In This Article:
-
Net Income: $7 million in the first quarter.
-
Diluted EPS: $0.70 for the first quarter.
-
Revenue: $153 million, a record for the first quarter, up 7% year over year.
-
Net Receivables Growth: Up 8% year over year.
-
New Branches: 15 new branches opened since September 2024.
-
Auto-Secured Loan Portfolio Growth: Increased by $59 million, or 37% year over year.
-
High APR Loan Portfolio Growth: Increased by $59 million, or 21% year over year.
-
30+ Day Delinquency Rate: 7.1% at the end of the first quarter.
-
Net Credit Loss Rate: 12.4%, 120 basis points better than the prior year period.
-
Allowance for Credit Losses: $199 million, reserve rate of 10.5%.
-
Total Capital Generation: $9.9 million in the first quarter.
-
G&A Expenses: $66 million in the first quarter.
-
Interest Expense: $19.8 million, or 4.2% of average net receivables.
-
Effective Tax Rate: 23.5% in the first quarter.
-
Dividend: $0.30 per common share for the second quarter.
-
Share Repurchase: Approximately 187,000 shares repurchased at an average price of $34.56 per share.
Release Date: April 30, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
-
Regional Management Corp (NYSE:RM) reported $7 million in net income and $0.70 of diluted EPS for the first quarter, aligning with their guidance.
-
The company experienced record first-quarter originations while maintaining a tightened credit box, with net receivables up 8% year over year.
-
RM opened 15 new branches since September 2024, with 10 in new markets, all performing well and contributing to revenue growth.
-
The auto-secured loan portfolio grew by 37% year over year, contributing to a diversified and high-margin portfolio.
-
RM maintained a strong balance sheet with $641 million of total unused capacity and $129 million of available liquidity at the end of the quarter.
Negative Points
-
Net income for the first quarter was lower than the previous year due to the absence of a special loan sale benefit from the prior year.
-
The company faces potential economic uncertainty, particularly related to trade policies and macroeconomic conditions.
-
Operating expenses increased, driven by new branch openings and marketing expenses, impacting overall profitability.
-
Interest expenses are expected to rise as fixed-rate funding matures and variable-rate debt is utilized for growth.
-
The company's guidance for meaningful EPS growth in 2025 is challenged by provisioning tied to loan growth and macroeconomic uncertainties.
Q & A Highlights
Q: Can you provide a longer-term outlook on Net Interest Margin (NIM) and discuss the factors affecting cost of funds and yield? A: Harpreet Rana, CFO, explained that as fixed-rate funding matures, cost of funds will increase. Pricing changes have been implemented, and the portfolio reflects these adjustments. The barbell strategy, which includes higher-margin loans and auto-secured loans with lower yields but lower credit losses, will influence yields. CEO Robert Beck added that future yield adjustments will depend on macroeconomic conditions and potential underwriting changes.