Regional Management Corp. Announces First Quarter 2025 Results

- Net income of $7.0 million and diluted earnings per share of $0.70 -

- Record first quarter originations were up 20.2% from prior year, contributing to $146 million, or 8.4%, of year-over-year portfolio growth -

- Record first quarter revenue was up 6.0% year-over-year, or 7.4% on an adjusted basis -

- Improving credit performance, with 30+ day contractual delinquency rate of 7.1%, down 60 basis points sequentially -

Regional Management Corp. (NYSE:RM), a diversified consumer finance company, today announced results for the first quarter ended March 31, 2025.

"We are very pleased with how we have begun the new year," said Robert W. Beck, President and Chief Executive Officer of Regional Management Corp. "We delivered $7.0 million of net income and 70 cents of diluted EPS in the first quarter, with record first quarter revenue of $153 million. We experienced relatively low seasonal liquidation of $2 million in the quarter — compared to a $27 million portfolio decline in the first quarter of last year — thanks to our recent growth initiatives, including opening 15 new branches since September. We generated record first quarter originations while maintaining our tightened credit box, and ending net receivables were up 8.4% year-over-year — our fastest year-over-year growth rate since 2023."

"Our new branches opened over the last several months are performing very well and growing rapidly, demonstrating the power of our branch-based model and our ability to grow through branch and geographic expansion without needing to open the credit box," added Mr. Beck. "We also continue to experience strong results from our barbell strategy of growth in our high-quality, auto-secured and higher-margin, small loan portfolios. These portfolios have strong margins and support our customer graduation strategy. We will continue to monitor the economic environment and expect to lean further into growth in the second half of the year."

"On the credit front, our portfolio continues to perform well," said Mr. Beck. "Our first quarter net credit loss rate of 12.4% was better than our expectations and 120 basis points better than the prior-year period after adjusting for prior-year loan sale impacts and the growth in our higher-margin portfolio. Our front book now makes up 92% of our total portfolio, is performing in line with our expectations, and has a 30+ day contractual delinquency rate of 6.8%, compared to 10.0% in the back book portfolio. As we evaluate our quarterly and annual loss curves, we are observing consistent and meaningful improvements in loss performance within the front book vintages across all months on book."

"Looking ahead, we will continue to carefully monitor economic conditions, making adjustments to our growth and underwriting strategies where advisable to further improve credit, margin, and bottom-line outcomes," continued Mr. Beck. "As always, we will manage the business prudently and in a way that appropriately balances portfolio growth and credit risk, as well as short- and long-term capital generation and returns for our shareholders."

First Quarter 2025 Highlights

• Net income for the first quarter of 2025 was $7.0 million and diluted earnings per share was $0.70, lower than the first quarter of 2024 due to the benefit in the prior-year period of the sale of certain non-performing loans during the fourth quarter of 2023.
• Net finance receivables as of March 31, 2025 were $1.9 billion, an increase of $146.1 million, or 8.4%, from the prior-year period, driven by receivables growth in 15 new branches opened since the beginning of September 2024 and strong execution of the company's barbell strategy, which balances growth in higher-quality, auto-secured products with growth in the higher-margin small loan portfolio.
  • Low seasonal portfolio liquidation of $2 million sequentially, compared to a $27 million portfolio liquidation in the first quarter of 2024.
  • Record first quarter originations of $392.1 million, up 20.2% from the prior-year period, while maintaining conservative underwriting criteria.
  • Large loan net finance receivables of $1.3 billion increased $95.2 million, or 7.6%, from the prior-year period and represented 71.2% of the total loan portfolio, compared to 71.7% in the prior-year period.
  • Small loan net finance receivables of $543.8 million increased $53.0 million, or 10.8%, from the prior-year period and represented 28.8% of the total loan portfolio, compared to 28.1% in the prior-year period.
  • Auto-secured net finance receivables of $218.7 million increased $59.0 million, or 37.0%, from the prior-year period and represented 11.6% of the total loan portfolio, compared to 9.2% in the prior-year period.
  • Net finance receivables with annual percentage rates (APRs) above 36% increased by 20.6% year-over-year and now represent 18.3% of the portfolio, up from 16.4% in the prior-year period, driven by the increase in the higher-margin small loan portfolio.
  • Customer accounts increased by 6.4% from the prior-year period.
• Record first quarter total revenue of $153.0 million, an increase of $8.7 million, or 6.0%, from the prior-year period, primarily due to growth in average net finance receivables.
  • Total revenue increased by 7.4% year-over-year after adjusting the prior-year period for the revenue benefit from the sale of certain non-performing loans during the fourth quarter of 2023.
  • Total revenue yield for the first quarter of 2025 was 32.4%, compared to 32.8% in the prior-year period, which was inclusive of an estimated 50 basis point benefit from the fourth quarter 2023 non-performing loan sale.
  • Total revenue yield and interest and fee yield each increased 10 basis points from the prior-year period after adjusting for the estimated 50 basis point benefit to yield in the prior-year period from the fourth quarter 2023 non-performing loan sale.
• Provision for credit losses for the first quarter of 2025 was $58.0 million, an increase of $11.6 million, or 24.9%, from the prior-year period, driven by portfolio growth.
  • The net credit loss rate (annualized net credit losses as a percentage of average net finance receivables) for the first quarter of 2025 was 12.4%, a 180 basis point increase compared to 10.6% in the prior-year period.
  • The first quarter 2024 net credit loss rate is inclusive of an estimated 270 basis point benefit from the sale of certain non-performing loans, which accelerated credit losses during the fourth quarter of 2023. The first quarter 2025 net credit loss rate improved 120 basis points year-over-year after adjusting for the prior-year period loan sale (90 basis points) and the year-over-year growth in our higher-margin portfolio (30 basis points).
  • The allowance for credit losses was $199.1 million as of March 31, 2025, or 10.5% of net finance receivables, compared to 10.7% in the prior-year period. The provision for credit losses for the first quarter of 2025 included a reserve decrease of $0.4 million, primarily due to portfolio liquidation occurring during the first quarter of 2025.
• As of March 31, 2025, 30+ day contractual delinquencies totaled $134.0 million, or 7.1% of net finance receivables, a 60 basis point improvement sequentially and consistent with the prior-year period.
  • The total portfolio delinquency rate (delinquent loans outstanding as a percentage of ending net finance receivables) improved 20 basis points from the prior-year period after adjusting for the impact of growth in the higher-margin portfolio (10 basis points) and the carryover impact of the 2024 hurricane events (10 basis points).
  • The delinquency rate of the large loan portfolio was 5.9% as of the end of the first quarter of 2025, a 30 basis point improvement from the prior-year period.
  • The delinquency rate of the small loan portfolio was 10.0% as of the end of the first quarter of 2025, a 70 basis point increase from the prior-year period, reflecting growth in the higher-margin portfolio.
• General and administrative expenses for the first quarter of 2025 were $66.0 million, an increase of $5.6 million from the prior-year period. The operating expense ratio (annualized general and administrative expenses as a percentage of average net finance receivables) for the first quarter of 2025 was 14.0%, consistent sequentially and a 30 basis point increase from 13.7% in the prior-year period.
  • Year-over-year increase in general and administrative expenses primarily driven by $1.7 million of incentive expenses shifting from the second quarter to the first quarter of 2025 and by investment in growth, which includes $1.9 million of expense associated with 17 new branches opened since the prior-year period and roughly $0.6 million of incremental marketing expense in legacy markets.
  • Incentive expense timing negatively impacted the first quarter 2025 operating expense ratio by 40 basis points. The operating expense ratio was 10 basis points better year-over-year after adjusting for the incentive expense timing, despite adding 17 new branches in the network since the prior-year period.
  • The 17 new branches added since the prior-year period had $3.6 million of revenue in the first quarter of 2025 against $1.9 million of general and administrative expenses.
• The company opened 10 new branches in the first quarter of 2025 in California, Mississippi, Louisiana, and Arizona.
  • Opened 15 new branches since the beginning of September 2024, of which 10 are in entirely new markets in California, Arizona, and Louisiana.
  • As of the end of the first quarter, the 10 new market branches had been open for an average of roughly two months and had an average portfolio balance of $2.2 million, with the largest of the branches achieving $7.0 million of receivables in less than three months. In the first quarter, these 10 branches generated $1.5 million of revenue against $1.1 million of general and administrative expenses.
• In the first quarter of 2025, the company repurchased 186,990 shares of its common stock at a weighted-average price of $34.56 per share under the company's $30 million stock repurchase program.
• Received notification from the Consumer Financial Protection Bureau in April 2025 that it closed its examination of the company without any adverse finding.

Second Quarter 2025 Dividend

The company's Board of Directors has declared a dividend of $0.30 per common share for the second quarter of 2025. The dividend will be paid on June 11, 2025 to shareholders of record as of the close of business on May 21, 2025. The declaration and payment of any future dividend is subject to the discretion of the Board of Directors and will depend on a variety of factors, including the company's financial condition and results of operations.

Liquidity and Capital Resources

As of March 31, 2025, the company had net finance receivables of $1.9 billion and debt of $1.5 billion. The debt consisted of:

• $140.8 million on the company's $355 million senior revolving credit facility,
• $1.3 billion through the company's asset-backed securitizations.

As of March 31, 2025, the company's unused capacity to fund future growth on its revolving credit facilities (subject to the borrowing base) was $641 million, or 82.1%, and the company had available liquidity of $129.3 million, including unrestricted cash on hand and immediate availability to draw down cash from its revolving credit facilities. As of March 31, 2025, the company's fixed-rate debt as a percentage of total debt was 90%, with a weighted-average coupon of 4.4% and a weighted-average revolving duration of 1.4 years.

In March, the company closed a $265 million asset-backed securitization transaction at a weighted-average coupon of 5.3%, a 90-basis point improvement over the company's second quarter 2024 securitization transaction. The Class A notes of the securitization received a top rating of "AAA" from Standard & Poor's and Morningstar DBRS. The company used a portion of the proceeds from the securitization to pay down variable rate debt facilities, as well as pay off notes from its September 2020 securitization.

The company had a funded debt-to-equity ratio of 4.1 to 1.0 and a stockholders' equity ratio of 18.8%, each as of March 31, 2025. On a non-GAAP basis, the company had a funded debt-to-tangible equity ratio of 4.5 to 1.0, as of March 31, 2025. Please refer to the reconciliations of non-GAAP measures to comparable GAAP measures included at the end of this press release.

Conference Call Information

Regional Management Corp. will host a conference call and webcast today at 5:00 PM ET to discuss these results.

The dial-in number for the conference call is (877) 407-0752 (toll-free) or (201) 389-0912 (international). Please dial the number 10 minutes prior to the scheduled start time.

*** A supplemental slide presentation will be made available on Regional's website prior to the earnings call at www.RegionalManagement.com. ***

In addition, a live webcast of the conference call will be available on Regional's website at www.RegionalManagement.com.

A webcast replay of the call will be available at www.RegionalManagement.com for one year following the call.

About Regional Management Corp.

Regional Management Corp. (NYSE:RM) is a diversified consumer finance company that provides attractive, easy-to-understand installment loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies, and other lenders. Regional Management operates under the name "Regional Finance" online and in branch locations in 19 states across the United States. Most of its loan products are secured, and each is structured on a fixed-rate, fixed-term basis with fully amortizing equal monthly installment payments, repayable at any time without penalty. Regional Management sources loans through its multiple channel platform, which includes branches, centrally managed direct mail campaigns, digital partners, and its consumer website. For more information, please visit www.RegionalManagement.com.

Forward-Looking Statements

This press release may contain various "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact but instead represent Regional Management Corp.'s expectations or beliefs concerning future events. Forward-looking statements include, without limitation, statements concerning financial outlooks or future plans, objectives, goals, projections, strategies, events, or performance, and underlying assumptions and other statements related thereto. Words such as "may," "will," "should," "likely," "anticipates," "expects," "intends," "plans," "projects," "believes," "estimates," "outlook," and similar expressions may be used to identify these forward-looking statements. Such forward-looking statements speak only as of the date on which they were made and are about matters that are inherently subject to risks and uncertainties, many of which are outside of the control of Regional Management. As a result, actual performance and results may differ materially from those contemplated by these forward-looking statements. Therefore, investors should not place undue reliance on forward-looking statements.

Factors that could cause actual results or performance to differ from the expectations expressed or implied in forward-looking statements include, but are not limited to, the following: managing growth effectively, implementing Regional Management's growth strategy, and opening new branches as planned; Regional Management's convenience check strategy; Regional Management's policies and procedures for underwriting, processing, and servicing loans; Regional Management's ability to collect on its loan portfolio; Regional Management's insurance operations; exposure to credit risk and repayment risk, which risks may increase in light of adverse or recessionary economic conditions; the implementation of evolving underwriting models and processes, including as to the effectiveness of Regional Management's custom scorecards; changes in the competitive environment in which Regional Management operates or a decrease in the demand for its products; the geographic concentration of Regional Management's loan portfolio; the failure of third-party service providers, including those providing information technology products; changes in economic conditions in the markets Regional Management serves, including levels of unemployment and bankruptcies; the ability to achieve successful acquisitions and strategic alliances; the ability to make technological improvements as quickly as competitors; security breaches, cyber-attacks, failures in information systems, or fraudulent activity; the ability to originate loans; reliance on information technology resources and providers, including the risk of prolonged system outages; changes in current revenue and expense trends, including trends affecting delinquencies and credit losses; any future public health crises, including the impact of such crisis on our operations and financial condition; changes in operating and administrative expenses; the departure, transition, or replacement of key personnel; the ability to timely and effectively implement, transition to, and maintain the necessary information technology systems, infrastructure, processes, and controls to support Regional Management's operations and initiatives; changes in interest rates; existing sources of liquidity may become insufficient or access to these sources may become unexpectedly restricted; exposure to financial risk due to asset-backed securitization transactions; risks related to regulation and legal proceedings, including changes in laws or regulations or in the interpretation or enforcement of laws or regulations; changes in accounting standards, rules, and interpretations and the failure of related assumptions and estimates; the impact of changes in tax laws and guidance, including the timing and amount of revenues that may be recognized; risks related to the ownership of Regional Management's common stock, including volatility in the market price of shares of Regional Management's common stock; the timing and amount of future cash dividend payments; and anti-takeover provisions in Regional Management's charter documents and applicable state law.

The foregoing factors and others are discussed in greater detail in Regional Management's filings with the Securities and Exchange Commission. Regional Management will not update or revise forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events or the non-occurrence of anticipated events, whether as a result of new information, future developments, or otherwise, except as required by law. Regional Management is not responsible for changes made to this document by wire services or Internet services.

Non-GAAP Financial Measures

In addition to financial measures presented in accordance with generally accepted accounting principles ("GAAP"), this press release contains certain non-GAAP financial measures. The company's management utilizes non-GAAP measures as additional metrics to aid in, and enhance, its understanding of the company's financial results. Tangible equity and the funded debt-to-tangible equity ratio are non-GAAP measures that adjust GAAP measures to exclude intangible assets. Management uses these equity measures to evaluate and manage the company's capital and leverage position. The company also believes that these equity measures are commonly used in the financial services industry and provide useful information to users of the company's financial statements in the evaluation of its capital and leverage position.

This non-GAAP financial information should be considered in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. In addition, the company's non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies. The following tables provide a reconciliation of GAAP measures to non-GAAP measures.

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Investor Relations

Garrett Edson, (203) 682-8331

[email protected]