Regional Management Corp.'s Strategic Barbell Strategy Drives Growth and Improved Credit Performance

Regional Management Corp. (NYSE: RM), a diversified consumer finance company, reported strong Q4 2024 results, driven by its strategic barbell strategy of balancing higher-quality, auto-secured products with higher-margin small loan portfolios. The company's net income reached $9.9 million, and diluted earnings per share were $0.98, reflecting a sharp improvement from the prior-year period. Record revenue and ending net receivables, driven by $73 million of sequential portfolio growth, contributed to the company's success.

Regional Management Corp.'s strategic barbell strategy has been instrumental in driving growth and enhancing credit performance. By balancing higher-quality, auto-secured products with higher-margin small loan portfolios, the company has maintained a strong credit profile while maximizing yields. The auto-secured loan portfolio increased by 33.8% year-over-year (YoY) to $206.6 million, representing 10.9% of the total loan portfolio, compared to 8.7% at the end of 2023. This strategic move has strengthened the credit profile while maintaining yield.

The company's net credit loss rate improved by 430 basis points YoY to 10.8%, demonstrating effective risk management, especially considering the higher-risk small loan portfolio expansion. The allowance coverage ratio of 10.5% appears adequate given the portfolio mix and macro environment. The expansion of loans with APRs above 36% to 18.5% of the portfolio indicates an optimized risk-return approach in the current market environment. The higher yields on this portfolio more than make up for the credit drag, resulting in overall improved margins.

Regional Management Corp.'s disciplined portfolio management and prudent expense management have contributed to its ability to maintain stable macroeconomic conditions and achieve its growth targets for 2025. The company's commitment to a minimum of 10% portfolio growth in 2025, along with its strategic initiatives and investments in growth, further support this outlook. By maintaining a balanced portfolio composition, the company has been able to maximize yields, strengthen its credit profile, and optimize risk-return dynamics.



In conclusion, Regional Management Corp.'s strategic barbell strategy has been a key driver of its growth and improved credit performance. By balancing higher-quality, auto-secured products with higher-margin small loan portfolios, the company has maintained a strong credit profile while maximizing yields. The company's disciplined portfolio management and prudent expense management have contributed to its ability to maintain stable macroeconomic conditions and achieve its growth targets for 2025. As the company continues to execute its strategic initiatives, investors can expect to see further progress in its financial performance.