Shares of Regional Management Corp. RM have declined 11.6% since it reported first-quarter 2025 results on April 30. The better-than-expected quarterly earnings benefited from increasing total loan originations and net finance receivables per branch. However, the upsides were hurt by increased general and administrative expenses.
The company reported first-quarter 2025 adjusted earnings per share (EPS) of 70 cents, which surpassed the Zacks Consensus Estimate by 4.5%. The bottom line decreased from $1.56 per share in the prior-year quarter.
RM's total revenues advanced 6% year over year to $153 million. However, the top line missed the consensus mark by 0.9%.
Regional Management Corp. Price, Consensus and EPS Surprise
Regional Management Corp. Price, Consensus and EPS Surprise
Interest and fee income of $136.6 million increased 6% year over year but came lower than the Zacks Consensus Estimate of $138 million. Net insurance income rose 2.9% year over year to $11.3 million, which missed the consensus mark of $12 million. Other income totaled $5.1 million, up 13.3% year over year but lower than the consensus mark of $5.2 million.
Provision for credit losses escalated 24.9% year over year to $58 million.
Total general and administrative expenses were $66 million, which increased 9.3% year over year, primarily due to the shift of incentive expenses from the second quarter. The efficiency ratio, which depicts general and administrative expenses as a percentage of revenues, improved 130 basis points (bps) year over year to 43.2% in the first quarter. Interest expenses of $19.8 million grew 13% year over year.
Regional Management recorded a net income of $7 million, which decreased 53.9% year over year.
Net finance receivables were $1.9 billion at the first-quarter end, which grew 8.4% year over year. Small loans advanced 10.8% year over year to $543.8 million, while large loans of $1.3 billion rose 7.6% year over year. It had 353 branches at the quarter-end, with net finance receivables per branch at $5.4 million, which grew 5.3% year over year.
The company recorded total loan originations of $392.1 million during the March quarter, which improved 20.2% year over year. (Find the latest earnings estimates and surprises on Zacks Earnings Calendar.)
RM’s Financial Position (as of March 31, 2025)
Regional Management exited the first quarter with a cash balance of $4.2 million, which increased from $4 million as of Dec. 31, 2024.
Total assets of $1.9 billion decreased 0.4% year over year.
Net debt amounted to $1.5 billion, down 0.1% year over year. Total liabilities of $1.5 billion at the first-quarter end declined 0.6% year over year.
Total shareholders’ equity advanced 0.2% year over year to $357.9 million.
Regional Management’s Share Repurchase and Dividend Update
RM bought back shares worth $6.5 million in the first quarter of 2025.
For the second quarter of 2025, Regional Management announced a dividend of 30 cents per share, which will be paid on June 11, 2025, to shareholders of record as of May 21.
Regional Management’s Outlook
Management earlier targeted achieving at least 10% portfolio growth and delivering a meaningful increase in net income in 2025.
The company expects general and administrative expenses for the second quarter of 2025 to be in the range of $65.5-$66 million. Interest expenses are estimated in the band of $19.8-$21 million in the second quarter.
Total revenue yield is likely to increase 20 basis points sequentially in the second quarter, while net credit losses are likely to be around $57 million. It anticipates the effective tax rate to be around 24.5% for the second quarter.
RM’s Zacks Rank & Key Picks
RM currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Finance space are Root Inc. ROOT, EverQuote Inc. EVER and Heritage Insurance Holdings Inc. HRTG, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Root’s current-year earnings of $1.11 per share has witnessed one upward revision in the past week against none in the opposite direction. Root beat earnings estimates in each of the trailing four quarters, with the average surprise being 208.9%. The consensus estimate for current-year revenues is pegged at $1.4 billion, implying 17.3% year-over-year growth.
The Zacks Consensus Estimate for EverQuote’s current-year earnings is pegged at $1.17 per share. EverQuote beat earnings estimates in each of the trailing four quarters, with the average surprise being 122.6%. The consensus estimate for current-year revenues is pegged at $640.3 million, suggesting 28% year-over-year growth.
The Zacks Consensus Estimate for Heritage Insurance’s current-year earnings of $3.25 per share has witnessed two upward revisions in the past week against no movement in the opposite direction. Heritage Insurance beat earnings estimates in each of the trailing four quarters, with the average surprise being 363.2%. The consensus estimate for current-year revenues is pegged at $854.9 million, calling for 4.6% year-over-year growth.
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