Regional Management Corp.

Second-quarter net income was $8.2 million, or $0.85 per diluted share. Revenue was $168 million, up 6.7% year over year, while the operating expense ratio improved 80 basis points to 12.4%. Ending net finance receivables were $2.1 billion, up 9.6% year over year; originations were $504 million, down 1.3% year over year; total revenue yield was 31.8%, down 110 basis points year over year; 30-plus day delinquencies were 7.0%, up 40 basis points year over year; and net credit losses were 12.2%, up 30 basis points year over year. Full-year guidance was revised to diluted EPS growth of 10% to 13%, portfolio growth of 5% to 7%, and net income growth of 6% to 9%. Management still expects third- and fourth-quarter earnings to be sequentially stronger, with fourth-quarter net income above third quarter.

Lakhbir Lamba said the quarter showed strong underlying franchise performance, but the company is deliberately prioritizing a stronger operating foundation over near-term volume. He framed the reset as a choice to grow profitably, tighten underwriting where returns were not acceptable, and invest more aggressively in bank partnership, digital lending, technology, and AI. His tone was confident but cautious on the consumer and macro backdrop, repeatedly stressing discipline and long-term value creation.

Harp Rana said the quarter benefited from portfolio and revenue growth plus operating leverage, but was offset by a higher provision for credit losses tied to growth and a net credit loss rate modestly above forecast. He highlighted an allowance for credit losses increase of $4.5 million, an allowance rate of 10.4%, interest expense of $23 million, a cost of funds of 4.4%, and $442 million of unused capacity with $128 million of available liquidity; fixed-rate debt represented 80% of total debt at a weighted average coupon of 4.8%. He also said the company repurchased about 136,000 shares at $36.68 and paid a $0.30 dividend for the third quarter, while warning funding costs should tick up to 4.5% in Q3 as older low-cost debt rolls off.

Analysts focused on what drove the lower growth outlook: management pointed to weaker direct-mail response rates, more competition from fintechs in personal lending, tighter underwriting in certain risk segments, and enhanced fraud controls that intentionally slowed some originations. Questions also centered on Column bank partnership and whether it would hurt near-term results; management said the program is already contributing to guidance, early delinquency and economics look promising, and it should ultimately add about 200 basis points of pre-tax margin on like-for-like loans. They also clarified that the bank partnership should help expand small-loan originations and improve the feeder pipeline for larger loans over time.