Regional Management (RM) Q2 EPS Up 20%

Key Points

• GAAP earnings per share of $1.03 in Q2 2025 exceeded analyst expectations by 43.1%.

• GAAP revenue rose 10.1% year-over-year to $157.4 million in Q2 2025, exceeding analyst estimates.

• Credit quality improved in Q2 2025, as both 30+ day delinquency and net credit loss rates were lower than last year.

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Regional Management (NYSE:RM), a consumer finance company specializing in personal loans for non-prime and near-prime customers, announced its results for Q2 2025 on July 30, 2025. The company's net income and GAAP revenue both surpassed analyst expectations. Diluted earnings per share (GAAP) was $1.03, compared to an estimate of $0.72. GAAP revenue reached $157.4 million, exceeding the forecast of $151.76 million. These figures reflected 19.8% year-over-year growth in GAAP diluted earnings per share. A 10.1% rise in revenue from the prior-year period. Overall, the quarter saw gains in portfolio size, credit quality, and operational efficiency, with most core metrics improving compared to the prior-year period on a GAAP basis.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Business Overview and Strategic Focus

Regional Management operates a network of over 350 branches, offering personal installment loans with a focus on consumers who may not qualify for traditional bank loans. Its products include large loans, small loans, and auto-secured loans. The company’s business model centers on lending to customers with limited credit histories or lower credit scores, making effective credit risk management a critical factor for performance.

Recent quarters have emphasized disciplined credit risk management, branch network expansion into new geographic markets, and investments in digital origination channels. Success for Regional Management depends on maintaining portfolio quality, expanding its customer base, controlling expenses, and responding swiftly to regulatory requirements.

Quarterly Highlights and Performance Drivers

During Q2 2025, Regional Management achieved double-digit growth in both revenue and profits (GAAP). Net income increased 20.1% year-over-year in the second quarter of 2025. Earnings per share climbed 19.8% year-over-year. GAAP revenue marked a 10.1% increase over the prior-year period, driven by a record $510.3 million in loan originations. Net finance receivables, representing the total value of loans on the company’s books, reached $2.0 billion as of Q2 2025. Another record high, up 10.5% year-over-year (GAAP).

Segment performance highlights include the company’s "barbell strategy," which aims to balance growth in auto-secured loans (loans backed by vehicle collateral, generally lower loss risk) and higher-yield small loans (unsecured, higher-rate loans offering larger margins but greater credit risk). Auto-secured receivables rose 36.9% to $245.7 million in Q2 2025. They accounted for 12.5% of the portfolio as of Q2 2025, up from 10.1% in Q2 2024. Small loan receivables grew 7.7% year-over-year to $547.0 million in Q2 2025. They comprised 27.9% of loans as of Q2 2025, but with a higher delinquency rate of 9.6 %. Large loan receivables totaled $1.41 billion as of Q2 2025 up 11.6% year-over-year and represented 72.1% of the portfolio as of Q2 2025.

Credit quality metrics showed overall improvement in Q2 2025. The rate of loans over 30 days past due fell to 6.6% in Q2 2025, down from 6.9% in Q2 2024. The annualized net credit loss rate (GAAP) declined to 11.9% from 12.7%. The allowance for credit losses stood at $202.8 million, or 10.3% of net finance receivables as of Q2 2025 (GAAP). This reserve covers expected loan defaults and was reduced following the release of hurricane-related reserves in Q2 2025, reflecting lower estimated losses.

Expense control was another area of strength. The operating expense ratio fell to 13.2%, the lowest on record for the company in Q2 2025. General and administrative expenses rose 4.7% year-over-year in Q2 2025, slower than revenue growth, demonstrating improved scale and efficiency. Liquidity remained strong, with $534 million in unused revolving credit capacity and $121.6 million in available cash or equivalents as of Q2 2025. The debt-to-equity ratio was reported at 4.2x as of Q2 2025, in line with the capital-intensive nature of consumer finance companies.

Capital was returned to shareholders through a quarterly dividend of $0.30 per share and continued stock buybacks in Q2 2025. In the second quarter of 2025, the company repurchased 164,692 shares at an average price of $30.36 per share. Book value per share at the end of Q2 2025 was $36.43, a 7.3% increase from the previous year.

There were no major one-time events disclosed in this release. The company’s funding structure remained primarily fixed-rate (84% of total debt as of Q2 2025), though there has been a gradual increase in interest expense as more recent funding has come at higher variable rates. These trends are a point of attention for the outlook.

Outlook and Investor Considerations

Looking ahead, management reaffirmed its target of at least 10% annual portfolio growth for FY2025. The company plans to open 5 to 10 new branches in the coming months, many in new geographic markets, to support this expansion, but management emphasized its commitment to controlling expenses and investing in digital and analytical tools to support both growth and risk management.

Investors should observe further trends in loan mix, especially as interest expense may also rise as the company gradually shifts toward more variable-rate funding. Credit metrics will remain key for future quarters, especially if macroeconomic conditions change or regulatory scrutiny intensifies. The quarterly dividend was maintained at $0.30 per share for Q3 2025.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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