Greetings and welcome to the Regional Management Fourth Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. You may be placed into the question queue at any time by pressing star 1 on your telephone keypad. As a reminder, this conference is being recorded. If anyone should require operator assistance, please press 0. It's now my pleasure to turn the call over to Garrett Edson with ICR. Garrett, please go ahead.

Thank you, and good afternoon. By now, everyone should have access to our earnings announcement and 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. 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, and 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, 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 Latvir Lambda, president and CEO of Regional Management Corp.

Thanks, Garrett, and good afternoon, everyone. I'm pleased to be joining you today on my first earnings call as president and CEO of Regional Management. Over the past few months, I've had the opportunity to spend time in the business, meet many members of the regional team, and deepen my understanding of what makes this company special. I've also had significant time that I've spent reviewing the economics of the business across various customer product, risk, and market segments with an eye towards opportunities to grow net income and increase risk-adjusted returns. I'm excited about the opportunity ahead and honored to lead an organization with a strong culture, a disciplined operating model, and a long track record of responsible growth. Before turning to our results, I want to thank Rob for his leadership in building the strong platform we have today. I've appreciated working closely with him during this transition. Regional enters 2026 from a position of strength, and my focus is on building on that momentum. Joining me on the call today is Harp Rana, our chief financial and administrative officer. I'll begin with a summary of our fourth quarter and full-year results, provide an update on our strategic priorities and outlook, and then Harp will walk through the financial details. We delivered strong financial and operating results in the fourth quarter and finished 2025 with excellent momentum. In the fourth quarter, we generated net income of $12.9 million or $1.30 of diluted earnings per share, representing an increase of 33% year over year. This result exceeded our guidance despite incurring a larger provision for credit losses driven by stronger than expected portfolio growth. Quarterly revenue reached record levels reflecting continued growth in net receivables and consistent execution across the organization. For the full year, we generated net income…

Thank you, Lockbir, and hello, everyone. I'll now take you through our fourth-quarter results in more detail. On Page five of the supplemental presentation, we provide our fourth-quarter financial highlights, demonstrating another quarter of significant improvements across key financial metrics. Our net income of $12.9 million and diluted EPS of $1.30 were once again supported by solid portfolio and revenue growth, a healthy credit profile, expense discipline, and a strong balance sheet. For 2026, consistent with seasonal trends and our 2025 quarterly results, our net income will be meaningfully higher in the second half of the year than the first half of the year, driven by stronger credit performance, balance sheet growth, and continued improvement in operating leverage. Turning to pages six and seven, we had a record total originations of $537 million in the fourth quarter, up 13% year over year. Loan volume was driven by continued strong performance from digital leads, our auto secured product, and the 17 de novo branches we've opened over the past twelve months. For the full year, we generated $2 billion in originations, a 19% increase from 2024. Our total portfolio finished at a record $2.1 billion at year-end, while our ending net receivables for branch reached $6.1 million on average. We continue to believe that key economic markers remain strong and that our customers tend to be resilient and adaptable. These conditions, along with the increase in our addressable market through geographic expansion, have allowed us to grow our portfolio while maintaining a tight credit box. Looking ahead, as a reminder, the first quarter is always our softest origination quarter because of the normal seasonal impact of tax refunds. Demand may be particularly soft this year due to the expected larger tax refunds for our customers. As a result, we anticipate that…

Thanks, Harp. To close, we are very pleased with how we finished 2025 and encouraged by the momentum we are carrying into 2026. We delivered strong results while continuing to invest in the business, improve underlying credit performance, and drive operating leverage. 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 analytics 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. Regional has a strong foundation, a resilient customer base, and a talented team, and I'm confident in our ability to continue creating long-term value for our shareholders. With that, we'll open the call for questions. Operator, could you please open the line?

Certainly. We'll now be conducting a question and answer session. If you'd like to be placed in the question queue, please press 1 on your telephone keypad. We ask you please ask one question and one follow-up, then return to the queue. You may press 2 if you'd 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. One moment, please, while we poll for questions. Our first question is coming from Vincent Caintic from BTIG. Your line is now live.

Hey, good afternoon. Thanks for taking my questions and Lockbir, we are looking forward to working with you. Welcome on board.

Thank you.

First question, as you were very comprehensive already in your kind of strategic vision, the things you're focused on, so I really appreciate that. One of the comments you were discussing is bank partnerships, and I was wondering if you could go into more detail about what sort of things we can anticipate Regional Management getting enhanced by with the bank, and then have you thought about becoming a bank yourselves? It seems like some nonbanks are now kind of thinking about becoming banks given that it might be an easier path with the new administration. So just wanted your thoughts on that as well. Thank you.

Thanks, Vincent. You know, as I shared in my remarks, we've been working on a bank partnership for several quarters. I'm highly focused with the team on getting that initiative executed. We believe it'll improve our speed to market, expand our digital reach, and help us with product uniformity across the footprint. I think, as mentioned, one of the key things is it'll help us fill holes we have in meeting our client needs in certain states, just because of the way the regulations work. Plus, it'll help us optimize yields, just make sure we get paid for the risk we take in all various segments of our business. At this point, we don't have a detailed timeline, viewpoint, or any specific state rollouts at this stage, but we'll be sharing that as soon as we're comfortable doing so. To your second question, again, it's too early in the seat for me to come in and change the overall strategy or question the strategy. But to your point, we do see a number of nonbanks buying banking institutions. I think long term, it does obviously help with cost of funds flexibility and strategic options, if you will. In the near term, though, I think our focus is getting this initiative done that the team has been working on for a number of quarters. But we'll continue to evaluate the landscape to your point, as it evolves.

Okay. Thank you. Appreciate that. And then, Harp, so thank you for all the different guidance items for 2026. I was just curious, I think in the past, you've had some other guidance items. So I was just curious if you're willing to give guidance on like credit reserves, and maybe I think you were talking about expenses being a bit higher and then how should we think about yields and interest expense? Thank you.

Yes. So Vincent, traditionally and historically, we have provided detailed short-term P&L guidance, but, you know, we believe that our forecasting framework and how we run the business, and short-term precision isn't always the most effective or reliable way to communicate our outlook. Quarterly results can swing meaningfully due to timing-related factors that don't always reflect the true underlying momentum of the business. So we're shifting to a full-year view. We're going to keep focus where it belongs on the fundamental drivers of long-term value creation. Nothing about our transparency is going to change. We're always going to continue to provide you guys with color on these calls. How I would think about the first quarter and the other quarters is I would take a look at our business as very seasonal. So we've talked a little bit about that, you know, yield will be lower in the first quarter as the higher rate small loans pay down due to the impact of tax season. That could be a little bit higher this year as folks are expecting higher tax refunds. We know our delinquencies typically are always lowest in the first half, and then they increase. And as a result, our net credit losses are always highest in the first half of the year, and then they are lower in the rest of the year. In terms of ENR growth, we've talked about, right, the impact of tax season. When you're looking at last year, you'll want to normalize for the de novo growth that we had in the first quarter, which muted some of that runoff that we normally see, just because those de novos came on in 2024. So you'll want to adjust for that. And then the other thing that I would tell you is, you know, just adjust for the hurricane noise that we've had in the past year and then also for the loan sale benefit that we had in the first quarter of 2024. So if you make those adjustments, then you go back to the cyclicality of the business, that should get you there with your model. Along with the, you know, guidance that we did provide around the at least 10% ENR growth and our net income guidance for the year at that range. You also mentioned expenses. So expenses, you will see our OpEx come down over time as we gain scale, but there is seasonality, of course, in our expenses, particularly year over year, just as, you know, the full-year impact of some of the investments that we made last year sort of comes fully online in the first quarter. So that's how I would think about the model, but we're happy to delve deeper with you guys on, you know, the analyst calls later.

Okay. Great. Very helpful. Thank you.

Thank you. Next question is coming from David Scharf from Citizens Capital Markets. Your line is now live.

Hi, good afternoon. This is Zach Oster on for David. Thank you for taking our question and congrats on the strong operational quarter. I wanted to dig in a little bit on the same-store results. So, obviously, good acceleration throughout the year in terms of same-store receivable growth. And, you know, speaking towards the guide for kind of expansion going into the new year, wanted to get some more detail or color on how much room there is basically to keep growing those balances on the same-store basis versus, you know, just kind of expanding the store cap? Thank you.

Paul, can you just repeat that last part of the question for me again, please?

Hey, no worries. Yeah, I just wanted to get some more color on where the growth trajectory is and kind of what pace we could be seeing for growth on a per-store basis for receivables versus, you know, just more of organic store expansion growth?

So I think we've talked a lot about, you know, sort of our market expansion, our geographic expansion, Paul, in terms of, right, that still is a lever for us. I think if you look at the supplemental presentation, you will see that we've become more efficient in terms of the loan balances that we have per branch. So we are becoming more efficient with those branches. So I would really marry those two things together as you're sort of thinking about the impact that that is going to have on our overall ENR balances. And then, you know, we provided you, obviously, with the ENR growth forecast for this year. And I would just, again, look at that in terms of seasonality, in terms of when we put that on as we know, right, in the first quarter, you have the tax refund. We go back to growing those balances in, you know, the second, third, and fourth quarters. And we would expect without any exogenous variables that that would be the same pattern that we would follow this year.

Got it. And then if maybe we can just get one follow-up, I wanted to get a little bit more detail also on, you know, the graduation program. I think that small balance loans came in a little bit lower than we were expecting while larger loans came in higher. So I wanted to see if we can get more color on, you know, how that's progressing and if there was kind of more of a funnel over to the larger loans and graduation during the quarter than expected?

Yeah. So, Kyle, how I would think about that is very much we meet the demand where the demand is as long as it fits within our credit box. So that is very much what we've been doing. Our auto product is more of a newer product for us. So you are seeing that grow in terms of its growing, you know, quite rapidly just because you're coming off of that smaller base. And then, of course, it has the larger ticket size. But we remain committed to our balanced approach to growth. We will continue to bring in smaller, higher-yielding loans that fit our credit box and our return hurdles. We will continue to graduate them up to larger small loans and also larger large loans, but the other end of that continuum being, you know, the auto secured test. You know, Lockbir talked a little bit about the auto secured business in his prepared remarks. We think that is a very stable portfolio. But we also understand what small loans bring to our balanced approach. And so we will continue with that graduation strategy. You will see, you know, sometimes some oscillation in that, but that is really because of where the demand is and our credit box at that time. We'll always continue to put on good loans that meet our return hurdles.

Got it. Thank you.

Next question is coming from Kyle Joseph from Stephens. Your line is now live.

Hey, good afternoon. Thanks for taking my questions. Just wanted to step back and get your perspective on macro. Appreciate what you guys said in terms of tax refunds, and we understand the seasonality there. But, you know, from a high level, obviously, there's some uncertainty out there. But, you know, we've seen a call it, almost two years now or more of kind of a good mix of strong loan demand, balanced with stable credit. So, you know, weighing on the heels of the higher tax refunds, how you're expecting kind of the remainder of '26 to look and how that factors into your outlook. Thanks.

Hey, Kyle. Good afternoon. It's Lockbir. I appreciate the question. You know, the macro picture, I'm just restating what the FOMC statement was last week. You know, the economy has been growing at a solid pace. We do see the consumer to be healthy, so in the early stage delinquency levels for the fourth quarter. And so, as I said, I've been we've been studying kind of various segments of the book, slicing and dicing various segments and markets, and think overall, the consumer, to your point, is fairly healthy even in the part of the K-shaped economy that we serve. In terms of the first quarter, as we mentioned, we believe the OBPA impact really sort of has three sort of rungs to it. One, I think the real increase in purchasing power we believe consumers are going to use to pay down past due debt. So it should help in collections. Two, if consumers might use that increase in purchasing power to pay down debt in general, that's high interest rate or what have you. And so that's the big question mark in how much impact it does to balances. And then three, I think some of this refund increase, which folks estimate would be a 20% year-over-year increase, will also help increase discretionary spending, which frankly gives us an opportunity to grow loans. And so we are looking at this from all three perspectives. Post-OBPA impact, which, you know, by kind of ends May kind of time frame, we believe consumer loan demand is going to stay healthy as it has been, and so that's kind of what's reflected in our 10% receivables growth year-over-year sort of guidance for '26.

Yeah. And Kyle, just the other thing that I would add to that, some of the metrics that we tend to follow, we'll continue to look at the employment rate and then the unemployment rate for the folks, you know, for our current customers and for those folks that, you know, could be potential customers. We know that open jobs still remain at 7 million. So, you know, open jobs, ample open jobs for our folks, even if they do tend to lose their job. We've been watching inflation, which is moderating. And then, you know, we look at wage growth in sort of the, you know, the lowest quartiles, and there is wage growth that has moderated. But it still continues to be real wage growth. And then we always look at the gas per gallon. Right? And the gas per gallon has come down from where it was last year. It's come down from where it was in September. And, you know, we always look at the health of our customer in terms of their ability to pay. So we'll continue to do that, but we do believe that even if there is an outsized tax impact, because people get higher refunds, we believe that all indications are demand will continue to be there. And if they do pay down their loans, that you should see that in terms of collections and then, of course, on NCL later in the year.

Got it. Very helpful. And then, just kind of honing in on customer acquisition costs. Obviously, marketing isn't a huge part of your P&L. But just kind of want to get your sense for, you know, how marketing should trend kind of weighing what you talked about in terms of, you know, broader G&A trends.

I mean, if you take a look at our marketing quarter over quarter and year over year, we've improved it. Talked a little bit about it during the last call. We've become much more efficient, you know, around our mail. Now what we will do is we will probably reinvest some of that, right, in terms of growth. So right now, you saw in the quarter that we had ample growth in the quarter a little bit higher than the guidance that I gave, but we were better on our marketing expenses, and that's really due to the efficiency. But if demand is strong and those folks meet our risk box, we will probably redeploy some of those expenses in order to grow the business.

Got it. Very helpful. Thanks for taking my questions.

Next question is coming from Alexander Villalobos from Jefferies. Your line is now live.

Hey, guys. Thank you for taking my question. A lot of the questions I had have been answered. Did want to ask a question about pricing, though. Obviously, rates have come down a decent amount last year. Are you guys able to keep pricing kind of where it is given the segment of the consumer that you guys serve not being that maybe inelastic? I was just curious if pricing might come down a little bit as rates go down. Should we think about pricing, you know, yields of the book kind of, like, staying where they are? Thank you.

So, hey, just a couple of things on that, Alex. So when we think about pricing, we really look at pricing in context of, you know, where the market's at. And so you always want to price within a range to the market because you don't want adverse selection if you're too high. You don't want to be too low because then, you know, you just don't want to be too low. You're leaving some opportunity there on the table. So, you know, we always measure those things as we look at pricing. But, again, I'll go back to right. We also look at obviously the consumer's ability to pay, and this consumer is often more focused on the payment dollars that they have to pay every month. So as long as you do that first part where you're in line with what the market will bear in terms of competition, the consumer in this segment is usually most concerned about their monthly payment. So we put all of that together when we think about pricing.

And some other different firms have been extending duration. Have you guys kind of kept duration where it has been historically or to get to that, like, payment that you're talking about, some other companies have extended duration. I was just curious if that has happened as well.

So we haven't done that, you know, in terms of how you're asking about it in terms of programmatically. I mean, we have put on, you know, our auto product, which just comes with, you know, it's a longer loan. So, you know, that definitely is a variable. And then, of course, as we work through our programs with customers who are having difficulty making payments, you know, we'll look at a number of curing tools in order, and that's on a, you know, loan by loan basis, in order to ensure that the customer has the ability to pay us and, therefore, will pay us. So we do look at it from that lens, but, no, there's no programmatic extension of duration.

Perfect. Thank you.

Thank you. We have reached the end of our question and answer session. I'd like to turn the floor back over for any further or closing comments.

Thank you. Just to close and maybe repeat myself, I'll be very pleased with how we finished 2025. Really encouraged by the momentum we are carrying into 2026. I want to thank all my colleagues at Regional, the team. They've done a tremendous job building the platform and the momentum we have today, and I really thank them and wish them luck as we work together in building an amazing 2026. Thank you.

Thank you. That does conclude today's teleconference. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.