year-over-year, indicating strong customer acquisition and retention[7] - The number of branches increased to 353, representing a 2.6% growth from 344 branches in the previous quarter[30] Credit Loss Allowance and Expenses - The allowance for credit losses stood at $199,100 million in 1Q 25, consistent with 10.5% of total net finance receivables[33] - General and administrative expenses increased to $66,043 million in 1Q 25, representing 43.2% of total revenue, up from 41.8% in 4Q 24[32] Dividend Declaration - A dividend of $0.30 per common share was declared for Q2 2025, to be paid on June 11, 2025[10]

Financial Performance - Net income was $7 million, and diluted EPS was $0.70, lower than 1Q 24 due to the prior-year benefit from the sale of certain non-performing loans in 4Q 23[18] - Total revenue reached a record $153 million for a first quarter, up 6% year-over-year, or 7.4% after adjusting for the $1.9 million revenue increase in 1Q 24 from the 4Q 23 loan sale[18] - Provision for credit losses increased by $11.6 million, or 24.9%[18] Portfolio Growth and Composition - Net Finance Receivables reached $1.89 billion, an increase of $146 million or 8.4% year-over-year[9] - Total originations for the first quarter were a record $392.1 million, up 20.2% from $326.4 million in 1Q 24[10, 21] - The company achieved year-over-year portfolio growth of $146 million, or 8.4%[24] Credit Quality and Delinquency - 30+ Delinquency Rate was 7.1%, a 60 bps improvement from 4Q 24[12] - Net Credit Loss Rate was 12.4%, a 120 bps improvement after adjusting for the 4Q 23 loan sale and growth in the higher-margin portfolio[12] Operating Efficiency and Funding - The operating expense ratio was 14%[11] - Unused capacity stood at $641 million, providing substantial bandwidth to fund growth[14] - Fixed-rate debt represented 90% of total debt, with a WAC of 4.4% and a revolving duration of 1.4 years[14]

Core Viewpoint - The article emphasizes the importance of value investing and highlights Regional Management (RM) as a potentially undervalued stock based on various financial metrics [2][7]. Company Analysis - Regional Management (RM) has a Zacks Rank of 2 (Buy) and an A for Value, indicating strong potential for value investors [4]. - The stock is currently trading at a P/E ratio of 5.41, significantly lower than the industry average of 7.74 [4]. - RM's Forward P/E has fluctuated between 4.88 and 8.34 over the past 12 months, with a median of 5.82 [4]. - The company has a P/B ratio of 0.77, which is also lower than the industry average of 0.93, indicating solid valuation [5]. - RM's P/B ratio has ranged from 0.70 to 1.05 in the past year, with a median of 0.89 [5]. - The P/S ratio for RM is 0.47, compared to the industry's average of 1.19, further suggesting undervaluation [6]. Investment Outlook - The combination of RM's low valuation metrics and strong earnings outlook positions it as a compelling value stock for investors [7].

Financial Performance - Total finance receivables grew by 67.0% from $1.1 billion in 2019 to $1.9 billion in 2024, with a CAGR of 10.8%[32] - Revenue increased by 65.4% from $355.7 million in 2019 to $588.5 million in 2024, with a CAGR of 10.6%[32] - Insurance income contributed $40.7 million, $44.5 million, and $43.5 million to total revenue in 2024, 2023, and 2022, respectively[23] - Insurance income, net for 2024 was $40.7 million, representing 6.9% of total revenue[51] - The operating expense ratio decreased from 15.6% in 2019 to 13.8% in 2024, indicating improved expense management[40] Loan Portfolio - As of December 31, 2024, the company had 259,500 large loans outstanding, representing $1.3 billion in finance receivables, with an average of approximately $5,200 per loan[23] - The total number of large loans as of December 31, 2024, was 259,506, with net finance receivables totaling $1,336,780,000[48] - The total number of small loans as of December 31, 2024, was 314,875, with net finance receivables totaling $554,686,000[50] - In 2024, the company refinanced over 25,000 small loans into large loans, representing $147.8 million in finance receivables at origination, reducing average APR from 42.8% to 31.1%[25] - The average originated principal balance for large loans in 2024 was $6,001 with a weighted-average term of 50 months, yielding an average interest and fee yield of 26.4%[46] - The average originated principal balance for small loans in 2024 was $2,144 with a weighted-average term of 26 months, yielding an average interest and fee yield of 37.6%[50] Regulatory Environment - The company faces risks related to regulatory compliance, which could impose significant costs and operational constraints[189] - Changes in consumer protection laws could affect the enforceability of personal loans, impacting the company's financial condition[191] - The company may encounter unexpected regulatory difficulties when expanding into new markets, potentially inhibiting growth[196] - Increased scrutiny from regulatory bodies could lead to civil penalties and increased compliance costs, affecting profitability[197] - The regulatory environment has become more complex post-2008 financial crisis, which could adversely impact business operations[198] - Proposed legislation could impose a 36% interest rate cap on consumer loans, potentially adversely affecting the company's business and operations[202] - The company may face increased costs and reduced profitability due to new laws and regulations limiting interest and fees charged on loans[203] - Local zoning regulations are increasingly restricting the locations where consumer finance companies can operate, which may hinder the company's expansion efforts[204] - The Dodd-Frank Act has created regulatory uncertainty that could negatively impact the company's financial condition and operations[206] - The CFPB has established supervisory authority over the company for two years, which may increase compliance costs and affect product offerings[209] - The CFPB can impose significant monetary penalties for violations, ranging from $7,217 to $1,443,275 per day depending on the severity of the violation[210] - The company is subject to increased regulatory scrutiny regarding the sale of charged-off loans, which could expose it to legal action and losses[213] - Compliance with consumer privacy and data protection laws may lead to higher operational costs for the company[220] Operational Strategy - The company operates 344 branches across 19 states as of December 31, 2024, with nearly 73% of loan originations facilitated by these branches[27][29] - The company plans to continue expanding its geographic presence and enhancing its digital capabilities to attract more customers[34][36] - The company has invested in customizing the Nortridge platform for loan origination and servicing, enhancing operational efficiency[71] - The company plans to continue investing in credit and collections functions to manage credit risk and improve underwriting capabilities[39] Market Trends - Digital channels accounted for over 27% of total new customer volumes in 2024, compared to nearly 29% in 2023[36] - Loan demand is typically highest during the second, third, and fourth quarters, influenced by seasonal spending patterns[74] - The consumer finance industry is highly fragmented, with competition based on price, loan product offerings, and customer service quality[73] Employee and Payment Trends - As of December 31, 2024, the company had 2,131 employees, all located in the United States[63] - In 2024, approximately 83% of customer payments were made via debit card or ACH, indicating a strong preference for electronic payment methods[67] - The company offers temporary loan modifications in 2024, allowing for reduced payments and limited interest forgiveness over a three-month period[69] Stockholder Information - The Board declared a quarterly cash dividend of $0.30 per share, with intentions to continue paying dividends in the foreseeable future, subject to various economic and financial conditions[222] - Approximately 985 million shares of common stock are authorized but unissued as of February 19, 2025, with 588,865 shares available for issuance under the 2024 Plan[223] - The maximum aggregate number of shares that may be issued under the 2024 Plan is capped at 381,000 shares plus any remaining shares from the 2015 Plan[223] - Anti-takeover provisions in the company's charter documents may discourage or delay acquisition attempts that stockholders might find favorable[224] - Delaware law provisions may impair takeover attempts that stockholders may deem beneficial, potentially affecting the trading price of common stock[225] - Non-employee directors may pursue acquisition opportunities that could conflict with the company's interests, potentially impacting business prospects[226] - The company has the authority to issue undesignated preferred stock without stockholder approval, which may include superior rights compared to common stock[227] - Stockholder actions require meetings rather than written consent, and amendments to bylaws require approval from 80% of outstanding shares[227] Economic Conditions - The U.S. annual inflation rate was 2.9% for the twelve months ended December 31, 2024, remaining above the Federal Reserve Board's target of 2.0%[181] - Inflation hit a 40-year high of 9.1% in June 2022, indicating significant economic volatility[181] - The Federal Reserve Board increased interest rates materially in 2022 and 2023, with a potential for further adjustments in 2025 depending on economic conditions[181] - Economic downturns generally lead to increased credit losses and decreased demand for credit products, impacting financial performance[182] Legal and Public Perception Risks - The company faces potential adverse effects from media and public perception regarding installment loans, which could impact stock price and borrower relationships[217] - Legal proceedings could result in significant liabilities and affect the company's financial condition and operations[218] - The market price of the company's common stock has been highly volatile, which could lead to significant fluctuations in value despite operating performance[221]

Core Viewpoint - Regional Management Corp. (RM) reported a mixed performance in its fourth-quarter 2024 results, with earnings exceeding expectations but impacted by high credit loss provisions and increased personnel costs [1][2]. Financial Performance - Adjusted earnings per share (EPS) for Q4 2024 were 98 cents, surpassing the Zacks Consensus Estimate by 11.4%, compared to a loss of 80 cents per share in the same quarter last year [2]. - Total revenues increased by 9.3% year over year to $154.8 million, beating the consensus estimate by 1.8% [2]. - Interest and fee income rose 9.6% year over year to $138.2 million, exceeding the Zacks Consensus Estimate of $136.6 million [3]. - Net insurance income grew 7.3% year over year to $11.8 million, surpassing the consensus mark of $10.8 million [3]. - Provision for credit losses increased by 16.3% year over year to $57.6 million [3]. - General and administrative expenses totaled $64.6 million, a slight increase of 0.2% year over year, primarily due to higher personnel costs [4]. - The efficiency ratio improved by 390 basis points year over year to 41.8% [4]. - Net income for the quarter was $9.9 million, compared to a loss of $7.6 million in the prior-year quarter [4]. Loan and Asset Growth - Net finance receivables reached $1.9 billion at the end of Q4, reflecting a year-over-year growth of 6.8% [5]. - Small loans increased by 12.4% year over year to $554.7 million, while large loans rose by 4.9% to $1.3 billion [5]. - Total loan originations for the December quarter were $475.9 million, marking a 16.7% year-over-year improvement [5]. Financial Position - As of December 31, 2024, cash balance was $4 million, down 12.4% year over year [6]. - Total assets increased by 6.4% year over year to $1.9 billion [6]. - Net debt rose by 5.5% year over year to $1.5 billion, with total liabilities growing by 5.4% to $1.6 billion [6]. - Total shareholders' equity advanced by 10.8% year over year to $357.1 million [6]. Dividend Announcement - For Q1 2025, Regional Management announced a dividend of 30 cents per share, payable on March 13, 2025, to shareholders of record as of February 20 [7]. Full-Year Results - In 2024, total revenues increased by 6.7% to $588.5 million, with adjusted EPS of $4.14 more than doubling year over year [9]. Outlook - Management targets at least 10% portfolio growth and a significant increase in net income for 2025 [10]. - General and administrative expenses for Q1 2025 are expected to be between $65 million and $65.5 million, while interest expenses are estimated to be between $20 million and $20.5 million [10]. - A decrease of 90 basis points in total revenue yield is anticipated for Q1, with net credit losses expected to be around $60 million [11].