Regional Management Q1 2026 Earnings Report

Regional Management EPS Results

• Actual EPS: $1.18
• Consensus EPS: $0.98
• Beat/Miss: Beat by +$0.21
• One Year Ago EPS: N/A

Regional Management Revenue Results

• Actual Revenue: $167.29 million
• Expected Revenue: $161.55 million
• Beat/Miss: Beat by +$5.74 million
• YoY Revenue Growth: N/A

Regional Management Announcement Details

• Quarter: Q1 2026
• Date: 4/29/2026
• Time: After Market Closes
• Conference Call Date: Wednesday, April 29, 2026
• Conference Call Time: 5:00PM ET

Regional Management (NYSE:RM) is a specialty consumer finance company that provides credit products to customers who may have limited access to traditional bank financing. The company operates primarily through its Regional Finance branch network and focuses on serving non-prime consumers.

Its principal products include small and large installment loans, generally used for personal, household and other consumer purposes. Regional Management may also offer optional credit-related insurance and ancillary products in connection with its loans, subject to applicable laws and regulations.

Founded in 1987 and headquartered in Greer, South Carolina, the company serves customers across a network of branches concentrated in the southeastern and southwestern United States. Regional Management became a publicly traded company in 2012 and conducts its consumer lending operations primarily under the Regional Finance brand.

Regional Management Q1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Delivered a strong Q1 with $11.4 million net income (EPS $1.18, +69% YoY), record first-quarter revenue of $167 million (+9% YoY) and 11% portfolio growth to $2.1 billion.
• Positive Sentiment: Operating leverage improved—G&A fell 2% YoY and the operating expense ratio hit an all-time best of 12.2%, ROE rose to 12.2%, and the company generated ~$12 million of capital while returning >$10 million to shareholders.
• Neutral Sentiment: Credit metrics remain broadly stable with 30+ day delinquency at 7.2% and net credit loss up ~10 bps YoY; the allowance rate was raised to 10.4% and the firm is increasing investments in data, AI and fraud controls to target long‑term NCL below 10%.
• Positive Sentiment: Growth initiatives progressing—entering Florida in Q2 (20th state), auto‑secured loans grew 38% YoY to $300 million (14% of portfolio, 30+ day delinquency 2%), and the Column bank partnership launched across 12 branches with encouraging early origination trends and digital/AI expansion planned.
• Neutral Sentiment: Company reiterates full‑year targets (≈10% portfolio growth; 20–25% net income growth) but expects Q2 to be the seasonal low point due to tax‑refund driven liquidation, higher CECL provisioning and temporarily elevated losses before improvement in H2.

Presentation

[Operator]

Greetings, and welcome to the Regional Management first quarter 2026 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Garrett Edson. Please go ahead.

[Garrett Edson, Managing Director at ICR]

Thank you and good afternoon. By now, everyone should have access to our earnings announcement supplemental presentation, which were released prior to this call and may be found on our website at regionalmanagement.com. Before we begin our formal remarks, I will direct you to page two of our supplemental presentation, which contains important disclosures concerning forward-looking statements and the use of non-GAAP financial measures. Part of our discussion today may include forward-looking statements, which are based on management's current expectations, estimates, and projections about the company's future financial performance and business prospects. These forward-looking statements speak only as of today and are subject to various assumptions, risks, uncertainties, and other factors that are difficult to predict and that could cause actual results to differ materially from those expressed or implied in the forward-looking statements.

[Garrett Edson, Managing Director at ICR]

These statements are not guarantees of future performance, and therefore you should not place undue reliance upon them. We refer all of you to our press release presentation of recent filings with the SEC for a more detailed discussion of our forward-looking statements and the risks and uncertainties that could impact our future operating results and financial condition. Also, our discussion today may include references to certain non-GAAP measures. A reconciliation of these measures to the most comparable GAAP measures can be found within our earnings announcement or earnings presentation and posted on our website at regionalmanagement.com. I would now like to introduce Lakhbir Lamba, President and CEO of Regional Management Corp.

[Lakhbir Lamba, President and CEO at Regional Management]

Thanks, Garrett. Good afternoon, everyone. We delivered a strong start to 2026 with solid financial performance, continued year-over-year portfolio growth, and further progress on our strategic priorities. Over the past few months, I've spent significant time across the organization continuing to listen, learn, and evaluate our business. I'm increasingly excited about the opportunities ahead. As I've deepened my understanding of our customers, products, and markets, I see a clear path to stronger performance and improving return outcomes over time. Our results in the first quarter reflect the strength of our operating model, disciplined execution, and continued investment in the business. Joining me on the call today is Harp Rana, our Chief Financial and Administrative Officer. I'll begin with a summary of our first quarter results, provide an update on our strategic initiatives, and then Harp will walk through the financial details.

[Lakhbir Lamba, President and CEO at Regional Management]

We generated net income of $11.4 million or $1.18 of diluted earnings per share, representing an increase of 69% year-over-year. These results were driven by continued portfolio growth, strong revenue performance, and further improvement in operating efficiency. Our loan portfolio increased by $214 million year-over-year to $2.1 billion, representing 11% growth, and we generated record revenue for our first quarter, up 9% compared to the prior year period. Demand for our products remains healthy, and we continue to grow this portfolio in a disciplined manner. We also delivered strong operating leverage. G&A expenses declined 2% year-over-year, even as we continued to invest in growth initiatives, technology, and digital capabilities. Our operating expense ratio improved 180 basis points year-over-year to 12.2%.

[Lakhbir Lamba, President and CEO at Regional Management]

Another all-time best for the company. Notably, revenue growth outpaced G&A and interest expense growth by a wide margin, reflecting the scalability of our model. Capital generation remained strong in the quarter. We had $12 million of capital generation and returned more than $10 million to shareholders through dividends and share repurchases while continuing to fund portfolio growth. Our 30+ day delinquency and net credit loss rates in Q1 were flat year-over-year after adjusting for this year's larger portfolio liquidation. Our customers remain stable and resilient in the current economic environment, and overall credit trends continue to perform within our expectations. That said, we are closely monitoring macroeconomic conditions, including elevated gas prices and inflation, and we remain disciplined and conservative in our underwriting.

[Lakhbir Lamba, President and CEO at Regional Management]

As we discussed on our last call, we are focused on continuing to improve our net credit loss rate over time with a long-term target below 10%. In support of this objective, we are increasing our investment in data, credit analytics, emerging AI capabilities, and fraud detection, including first-party and synthetic fraud controls. We are actively evaluating and beginning to deploy AI initiatives to enhance our underwriting, decisioning capabilities, and collections over time while maintaining appropriate risk controls. These investments are critical to improving credit performance as we scale the portfolio and enter new markets. We continue to make good progress on our key strategic priorities. First, we are continuing to invest in market expansion.

[Lakhbir Lamba, President and CEO at Regional Management]

We plan to enter the state of Florida in the second quarter, which will mark our expansion into our 20th state and represents an important long-term growth opportunity. Second, responsible portfolio growth remains a core priority. We are seeing continued strength in our auto-secured lending product. The auto-secured portfolio reached $300 million in outstandings at the end of the first quarter, representing a 38% increase year-over-year. It now accounts for 14% of our total portfolio and carries a 30+ day delinquency rate of 2%. This product continues to deliver attractive credit performance and returns. Third, we are advancing our bank partnership strategy. In early March, we announced the launch of our partnership with Column, a nationally chartered bank.

[Lakhbir Lamba, President and CEO at Regional Management]

We expect this partnership to provide several important strategic benefits over time as it scales, including optimization of risk-adjusted yields, expanded relationships with existing customers and a broader addressable market, greater product and operational uniformity across states, faster entry into new markets, additional fee income opportunities, and increased wallet share over time from the introduction of new products. We launched the partnership in one branch with select products and have since expanded to 12 branches. We are encouraged by the early results, particularly in the origination trends, including volume, mix, and revenue characteristics. As we expected at this stage, our data is primarily focused on origination, credit quality, and yield metrics, and we expect to begin seeing early credit performance in the coming months. We plan to expand the partnership throughout the year as we continue to evaluate results, assess customer adoption, and refine the strategy.

[Lakhbir Lamba, President and CEO at Regional Management]

Fourth, we are continuing to invest in an end-to-end digital originations capability. We see meaningful long-term opportunity in this channel, including the ability to reach higher credit quality customers and expand our addressable market. We are focused on creating a frictionless digital experience with strong fraud detection, credit underwriting, and risk-based pricing capabilities as we scale this channel. We are also evaluating the use of AI to enhance customer acquisition, improve decisioning speed and accuracy, and optimize channel performance. Our bank partnership will play an important role in supporting this initiative over time. Looking ahead, our expectations for the year remain unchanged. We continue to target full-year portfolio growth of 10% and net income growth in the range of 20%-25% while remaining prepared to moderate portfolio growth if warranted by macroeconomic or credit conditions.

[Lakhbir Lamba, President and CEO at Regional Management]

As a reminder, we expect second quarter net income to represent the low point for the year, consistent with normal seasonal trends. First quarter tax refund activity results in portfolio liquidation, which impacts second quarter revenue while growth begins to accelerate as we move through the second quarter, driving sequentially higher CECL provisioning and G&A expenses. Portfolio growth in the second quarter and throughout the remainder of the year supports stronger revenue and earnings in the third and fourth quarters. We also expect net credit losses to remain seasonally elevated in the second quarter before improving to lower levels in the second half of the year. In addition, we anticipate the benefits of our bank partnership, portfolio growth, and other strategic initiatives will build throughout the year, supporting stronger earnings performance in the third and fourth quarters.

[Lakhbir Lamba, President and CEO at Regional Management]

Over the longer term, our objective remains clear. We will deliver sustainable, profitable growth while generating attractive returns for shareholders. We will continue to improve our return on equity through responsible portfolio growth, improving credit performance, operating leverage, and disciplined capital management. Regional is off to a strong start in 2026. We have a clear strategy, strong execution, and meaningful opportunities ahead, and we remain focused on delivering long-term value for our shareholders. With that, I will turn the call over to Harp.

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

Thank you, Lakhbir, and good afternoon, everyone. I'll now take you through our first quarter results in more detail. Starting on page 4 of the supplemental presentation, we delivered another quarter of strong year-over-year improvement across our key financial metrics. Net income was $11.4 million, and diluted earnings per share were $1.18, both driven by continued year-over-year portfolio and revenue growth, stable credit performance, strong operating leverage, and a disciplined balance sheet. Return on equity improved to 12.2%, up 430 basis points year-over-year, reflecting higher earnings and operating efficiency. Turning to pages 5 and 6, total originations were $388 million, down modestly year-over-year as expected, due to a stronger tax refund season and disciplined underwriting. Portfolio growth remained strong, with ending net receivables of $2.1 billion, representing 11% year-over-year growth.

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

This growth continues to be driven by larger loans, including our auto-secured product, as well as contributions from new branches. Average receivables per branch increased to approximately $5.9 million, up nearly 11% year-over-year, reflecting improved branch productivity and continued maturation of our newer locations. From a sequential perspective, we saw a $36 million reduction in receivables, consistent with normal seasonal patterns driven by first quarter tax refund activity. Looking ahead, we expect to return to sequential portfolio growth in the second quarter while maintaining the flexibility to adjust originations if macroeconomic or credit conditions warrant. Turning to page 7, total revenue was a first quarter record of $167 million, increasing 9% year-over-year, driven by higher average receivables.

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

Total revenue yield declined on both a sequential and a year-over-year basis, primarily due to normal seasonality and continued mix shift towards larger, lower yielding loans. As we move into the second quarter, we expect revenue yield to increase modestly on a sequential basis, consistent with typical seasonal trends. Turning to page 8, credit performance remains stable. Our 30+ day delinquency rate was 7.2%, up 10 basis points year-over-year and improved 30 basis points sequentially, reflecting normal seasonal patterns. Our net credit loss rate increased modestly by 10 basis points year-over-year, also consistent with expectations. Both our delinquency rate and NCL rate included roughly 10 basis points of impact from higher liquidation in the first quarter of 2026 compared to the first quarter of 2025. Looking ahead to the second quarter, we expect delinquency and net credit losses to decline sequentially, consistent with seasonal patterns.

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

Overall, credit performance remains in line with our expectations, and we continue to monitor macroeconomic conditions closely. Turning to page 9, the allowance for credit losses declined by $1.4 million during the quarter, primarily reflecting seasonal portfolio liquidation. The allowance rate increased slightly to 10.4%, reflecting updates to macroeconomic assumptions and continued prudence in reserving. Subject to economic conditions and credit performance, we expect our allowance rate to stay flat sequentially in the second quarter. Turning to page 10, we continue to demonstrate strong operating leverage. Our operating expense ratio improved to 12.2%, an all-time best and a 180 basis point improvement year-over-year, while we continue to invest in key initiatives. Total G&A expenses declined modestly year-over-year, reflecting continued discipline in managing expenses while scaling the business.

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

For the second quarter, we expect a sequential increase in our operating expense ratio, but a year-over-year improvement from the second quarter of last year. Turning to pages 11 and 12, interest expense was $22.9 million or 4.3% of average receivables on an annualized basis. We continue to maintain a strong and flexible funding profile, including $560 million of unused capacity, a diversified funding structure, and a high proportion of fixed rate debt, which represented 84% of total debt at quarter end. This positions us well to support continued portfolio growth. Looking ahead, we anticipate that our funding costs will tick up slightly in the second quarter. Turning to page 13, we continue to generate strong capital and allocate it in a disciplined manner.

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

During the quarter, we had approximately $12 million of capital generation, and we returned over $10 million to shareholders through dividends and share repurchases. Our board declared a $0.30 per share dividend, and we repurchased approximately 208,000 shares during the quarter. Finally, turning to page 14 and building on Lakhbir's comments about second quarter net income and seasonality, I'll provide some additional detail on how we expect the year to progress from a quarterly perspective. As we noted, we expect second quarter net income to represent the low point for the year, followed by stronger performance in the third and fourth quarters, consistent with our normal seasonal patterns. The primary driver of this cadence is the impact of first quarter tax refund activity, which results in seasonal portfolio liquidation in the first quarter and, in turn, impacts average receivables and revenue in the second quarter.

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

At the same time, we begin to rebuild the portfolio during the second quarter, with growth typically accelerating as we move through the quarter. This results in a sequential increase in provision for credit losses in the second quarter as we reserve for new originations. As that portfolio growth takes hold, we see the benefit in the second half of the year. The increase in receivables exiting the second quarter drives higher revenue in both the third and fourth quarters, and those growth tailwinds continue throughout the back half of the year. While provisioning for loan growth remains elevated in the third and fourth quarters relative to the first quarter, it is more comparable to second quarter levels, allowing revenue growth to drive stronger earnings. From a credit perspective, we expect net credit losses to remain seasonally elevated in the second quarter before improving in the third and fourth quarters.

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

Finally, as Lakhbir mentioned, we expect the benefits of our strategic initiatives to build as we move through the year with increasing contribution in the second half. That concludes my remarks, and I'll now turn the call back over to Lakhbir.

[Lakhbir Lamba, President and CEO at Regional Management]

To close, we are very pleased with how we started 2026 and are encouraged by the momentum we are carrying into rest of the year. We delivered strong results while continuing to invest in the business, improve underlying credit performance, and drive operating leverage.

[Lakhbir Lamba, President and CEO at Regional Management]

Importantly, we did this in a disciplined way that positions us well for sustainable, profitable growth. As we look ahead, our priorities are clear. Continue growing the portfolio responsibly, improving credit outcomes, expanding into attractive new markets, and investing in our people, technology, and digital data and AI-driven capabilities to enhance risk-adjusted returns. We believe the opportunities in front of us across products, markets, and operating efficiency are compelling, and we are focused on executing against them thoughtfully. We have a strong foundation, a resilient customer base, and a highly capable team. I am confident in our ability to continue creating long-term value for our shareholders. My sincere thanks to the regional team for delivering a great quarter.

[Operator]

Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question will come from Kyle Joseph with Stephens.

[Kyle Joseph, Managing Director at Stephens]

Hey, good afternoon, guys. Thanks for taking my questions. Just curious, a lot of moving parts in the first quarter with elevated tax refunds and then gas prices, you know, rising in March. Just kind of walk us through, you know, how loan demand and credit kind of performed and kind of the cadence of demand, and then, you know, how that, how that's trended into April with, you know, gas prices remaining elevated.

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

Hey, Kyle. It's Harp. I'll take that question. In terms of the elevated refunds, that was something that we had expected, right? We had all heard that refunds were going to be outsized. They did come in, right, higher than where they were last year, but not quite as high as what everyone expected. You know, demand was where we expected it to be, knowing that refunds were going to be higher. That's what we saw there. In terms of the gas prices, it continues to be something that we're watching. What we found in first quarter is, you know, our customers continue to be adaptable, resilient, but we do understand that inflation and particularly gas prices can take a toll on their wallet.

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

We continue to watch that through first payment defaults, delinquency rates, and also through any listening that we do, you know, when we have conversations with our customers, particularly even collections conversations, just to understand sort of what is causing them the pain point. Right now, you know, they appear to continue to be resilient, but again, in second quarter, we continue to watch the gas prices, particularly given how much savings increased this week.

[Lakhbir Lamba, President and CEO at Regional Management]

Yeah, Kyle, the only thing I'll add to that is we are, to Harp Rana's point, monitoring the portfolio, looking at roll rates, both early and late stage. You know, our reserve posture reflects the higher gas prices and potentially has some impact on inflation. You know, we're the segment of consumer we are really monitoring is high debt service coverage or debt to income and, you know, low free income consumer that, you know, if gas prices remain elevated for a prolonged period, you know, that discretionary spending gets tested. We're sort of continuing to monitor that.

[Kyle Joseph, Managing Director at Stephens]

Got it. Really helpful. Thanks. Second question, kind of a two-part question. First, I mean, as you think about AI, and you guys talked about incorporating AI, I mean, talk about where you think OpEx can go over that timeframe. Just follow-up to that, obviously the relationship with Column is very exciting, but walk us through how you think about that impacting the P&L as that expands.

[Lakhbir Lamba, President and CEO at Regional Management]

Thanks, Kyle. Let me take a crack at the first one. On the AI one, I think we see our investment in machine learning models and origination and collection. Some I think we've mentioned in the past that are already in production in the company that we've deployed. Those models help us take more, take better risks and then price better for risk. In terms of GenAI and agentic AI deployments, you know, although I don't have a specific guidance for you on the subject, I think both are cost to originate and cost to service/collect over time. We believe as we automate the both the origination collection journeys using agentic AI workflows, we believe both those cost numbers on a variable basis can come down over time.

[Lakhbir Lamba, President and CEO at Regional Management]

That's kind of the tack we are taking in the space. In terms of your second question, I'll start and then I'll let Harp add to it. On the Column partnership, we believe, you know, as I mentioned in the remarks, certain segments of consumers we can't serve today because we are, you know, focused on implementing based on state laws and state charter. Those segments of consumers, we believe we can originate using a national charter over time. That's a state-by-state specific kind of analyses and execution. Second, I think, we are now going to be in 20 states. We still have a bunch of work to do to expand in other markets. We believe a national charter execution and product uniformity increase their speed to market.

[Lakhbir Lamba, President and CEO at Regional Management]

In those markets, we can scale up faster, especially with the digital originations capability we are building in parallel. I think the third thing I would say is there are pockets of customers or business where we don't get paid for the risk we take. That's something that we are very thoughtful in terms of evaluating opportunities where we can optimize risk and return better in the business as we go forward. You know, the last thing is, as I mentioned, the Column banks technology stack is pretty advanced. We believe the consumer we serve has needs for a bunch of other products.

[Lakhbir Lamba, President and CEO at Regional Management]

We will evaluate each one of them on their own business cases and see if we can, you know, launch and diversify our product set and serve the product through branches and/or digital channels, using the Column tech stack and the charter there. But that's, you know, as we go forward next year and beyond, opportunity. Harp, anything you want to add?

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

Yeah. Just in terms of where OpEx can go. How I would think about OpEx in the near term is, as we talked about some of the investments that we're going to continue to make in those areas. How I would think about OpEx is, you know, there will be some productivity improvement in the short to the medium term. Really right in terms of OpEx, that'll come through scale. You'll see if there are enhancements in the cost to originate and the cost of service. Those will come, you know, in the medium term, Kyle. That's how I would think about that.

[Kyle Joseph, Managing Director at Stephens]

Thanks for taking my questions.

[Lakhbir Lamba, President and CEO at Regional Management]

Yeah.

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

Thank you.

[Operator]

Our next question comes from Vincent Caintic with BTIG.

[Vincent Caintic, Managing Director and Specialty Finance Analyst at BTIG]

Hey, good afternoon. Thanks for taking my questions. I really appreciate the very detailed quarterly guidance that you gave. Thank you very much for that. First question, I wanted to go over maybe some of the macro assumptions that you're having in your guidance estimates, particularly when you're thinking about your credit reserve rate. I noticed that it's gonna be flat for the rest of the year, implied in guidance. Just wondering what you're assuming there, if there's any, like, macro changes or what you're thinking about on employment. Thank you.

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

Hey, Vincent. It's Harp. We did take the reserve rate up quarter-over-quarter versus where we were, you know, in fourth quarter of last year. The reason why we took that up was just based upon some of the macro that, you know, we were seeing, which was basically, you know, oil prices and also, you know, gas prices, and just being prudent around that in terms of what that could mean for our customers. In terms of, you know, where we're going to be next quarter or quarter out, I can't really say right now. Right now in the prepared remarks, right, we've assumed that we're going to be flat to the 10.4% that we're at in first quarter, you know, of course barring, you know, any other macro news.

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

You know, it could go up if things get, you know, a little bit tighter in terms of, you know, oil continues to increase, and, you know, inflation continues to increase and gas prices continue to increase. It could absolutely, you know, come back down based upon, right, if oil prices come back down to where they were, you know, a few weeks ago and gas prices moderate.

[Vincent Caintic, Managing Director and Specialty Finance Analyst at BTIG]

Okay. Got it. That's helpful. Thank you. Second question, I wanted to ask about how we should think about product growth. I appreciate the overall loan growth guidance. If you could talk about, say, between your small dollar loans versus your large loans. Looks like auto is doing really well, and you sound pretty excited about that. If you could describe, like, mix shift in terms of where you want to go, where the customer demand is, as you're thinking about the year. Thank you.

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

Vincent, it's Harp Rana again. Here's what I would say. In terms of, you know, our priorities, auto-secured is one of the priorities that Lakhbir Lamba laid out in his prepared remarks. You can sort of see, you know, how our large loans have grown over time. That continues to be a priority just given the returns on that product. However, we remain very much committed to our small loans as well. We often talk about our graduation strategy. Again, you know, in 2025, we did refinance, you know, 26,000 of those small loan customers. You know, we moved them up to larger small loans or large loans, we're also able to bring down their rate.

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

That is really a part of our acquisition and our customer life cycle journey. We remain committed to the small loans. Large loans, particularly auto-secured, you know, is a focus given the returns on that product.

[Vincent Caintic, Managing Director and Specialty Finance Analyst at BTIG]

Okay, great. Thank you.

[Operator]

As a reminder, it is star one if you would like to ask a question. We'll go next to Zachary Oster with Citizens Capital.

[Zachary Oster, VP of Equity Research at Citizens Capital]

Hey, everyone. Good afternoon. Thanks for taking my question. Wanted to dig in a little bit on the tax refund side and kind of see if we can get some sort of disaggregated number. Really just, I guess, a quote unquote normalized sense of where origination growth would've been had that been excluded for this quarter.

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

Zach, it's really hard to give you know, what a normal number would be, but you're probably looking at last year as well, right? In terms of what we saw this year, I would say it's pretty typical. I think what, you know, we've read is, tax refunds on average were up by about $300, you know, over last year. You know, in terms of our portfolio liquidation, we saw about $36 million quarter-over-quarter. Last year, right, we only saw $2.2 million. You have to remember that last year what we saw was masked by the number of de novos that we had come online in first quarter of 2025.

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

What we saw this year is exactly what we expected in terms of knowing that refunds on average were gonna be a little bit larger. Typically we do see, you know, a liquidation of small dollar loans as people get their refunds and they go ahead and they, you know, pay us with the refund money. What we saw was actually quite typical of what we expected given our portfolio size. As we move into second quarter, right, we are gonna have growth in second quarter. You have the $36 million in liquidation in the first quarter, and on page 14 of the supplement, we've actually guided to an approximation of where growth is expected.

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

When you're modeling, what you have to keep in mind is, you know, we had a provision release of $1.4 million in the first quarter based upon that liquidation. We've also provided you with a range based upon growth in terms of what that provision increase will be in second quarter. Going back to Lakhbir's remarks, right, that swing in provision from, you know, the $1.4 million release up to, you know, if I take the midpoint, a $7 million, that swing of $8.4 million is gonna drop right down to the bottom line. Of course, other things are going to continue to improve, such as, you know, revenue is gonna continue to improve. The growth will end up being a tailwind for the rest of the year.

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

You will see revenue improve, but in the second quarter you will see that swing because of the growth in the CECL provision that'll drop down to the bottom line.

[Zachary Oster, VP of Equity Research at Citizens Capital]

Got it. Understood. One more question if I could just add it on. Just digging also into the macro assumptions. Wanted to see if you guys have any updated commentary on rate cuts, or kind of any assumptions going into or exiting the quarter on the allowance rate in terms of the rate cuts.

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

You know, in terms of the rate cuts, right, Federal Reserve held flat today. That was our expectation. I think when we all entered the year, we probably thought that there was gonna be one rate cut right at the beginning of the year. Now, right, with them holding flat, we've taken what the forecast is on rates, as well as, right, the forecast and other macro narratives into account when we did our reserve calculation. When we look at the macro, you know, we do, you know, look at a ratings agency and sort of their predictions of all of those things into the future. We took all of that into consideration as well as, of course, our own portfolio, right? Where we look at the product mix, we look at, you know, delinquency status, we look at FICO.

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

We look at our own portfolio, and then we go ahead and we look at sort of what the macro assumptions are for the rest of the year in order to come up with the reserve rate. I would tell you that, you know, we sort of anticipated where we are today in terms of coming up with that reserve rate, if that helps.

[Zachary Oster, VP of Equity Research at Citizens Capital]

Yep. Understood. Thank you very much.

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

Yeah.

[Lakhbir Lamba, President and CEO at Regional Management]

Zach, the biggest levers in our credit, you know, assumptions essentially are the labor market, which have been stable. Number two, it's inflation, which is an outcome of everything that's happening around gas prices and what have you. Those are and GDP obviously, those are big levers and as we model our reserve content. I think the biggest uncertainty that remains, I think, on the credit side, the obvious one is gas prices and how prolonged this whole, you know, geopolitical conflict in the Middle East is going to stay.

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

Yeah, Zachary Oster, I'm sorry. I'll add one other thing to what Lakhbir Lamba just said, right? In terms of open jobs, we talk about that on these calls. There's still about 7 million open jobs, again, we know that open jobs for our target segment, there are ample jobs out there. That's just, you know, something else that we take into consideration as we're looking out into the future when we do our reserve, just in terms of what does the unemployment picture look like. Right now, again, we'll say that our customers are resilient. They're adaptable. There's plenty of open jobs, you know, available for them, as Lakhbir Lamba mentioned, right. Inflation, gas prices. We continue to watch those as we move into second quarter.

[Zachary Oster, VP of Equity Research at Citizens Capital]

Understood. Thank you for the color.

[Operator]

Moving next to Bill Dezellem with Tieton Capital.

[Bill Dezellem, Founder, Chief Investment Officer and President Tieton Capital Management at Tieton Capital]

Thank you. A couple questions. First of all, relative to your originations in the first quarter, the small loan originations were down, call it, 19%, while the large loan originations were up 10. Can you walk us through the dynamics that led to that differential in origination change versus the first quarter of last year?

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

Yeah. Hey Bill, it's Harp. Nice to hear from you. A couple of things. I think on the small loan originations, a couple of things that I would point out, right? One is we had, in higher tax season, we do expect our small loans to pay off. We do expect originations in terms of response rates to be muted in first quarter. That's really what you're seeing, you know, in 2026. When you compare that to 2025, in 2025, we had 17 de novos come online between fourth quarter and first quarter. In those de novos, you know, they have, you know, mail support. Although you did have an origination impact on small loans last year, that was masked by the fact that we had those de novos coming online.

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

That's really, you know, part of what you're seeing there in terms of year-over-year originations. Then in terms of the small loans, it's really, you know, our, the auto-secured, right? As we grow that business, that is what you're seeing on the large loans year-over-year.

[Bill Dezellem, Founder, Chief Investment Officer and President Tieton Capital Management at Tieton Capital]

That's very helpful. Thank you. Would you want to take that last comment a step further and segment the auto-secured origination growth versus the non-auto-secured large loan origination growth?

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

Yeah. Bill, the best way for me to answer that is that portfolio grew $83 million, the auto-secured portfolio, and now it's 14.3% of our portfolio. Compared to last year, it was only 11.6% of our portfolio. That continues to be a driver within large loans.

[Bill Dezellem, Founder, Chief Investment Officer and President Tieton Capital Management at Tieton Capital]

Fair enough. Then you referenced.

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

Bill, I'm sorry.

[Bill Dezellem, Founder, Chief Investment Officer and President Tieton Capital Management at Tieton Capital]

Column...

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

I apologize. One other thing that I would add there is just the growth rate on the auto-secured compared to the growth rate, you know, on ENR, on large loans. Auto-secured grew by 38%. Again, that's a component of what you're seeing on the ENR in terms of large loans. Again, auto-secured, you know, is a driver of that.

[Bill Dezellem, Founder, Chief Investment Officer and President Tieton Capital Management at Tieton Capital]

Yes. Thank you. Then shifting to the Column relationship, I believe in your opening reference to you started with one branch, up to a dozen. When are you anticipating that relationship will be across all branches?

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

Bill, here's what I would say. I would say that, you know, we're going to continue to roll that out. We're gonna be quite measured. The reason why we roll out one is to make sure it works the way that we think it's going to work from a technological perspective and also from a branch operational perspective, and also from a customer perspective. You roll it out into one, and then you roll it out a little bit larger and again, make sure that it's working the way that you want it to work. What I would say is it is very much, you know, in terms of the data that we're seeing. It's exactly what we thought it was gonna be. We're quite pleased with that.

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

In terms of the rollout, what I would say is we're gonna continue to be measured in rolling it out. As, you know, Lakhbir Lamba said earlier, right, we're now in 20 states, we'll take a look and see, you know, what makes sense over time, particularly given where we're rolling it out currently and how we want to roll that out going forward. That's probably as much information as I can give you right now on that.

[Bill Dezellem, Founder, Chief Investment Officer and President Tieton Capital Management at Tieton Capital]

Okay. I'm going to dive into that a bit further here, please. My perception, having never rolled out this sort of a relationship, would be that once you get up to 50 branches or so, that going from 50 to 250, you really aren't going to learn anything there. You know, going from one to 12 or a dozen to 50, very much maybe. Assuming that that presumption is correct, do you have operational heavy lifting or lifting that needs to be done each time this is moved into a branch? Therefore, it's not as simple as flipping a switch once you're at whatever your maximum test number is, using my example, 50. Do you really need to take that kind of at whatever pace your operations team follow?

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

Here's how I would think about that, Bill. You're absolutely right? After you hit a critical mass, it becomes easier to roll that out because you know that technologically it works, and it's really about training the staff in the branches where you are. You're absolutely right on that, and it just becomes sort of the flywheel of training the branches. You know, what I would think about is, you know, again, right, we will soon be in 20 states, and rolling it out in each state probably is where we're focused and making sure that we are going to do that right.

[Harp Rana, EVP, Chief Financial and Administrative Officer at Regional Management]

That in one state, eventually in multiple states, the flywheel approach of, hey, if you've done 50 and now you know how to train the folks and you know what works, that would absolutely be a true statement.

[Bill Dezellem, Founder, Chief Investment Officer and President Tieton Capital Management at Tieton Capital]

That's very helpful. Thank you for the depth of answers.

[Lakhbir Lamba, President and CEO at Regional Management]

Thanks, Bill.

[Operator]

This now concludes our question and answer session. I would like to turn the floor back over to Lakhbir Lamba for closing comments.

[Lakhbir Lamba, President and CEO at Regional Management]

Thank you so much. You know, as I said earlier on the call, we're very pleased with how we started 2026. I'm excited about opportunities ahead this year, as we go forward for Regional Management. As we also mentioned, just, you know, we just talked in the Q&A, you know, we are watching the macroeconomic conditions, you know, carefully and we'll, you know, adjust our posture in terms of be it underwriting or what have you, relative to how macroeconomic conditions perform. Outside of that, really excited about where we are and how we started the year. My sincere thanks to the whole Regional Management team, and we got exciting times ahead. Thank you.

[Operator]

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.

Participants

Executives

• Harp Rana, EVP, Chief Financial and Administrative Officer

Analysts

• Garrett Edson, Managing Director at ICR
• Lakhbir Lamba, President and CEO at Regional Management
• Kyle Joseph, Managing Director at Stephens
• Vincent Caintic, Managing Director and Specialty Finance Analyst at BTIG
• Zachary Oster, VP of Equity Research at Citizens Capital
• Bill Dezellem, Founder, Chief Investment Officer and President Tieton Capital Management at Tieton Capital