Regional Management (NYSE:RM) reported strong fourth-quarter and full-year 2025 results, driven by portfolio growth, improving credit trends, and operating leverage, while executives outlined priorities for 2026 that include continued branch expansion, a focus on auto-secured lending, and ongoing investments in technology and analytics.
Leadership transition and strategic focus
President and CEO Lakhbir Lamba said the call marked his first earnings call in the role and that he has spent his initial months meeting teams and reviewing the economics of the business across customer, product, risk, and market segments “with an eye towards opportunities to grow net income and increase risk-adjusted returns.” He also thanked outgoing leader Rob for building what he called a strong platform.
- Portfolio growth, with particular emphasis on the auto-secured product
- Expanding the branch footprint in attractive markets
- Investments in people, technology, data and analytics, and credit risk management to improve the digital origination and servicing journey
- Improving profitability at the branch and state level, including monitoring first payment default trends, sales productivity, operating expenses, and risk-adjusted yields
Fourth-quarter performance topped guidance
Management said the company delivered a strong finish to 2025, with fourth-quarter net income of $12.9 million, or $1.30 in diluted earnings per share, up 33% year-over-year. Lamba said the result exceeded guidance even though the company recorded a larger provision for credit losses tied to stronger-than-expected portfolio growth.
Executives highlighted record quarterly revenue as net receivables continued to expand. In the quarter, net receivables increased by $87 million, supported by origination strength across channels and what management described as healthy customer demand.
Chief Financial and Administrative Officer Harp Rana said fourth-quarter originations were a record $537 million, up 13% year-over-year, driven by digital leads, the auto-secured product, and the 17 de novo branches opened over the past 12 months. Total revenue rose to a record $170 million, up 10% year-over-year, though total revenue yield and interest and fee yield declined sequentially to 32.5% and 29.3%, respectively, due to seasonality and product mix.
Full-year 2025 results: portfolio growth and operating leverage
For the full year, Regional generated net income of $44.4 million, up 8% from 2024 and toward the upper end of the company’s prior guidance range, management said. Ending net receivables rose $248 million, or 13% year-over-year, consistent with the company’s stated target of at least 10% growth for 2025. The loan portfolio ended the year at $2.1 billion.
Rana said full-year originations totaled $2.0 billion, a 19% increase from 2024, and that ending net receivables per branch averaged $6.1 million.
On expenses, Lamba said the company maintained discipline while continuing to invest. The annualized operating expense ratio was 12.4% in the fourth quarter—an “all-time best”—improving 160 basis points versus the prior-year period. For the full year, the operating expense ratio was 13.1%, improving 70 basis points year-over-year.
Credit metrics improved; seasonal dynamics expected in Q1
Management pointed to improving credit performance. The 30+ day delinquency rate at quarter end was 7.5%, improving 20 basis points year-over-year. On an adjusted basis, the fourth-quarter annualized net credit loss rate improved by 30 basis points year-over-year, and the full-year net credit loss rate improved by 70 basis points compared to the prior year, reflecting tighter underwriting, enhanced credit risk management, and investments in data and analytics.
Rana said the allowance for credit losses increased by $8.9 million in the quarter to support portfolio growth, while the allowance rate held steady at 10.3%, which was 20 basis points better than the prior-year period.
Looking to the first quarter, both executives emphasized normal seasonality. Lamba said the company typically sees a sequential net credit loss rate increase of roughly 150 basis points in the first quarter, and that results can be sensitive to payment and credit behavior driven by tax refunds. Rana added that first-quarter yields are expected to decline sequentially due to seasonal interest accrual reversals associated with net credit losses and the tax-season runoff of smaller, higher-yielding loans.
2026 outlook: growth targets, tax refund impacts, and capital returns
For 2026, management guided to ending net receivables growth of at least 10% and net income growth of 20% to 25%. Rana said the company expects net income to be “meaningfully higher” in the second half of 2026 than the first half, consistent with its seasonal patterns driven by credit performance, balance sheet growth, and operating leverage.
Both executives discussed the expected impact of higher tax refunds tied to the “One Big Beautiful Bill Act,” which they said could reduce balances through debt paydowns and improve collections and delinquencies in the first quarter. Rana said the company anticipates ending net receivables could contract sequentially in the first quarter—potentially more than typical seasonal trends—before demand strengthens after tax season.
In the Q&A, Lamba discussed a bank partnership capability under development, saying it could improve speed to market, expand digital reach, support product uniformity across states, help address regulatory limitations in certain states, and help optimize yields. He said there was no detailed timeline or specific rollout plan to share yet. Asked whether Regional might become a bank, Lamba said it was “too early” for a strategic shift, but that management would continue to evaluate the landscape.
On capital return, Rana said the board declared a $0.30 per share dividend for the first quarter. The company repurchased about 197,000 shares in the fourth quarter at a weighted average price of $38.07, and about 702,000 shares for the full year at a weighted average price of $34.12.
Management also noted interest expense of $22.6 million in the fourth quarter, or 4.3% of average net receivables on an annualized basis, and said the company would continue to maintain diversified funding sources and ample liquidity.
Rana said Regional is shifting away from providing detailed short-term P&L guidance, emphasizing that quarterly results can swing due to timing-related factors, and that the company plans to focus communication on full-year performance and long-term value drivers while continuing to provide color during earnings calls.
About Regional Management (NYSE:RM)
Regional Management Corp., headquartered in Wilmington, North Carolina, is a consumer finance company specializing in installment loan products for underbanked individuals. Since its founding in 1977, the company has developed a network of field-based branches alongside a digital platform to offer credit solutions in rural and small-town markets across the United States.
The company’s core offerings include consumer installment loans for everyday purchases, auto refinancing and lease buyouts, as well as ancillary services such as insurance referrals.
