RM Regional Management Corp

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 31, 2024

 

Regional Management Corp.

(Exact name of registrant as specified in its charter)

 

 

Delaware		001-35477		57-0847115
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

979 Batesville Road, Suite B

Greer, South Carolina 29651

(Address of principal executive offices) (zip code)

(864) 448-7000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class		Trading Symbol		Name of Each Exchange on Which Registered
Common Stock, $0.10 par value		RM		New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

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Item 2.02. Results of Operations and Financial Condition.

On July 31, 2024, the Company issued a press release announcing financial results for the three and six months ended June 30, 2024. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. On July 31, 2024, the Company will host a conference call to discuss financial results for the three and six months ended June 30, 2024. A copy of the presentation to be used during the conference call is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

All information in the press release and the presentation is furnished under Item 2.02 of Form 8-K, “Results of Operations and Financial Condition,” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 8.01. Other Events.

On July 31, 2024, the Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.30 per share of outstanding common stock, payable on September 12, 2024 to stockholders of record as of the close of business on August 21, 2024.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit No.		Description
99.1		Press Release issued by Regional Management Corp. on July 31, 2024, announcing financial results for Regional Management Corp. for the three and six months ended June 30, 2024.
99.2		Presentation of Regional Management Corp., dated July 31, 2024.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	Regional Management Corp.
Date: July 31, 2024	By:		/s/ Harpreet Rana
	Name:		Harpreet Rana
	Title:		Executive Vice President and Chief Financial Officer

 

 

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Regional Management Corp. Announces Second Quarter 2024 Results

- Net income of $8.4 million and diluted earnings per share of $0.86, up 37% from $0.63 in the prior-year period -

- Year-over-year growth in customer accounts, originations, and revenue of 7%; revenue growth driven by 5% ending net receivables growth and 80 bps increase in total revenue yield -

- 30+ day contractual delinquency rate of 6.9% as of June 30, 2024 -

- Continued expense discipline with operating expense ratio of 13.8% -

Greenville, South Carolina – July 31, 2024 – Regional Management Corp. (NYSE: RM), a diversified consumer finance company, today announced results for the second quarter ended June 30, 2024.

 

“We are very pleased with our quarterly and year-to-date results,” said Robert W. Beck, President and Chief Executive Officer of Regional Management Corp. “We delivered $8.4 million of net income in the second quarter, or $0.86 of diluted EPS. We grew our portfolio by $29 million sequentially to $1.8 billion in the quarter, up 5.0% from the prior year. Our interest and fee yield increased 110 basis points year-over-year from a combination of increased pricing, growth of our higher-margin small loan portfolio, and improved credit performance. Our larger portfolio and stronger yield combined to drive total revenue to $143 million in the second quarter, up 7% from last year. At the same time, we have maintained a tight grip on G&A expense while still investing in our growth and strategic initiatives. Together, these strong line item outcomes drove net income up 40% compared to the second quarter of last year.”

 

“Along with our strong first half results, we continue to carefully manage our portfolio’s credit quality and performance,” added Mr. Beck. “Our 30+ day delinquency rate remained stable at 6.9% at the end of the quarter, 20 basis points better sequentially. Our net credit loss rate improved 40 basis points from the prior year, as the front book continues to perform in line with our expectations and makes up a larger portion of our total portfolio. We grew our small loan portfolio by $61 million, or 14%, year-over-year, representing more than 70% of our total portfolio growth over the past year. Our portfolio of loans with greater than 36% APR grew from 14% to 17% of the total portfolio over that same time period. While these portfolios naturally come with higher delinquencies and credit losses, it is an excellent trade given the stronger margins and bottom-line returns that the portfolios generate.”

 

 

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“We had a very successful first half of 2024, posting strong top- and bottom-line results despite the continued impacts of inflation on credit performance,” continued Mr. Beck. “We remain well-positioned to operate effectively through the current economic cycle. As we expect credit losses to improve in the second half of the year, we are excited to begin increasing our investment in our strategic initiatives and portfolio growth, including through the opening of ten new branch locations before year-end and continued expansion of our higher-margin and auto-secured loan portfolios. We look forward to continuing to deliver strong returns to our shareholders while also investing in the business in a way that will enable us to achieve additional, sustainable growth, improved credit performance, and greater productivity, operating efficiency, and leverage over the long-term.”

 

Second Quarter 2024 Highlights

 

 

 

- Large loan net finance receivables of $1.3 billion increased $28.0 million, or 2.3%, from the prior-year period and represented 71.4% of the total loan portfolio, compared to 73.3% in the prior-year period.

 

- Small loan net finance receivables of $505.6 million increased $61.1 million, or 13.7%, from the prior-year period and represented 28.5% of the total loan portfolio, compared to 26.3% in the prior-year period.

 

- Net finance receivables with annual percentage rates (APRs) above 36% increased to 17.2% of the portfolio from 13.9% in the prior-year period.

 

- Total loan originations were $426.1 million in the second quarter of 2024, an increase of $27.1 million, or 6.8%, from the prior-year period, due to controlled growth from credit-tightening actions.

 

 

- The increase in interest and fee yield is attributable to increased pricing, growth of the higher-margin small loan portfolio, and improved credit performance.

 

- Total revenue yield increased 80 basis points year-over-year, 30 basis points lower than the increase in interest and fee yield due to lower insurance revenues.

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- Annualized net credit losses as a percentage of average net finance receivables for the second quarter of 2024 were 12.7%, a 40 basis point improvement compared to 13.1% in the prior-year period. The second quarter 2024 net credit loss rate is inclusive of a 20 basis point impact from growth of the higher-rate, small loan portfolio.

 

- The provision for credit losses for the second quarter of 2024 included a reserve reduction of $1.7 million primarily due to changes in estimated future macroeconomic impacts on credit losses, partially offset by portfolio growth during the quarter.

 

- Allowance for credit losses was $185.4 million as of June 30, 2024, or 10.5% of net finance receivables, a 20 basis point decrease sequentially from 10.7% due to improved portfolio credit quality and expectations for improving future macroeconomic conditions.

 

 

 

Third Quarter 2024 Dividend

 

The company’s Board of Directors has declared a dividend of $0.30 per common share for the third quarter of 2024. The dividend will be paid on September 12, 2024 to shareholders of record as of the close of business on August 21, 2024. The declaration and payment of any future dividend is subject to the discretion of the Board of Directors and will depend on a variety of factors, including the company’s financial condition and results of operations.

 

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Liquidity and Capital Resources

 

As of June 30, 2024, the company had net finance receivables of $1.8 billion and debt of $1.4 billion. The debt consisted of:

 

 

As of June 30, 2024, the company’s unused capacity to fund future growth on its revolving credit facilities (subject to the borrowing base) was $564 million, or 77.3%, and the company had available liquidity of $149.4 million, including unrestricted cash on hand and immediate availability to draw down cash from its revolving credit facilities. As of June 30, 2024, the company’s fixed-rate debt as a percentage of total debt was 88%, with a weighted-average coupon of 4.2% and a weighted-average revolving duration of 1.2 years.

 

The company had a funded debt-to-equity ratio of 4.0 to 1.0 and a stockholders’ equity ratio of 19.3%, each as of June 30, 2024. On a non-GAAP basis, the company had a funded debt-to-tangible equity ratio of 4.2 to 1.0, as of June 30, 2024. Please refer to the reconciliations of non-GAAP measures to comparable GAAP measures included at the end of this press release.

 

Conference Call Information

 

Regional Management Corp. will host a conference call and webcast today at 5:00 PM ET to discuss these results.

 

The dial-in number for the conference call is (855) 327-6837 (toll-free) or (631) 891-4304 (direct). Please dial the number 10 minutes prior to the scheduled start time.

 

*** A supplemental slide presentation will be made available on Regional’s website prior to the earnings call at www.RegionalManagement.com. ***

 

In addition, a live webcast of the conference call will be available on Regional’s website at www.RegionalManagement.com.

 

A webcast replay of the call will be available at www.RegionalManagement.com for one year following the call.

 

About Regional Management Corp.

 

Regional Management Corp. (NYSE: RM) is a diversified consumer finance company that provides attractive, easy-to-understand installment loan products primarily to customers with

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limited access to consumer credit from banks, thrifts, credit card companies, and other lenders. Regional Management operates under the name “Regional Finance” online and in branch locations in 19 states across the United States. Most of its loan products are secured, and each is structured on a fixed-rate, fixed-term basis with fully amortizing equal monthly installment payments, repayable at any time without penalty. Regional Management sources loans through its multiple channel platform, which includes branches, centrally managed direct mail campaigns, digital partners, and its consumer website. For more information, please visit www.RegionalManagement.com.

 

Forward-Looking Statements

 

This press release may contain various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact but instead represent Regional Management Corp.’s expectations or beliefs concerning future events. Forward-looking statements include, without limitation, statements concerning financial outlooks or future plans, objectives, goals, projections, strategies, events, or performance, and underlying assumptions and other statements related thereto. Words such as “may,” “will,” “should,” “likely,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “outlook,” and similar expressions may be used to identify these forward-looking statements. Such forward-looking statements speak only as of the date on which they were made and are about matters that are inherently subject to risks and uncertainties, many of which are outside of the control of Regional Management. As a result, actual performance and results may differ materially from those contemplated by these forward-looking statements. Therefore, investors should not place undue reliance on forward-looking statements.

 

Factors that could cause actual results or performance to differ from the expectations expressed or implied in forward-looking statements include, but are not limited to, the following: managing growth effectively, implementing Regional Management’s growth strategy, and opening new branches as planned; Regional Management’s convenience check strategy; Regional Management’s policies and procedures for underwriting, processing, and servicing loans; Regional Management’s ability to collect on its loan portfolio; Regional Management’s insurance operations; exposure to credit risk and repayment risk, which risks may increase in light of adverse or recessionary economic conditions; the implementation of evolving underwriting models and processes, including as to the effectiveness of Regional Management's custom scorecards; changes in the competitive environment in which Regional Management operates or a decrease in the demand for its products; the geographic concentration of Regional Management’s loan portfolio; the failure of third-party service providers, including those providing information technology products; changes in economic conditions in the markets Regional Management serves, including levels of unemployment and bankruptcies; the ability to achieve successful acquisitions and strategic alliances; the ability to make technological improvements as quickly as competitors; security breaches, cyber-attacks, failures in information systems, or fraudulent activity; the ability to originate loans; reliance on information technology resources and providers, including the risk of prolonged system outages; changes in current revenue and expense trends, including trends affecting delinquencies and credit losses;

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any future public health crises, including the impact of such crisis on our operations and financial condition; changes in operating and administrative expenses; the departure, transition, or replacement of key personnel; the ability to timely and effectively implement, transition to, and maintain the necessary information technology systems, infrastructure, processes, and controls to support Regional Management’s operations and initiatives; changes in interest rates; existing sources of liquidity may become insufficient or access to these sources may become unexpectedly restricted; exposure to financial risk due to asset-backed securitization transactions; risks related to regulation and legal proceedings, including changes in laws or regulations or in the interpretation or enforcement of laws or regulations; changes in accounting standards, rules, and interpretations and the failure of related assumptions and estimates; the impact of changes in tax laws and guidance, including the timing and amount of revenues that may be recognized; risks related to the ownership of Regional Management’s common stock, including volatility in the market price of shares of Regional Management’s common stock; the timing and amount of future cash dividend payments; and anti-takeover provisions in Regional Management’s charter documents and applicable state law.

 

The foregoing factors and others are discussed in greater detail in Regional Management’s filings with the Securities and Exchange Commission. Regional Management will not update or revise forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events or the non-occurrence of anticipated events, whether as a result of new information, future developments, or otherwise, except as required by law. Regional Management is not responsible for changes made to this document by wire services or Internet services.

 

Contact

Investor Relations

Garrett Edson, (203) 682-8331

investor.relations@regionalmanagement.com

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Regional Management Corp. and Subsidiaries

Consolidated Statements of Income

(Unaudited)

(dollars in thousands, except per share amounts)

 

										Better (Worse)																Better (Worse)
		2Q 24				2Q 23				$				%				YTD 24				YTD 23				$				%
Revenue
Interest and fee income		$	127,898			$	118,083			$	9,815				8.3	%		$	256,716			$	238,490			$	18,226				7.6	%
Insurance income, net			10,507				11,203				(696	)			(6.2	)%			21,481				22,162				(681	)			(3.1	)%
Other income			4,620				4,198				422				10.1	%			9,136				8,210				926				11.3	%
Total revenue			143,025				133,484				9,541				7.1	%			287,333				268,862				18,471				6.9	%
Expenses
Provision for credit losses			53,802				52,551				(1,251	)			(2.4	)%			100,225				100,219				(6	)			—
Personnel			37,097				36,419				(678	)			(1.9	)%			74,917				75,016				99				0.1	%
Occupancy			6,149				6,158				9				0.1	%			12,524				12,446				(78	)			(0.6	)%
Marketing			4,836				3,844				(992	)			(25.8	)%			9,151				7,223				(1,928	)			(26.7	)%
Other			12,054				10,475				(1,579	)			(15.1	)%			23,992				21,534				(2,458	)			(11.4	)%
Total general and administrative			60,136				56,896				(3,240	)			(5.7	)%			120,584				116,219				(4,365	)			(3.8	)%
Interest expense			17,865				16,224				(1,641	)			(10.1	)%			35,369				33,006				(2,363	)			(7.2	)%
Income before income taxes			11,222				7,813				3,409				43.6	%			31,155				19,418				11,737				60.4	%
Income taxes			2,777				1,790				(987	)			(55.1	)%			7,505				4,706				(2,799	)			(59.5	)%
Net income		$	8,445			$	6,023			$	2,422				40.2	%		$	23,650			$	14,712			$	8,938				60.8	%
Net income per common share:
Basic		$	0.88			$	0.64			$	0.24				37.5	%		$	2.47			$	1.57			$	0.90				57.3	%
Diluted		$	0.86			$	0.63			$	0.23				36.5	%		$	2.41			$	1.53			$	0.88				57.5	%
Weighted-average common shares outstanding:
Basic			9,613				9,399				(214	)			(2.3	)%			9,591				9,363				(228	)			(2.4	)%
Diluted			9,863				9,566				(297	)			(3.1	)%			9,805				9,595				(210	)			(2.2	)%
Return on average assets (annualized)			1.9	%			1.4	%											2.7	%			1.7	%
Return on average equity (annualized)			10.0	%			7.6	%											14.1	%			9.3	%

 

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Regional Management Corp. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(dollars in thousands, except par value amounts)

 

										Increase (Decrease)
		2Q 24				2Q 23				$				%
Assets
Cash		$	4,323			$	10,330			$	(6,007	)			(58.2	)%
Net finance receivables			1,773,743				1,688,937				84,806				5.0	%
Unearned insurance premiums			(46,081	)			(49,059	)			2,978				6.1	%
Allowance for credit losses			(185,400	)			(181,400	)			(4,000	)			(2.2	)%
Net finance receivables, less unearned insurance premiums and allowance for credit losses			1,542,262				1,458,478				83,784				5.7	%
Restricted cash			138,891				131,132				7,759				5.9	%
Lease assets			35,144				34,996				148				0.4	%
Intangible assets			19,264				13,949				5,315				38.1	%
Property and equipment			13,411				14,689				(1,278	)			(8.7	)%
Deferred tax assets, net			12,376				15,278				(2,902	)			(19.0	)%
Restricted available-for-sale investments			2,157				20,298				(18,141	)			(89.4	)%
Other assets			21,224				24,466				(3,242	)			(13.3	)%
Total assets		$	1,789,052			$	1,723,616			$	65,436				3.8	%
Liabilities and Stockholders’ Equity
Liabilities:
Debt		$	1,378,449			$	1,344,855			$	33,594				2.5	%
Unamortized debt issuance costs			(5,616	)			(6,923	)			1,307				18.9	%
Net debt			1,372,833				1,337,932				34,901				2.6	%
Lease liabilities			37,286				37,150				136				0.4	%
Accounts payable and accrued expenses			34,030				27,032				6,998				25.9	%
Total liabilities			1,444,149				1,402,114				42,035				3.0	%
Stockholders’ equity:
Preferred stock ($0.10 par value, 100,000 shares authorized, none issued or outstanding)			—				—				—				—
Common stock ($0.10 par value, 1,000,000 shares authorized, 14,962 shares issued and 10,156 shares outstanding at June 30, 2024 and 14,636 shares issued and 9,829 shares outstanding at June 30, 2023)			1,496				1,464				32				2.2	%
Additional paid-in capital			126,373				116,202				10,171				8.8	%
Retained earnings			367,216				354,346				12,870				3.6	%
Accumulated other comprehensive loss			(39	)			(367	)			328				89.4	%
Treasury stock (4,807 shares at June 30, 2024 and June 30, 2023)			(150,143	)			(150,143	)			—				—
Total stockholders’ equity			344,903				321,502				23,401				7.3	%
Total liabilities and stockholders’ equity		$	1,789,052			$	1,723,616			$	65,436				3.8	%

 

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Regional Management Corp. and Subsidiaries

Selected Financial Data

(Unaudited)

(dollars in thousands, except per share amounts)

 

		Net Finance Receivables
		2Q 24				1Q 24				QoQ $ Inc (Dec)				QoQ % Inc (Dec)				2Q 23				YoY $ Inc (Dec)				YoY % Inc (Dec)
Large loans		$	1,266,032			$	1,250,647			$	15,385				1.2	%		$	1,238,031			$	28,001				2.3	%
Small loans			505,640				490,830				14,810				3.0	%			444,590				61,050				13.7	%
Retail loans			2,071				2,809				(738	)			(26.3	)%			6,316				(4,245	)			(67.2	)%
Total net finance receivables		$	1,773,743			$	1,744,286			$	29,457				1.7	%		$	1,688,937			$	84,806				5.0	%
Number of branches at period end			343				343				—				—				347				(4	)			(1.2	)%
Net finance receivables per branch		$	5,171			$	5,085			$	86				1.7	%		$	4,867			$	304				6.2	%

 

 

		Averages and Yields
		2Q 24								1Q 24								2Q 23
		Average Net Finance Receivables				Average Yield (1)				Average Net Finance Receivables				Average Yield (1)				Average Net Finance Receivables				Average Yield (1)
Large loans		$	1,255,729				26.1	%		$	1,263,491				26.0	%		$	1,223,339				26.0	%
Small loans			490,615				37.3	%			491,911				37.8	%			443,601				34.5	%
Retail loans			2,433				16.6	%			3,341				15.8	%			7,191				16.6	%
Total interest and fee yield		$	1,748,777				29.3	%		$	1,758,743				29.3	%		$	1,674,131				28.2	%
Total revenue yield		$	1,748,777				32.7	%		$	1,758,743				32.8	%		$	1,674,131				31.9	%

(1) Annualized interest and fee income as a percentage of average net finance receivables.

 

 

		Components of Increase in Interest and Fee Income
		2Q 24 Compared to 2Q 23
		Increase (Decrease)
		Volume				Rate				Volume & Rate				Total
Large loans		$	2,105			$	380			$	10			$	2,495
Small loans			4,057				3,129				331				7,517
Retail loans			(197	)			1				(1	)			(197	)
Product mix			(700	)			846				(146	)			—
Total increase in interest and fee income		$	5,265			$	4,356			$	194			$	9,815

 

 

		Loans Originated (1)
		2Q 24				1Q 24				QoQ $ Inc (Dec)				QoQ % Inc (Dec)				2Q 23				YoY $ Inc (Dec)				YoY % Inc (Dec)
Large loans		$	254,779			$	185,074			$	69,705				37.7	%		$	249,514			$	5,265				2.1	%
Small loans			171,282				141,281				30,001				21.2	%			149,460				21,822				14.6	%
Total loans originated		$	426,061			$	326,355			$	99,706				30.6	%		$	398,974			$	27,087				6.8	%

(1) Represents the principal balance of loan originations and refinancings.

 

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		Other Key Metrics
		2Q 24				1Q 24				2Q 23
Net credit losses		$	55,502			$	46,723			$	54,951
Percentage of average net finance receivables (annualized)			12.7	%			10.6	%			13.1	%
Provision for credit losses		$	53,802			$	46,423			$	52,551
Percentage of average net finance receivables (annualized)			12.3	%			10.6	%			12.6	%
Percentage of total revenue			37.6	%			32.2	%			39.4	%
General and administrative expenses		$	60,136			$	60,448			$	56,896
Percentage of average net finance receivables (annualized)			13.8	%			13.7	%			13.6	%
Percentage of total revenue			42.0	%			41.9	%			42.6	%
Same store results (1):
Net finance receivables at period-end		$	1,759,075			$	1,733,237			$	1,636,131
Net finance receivable growth rate			4.5	%			3.4	%			7.2	%
Number of branches in calculation			338				340				329

(1) Same store sales reflect the change in year-over-year sales for the comparable branch base. The comparable branch base includes those branches open for at least one year.

 

 

		Contractual Delinquency
		2Q 24								1Q 24								2Q 23
Allowance for credit losses		$	185,400				10.5	%		$	187,100				10.7	%		$	181,400				10.7	%
Current			1,497,219				84.4	%			1,489,510				85.4	%			1,433,787				84.9	%
1 to 29 days past due			153,788				8.7	%			130,578				7.5	%			138,810				8.2	%
Delinquent accounts:
30 to 59 days			34,924				1.9	%			30,020				1.7	%			33,676				2.0	%
60 to 89 days			27,689				1.6	%			25,409				1.5	%			24,931				1.5	%
90 to 119 days			21,607				1.2	%			23,460				1.3	%			20,041				1.1	%
120 to 149 days			19,333				1.1	%			22,163				1.3	%			18,087				1.1	%
150 to 179 days			19,183				1.1	%			23,146				1.3	%			19,605				1.2	%
Total contractual delinquency		$	122,736				6.9	%		$	124,198				7.1	%		$	116,340				6.9	%
Total net finance receivables		$	1,773,743				100.0	%		$	1,744,286				100.0	%		$	1,688,937				100.0	%
1 day and over past due		$	276,524				15.6	%		$	254,776				14.6	%		$	255,150				15.1	%

 

 

		Contractual Delinquency by Product
		2Q 24								1Q 24								2Q 23
Large loans		$	76,432				6.0	%		$	78,055				6.2	%		$	74,637				6.0	%
Small loans			46,015				9.1	%			45,804				9.3	%			40,894				9.2	%
Retail loans			289				14.0	%			339				12.1	%			809				12.8	%
Total contractual delinquency		$	122,736				6.9	%		$	124,198				7.1	%		$	116,340				6.9	%

 

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		Income Statement Quarterly Trend
		2Q 23				3Q 23				4Q 23				1Q 24				2Q 24				QoQ $ B(W)				YoY $ B(W)
Revenue
Interest and fee income		$	118,083			$	125,018			$	126,190			$	128,818			$	127,898			$	(920	)		$	9,815
Insurance income, net			11,203				11,382				10,985				10,974				10,507				(467	)			(696	)
Other income			4,198				4,478				4,484				4,516				4,620				104				422
Total revenue			133,484				140,878				141,659				144,308				143,025				(1,283	)			9,541
Expenses
Provision for credit losses			52,551				50,930				68,885				46,423				53,802				(7,379	)			(1,251	)
Personnel			36,419				39,832				42,024				37,820				37,097				723				(678	)
Occupancy			6,158				6,315				6,268				6,375				6,149				226				9
Marketing			3,844				4,077				4,474				4,315				4,836				(521	)			(992	)
Other			10,475				11,880				12,030				11,938				12,054				(116	)			(1,579	)
Total general and administrative			56,896				62,104				64,796				60,448				60,136				312				(3,240	)
Interest expense			16,224				16,947				17,510				17,504				17,865				(361	)			(1,641	)
Income before income taxes			7,813				10,897				(9,532	)			19,933				11,222				(8,711	)			3,409
Income taxes			1,790				2,077				(1,958	)			4,728				2,777				1,951				(987	)
Net income (loss)		$	6,023			$	8,820			$	(7,574	)		$	15,205			$	8,445			$	(6,760	)		$	2,422
Net income (loss) per common share:
Basic		$	0.64			$	0.94			$	(0.80	)		$	1.59			$	0.88			$	(0.71	)		$	0.24
Diluted		$	0.63			$	0.91			$	(0.80	)		$	1.56			$	0.86			$	(0.70	)		$	0.23
Weighted-average shares outstanding:
Basic			9,399				9,429				9,437				9,569				9,613				(44	)			(214	)
Diluted			9,566				9,650				9,437				9,746				9,863				(117	)			(297	)
		Balance Sheet Quarterly Trend
		2Q 23				3Q 23				4Q 23				1Q 24				2Q 24				QoQ $ Inc (Dec)				YoY $ Inc (Dec)
Total assets		$	1,723,616			$	1,765,340			$	1,794,527			$	1,756,748			$	1,789,052			$	32,304			$	65,436
Net finance receivables		$	1,688,937			$	1,751,009			$	1,771,410			$	1,744,286			$	1,773,743			$	29,457			$	84,806
Allowance for credit losses		$	181,400			$	184,900			$	187,400			$	187,100			$	185,400			$	(1,700	)		$	4,000
Debt		$	1,344,855			$	1,372,748			$	1,399,814			$	1,358,795			$	1,378,449			$	19,654			$	33,594
		Other Key Metrics Quarterly Trend
		2Q 23				3Q 23				4Q 23				1Q 24				2Q 24				QoQ Inc (Dec)				YoY Inc (Dec)
Interest and fee yield (annualized)			28.2	%			29.0	%			28.8	%			29.3	%			29.3	%			—				1.1	%
Efficiency ratio (1)			42.6	%			44.1	%			45.7	%			41.9	%			42.0	%			0.1	%			(0.6	)%
Operating expense ratio (2)			13.6	%			14.4	%			14.8	%			13.7	%			13.8	%			0.1	%			0.2	%
30+ contractual delinquency			6.9	%			7.3	%			6.9	%			7.1	%			6.9	%			(0.2	)%			—
Net credit loss ratio (3)			13.1	%			11.0	%			15.1	%			10.6	%			12.7	%			2.1	%			(0.4	)%
Book value per share		$	32.71			$	33.61			$	33.02			$	34.10			$	33.96			$	(0.14	)		$	1.25

(1) General and administrative expenses as a percentage of total revenue.

(2) Annualized general and administrative expenses as a percentage of average net finance receivables.

(3) Annualized net credit losses as a percentage of average net finance receivables.

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		Averages and Yields
		YTD 24								YTD 23
		Average Net Finance Receivables				Average Yield (1)				Average Net Finance Receivables				Average Yield (1)
Large loans		$	1,259,611				26.1	%		$	1,219,464				26.0	%
Small loans			491,262				37.6	%			455,659				34.8	%
Retail loans			2,887				16.1	%			8,068				17.7	%
Total interest and fee yield		$	1,753,760				29.3	%		$	1,683,191				28.3	%
Total revenue yield		$	1,753,760				32.8	%		$	1,683,191				31.9	%

 

 

		Components of Increase in Interest and Fee Income
		YTD 24 Compared to YTD 23
		Increase (Decrease)
		Volume				Rate				Volume & Rate				Total
Large loans		$	5,219			$	407			$	13			$	5,639
Small loans			6,193				6,378				498				13,069
Retail loans			(459	)			(64	)			41				(482	)
Product mix			(954	)			1,175				(221	)			—
Total increase in interest and fee income		$	9,999			$	7,896			$	331			$	18,226

 

 

		Loans Originated (1)
		YTD 24				YTD 23				YTD $ Inc (Dec)				YTD % Inc (Dec)
Large loans		$	439,853			$	443,085			$	(3,232	)			(0.7	)%
Small loans			312,563				258,944				53,619				20.7	%
Retail loans			—				146				(146	)			(100.0	)%
Total loans originated		$	752,416			$	702,175			$	50,241				7.2	%

(1) Represents the principal balance of loan originations and refinancings.

 

 

		Other Key Metrics
		YTD 24				YTD 23
Net credit losses		$	102,225			$	97,619
Percentage of average net finance receivables (annualized)			11.7	%			11.6	%
Provision for credit losses		$	100,225			$	100,219
Percentage of average net finance receivables (annualized)			11.4	%			11.9	%
Percentage of total revenue			34.9	%			37.3	%
General and administrative expenses		$	120,584			$	116,219
Percentage of average net finance receivables (annualized)			13.8	%			13.8	%
Percentage of total revenue			42.0	%			43.2	%

 

 

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Non-GAAP Financial Measures

In addition to financial measures presented in accordance with generally accepted accounting principles (“GAAP”), this press release contains certain non-GAAP financial measures. The company’s management utilizes non-GAAP measures as additional metrics to aid in, and enhance, its understanding of the company’s financial results. Tangible equity and the funded debt-to-tangible equity ratio are non-GAAP measures that adjust GAAP measures to exclude intangible assets. Management uses these equity measures to evaluate and manage the company’s capital and leverage position. The company also believes that these equity measures are commonly used in the financial services industry and provide useful information to users of the company’s financial statements in the evaluation of its capital and leverage position.

This non-GAAP financial information should be considered in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. In addition, the company’s non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies. The following tables provide a reconciliation of GAAP measures to non-GAAP measures.

		2Q 24
Debt		$	1,378,449
Total stockholders' equity			344,903
Less: Intangible assets			19,264
Tangible equity (non-GAAP)		$	325,639
Funded debt-to-equity ratio			4.0	x
Funded debt-to-tangible equity ratio (non-GAAP)			4.2	x

 

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2Q 24 Earnings Presentation July 31, 2024 Exhibit 99.2

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Legal Disclosures This document contains summarized information concerning Regional Management Corp. (the “Company”) and the Company’s business, operations, financial performance, and trends. No representation is made that the information in this document is complete. For additional financial, statistical, and business information, please see the Company’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the U.S. Securities and Exchange Commission (the “SEC”), as well as the Company’s other reports filed with the SEC from time to time. Such reports are or will be available on the Company’s website (www.regionalmanagement.com) and on the SEC’s website (www.sec.gov). The information and opinions contained in this document are provided as of the date of this presentation and are subject to change without notice. This document has not been approved by any regulatory or supervisory authority. This presentation, the related remarks, and the responses to various questions may contain various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact but instead represent the Company’s expectations or beliefs concerning future events. Forward-looking statements include, without limitation, statements concerning financial outlook or future plans, objectives, goals, projections, strategies, events, or performance, and underlying assumptions and other statements related thereto. Words such as “may,” “will,” “should,” “likely,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “outlook,” and similar expressions may be used to identify these forward-looking statements. Such forward-looking statements speak only as of the date on which they were made and are about matters that are inherently subject to risks and uncertainties, many of which are outside of the control of the Company. As a result, actual performance and results may differ materially from those contemplated by these forward-looking statements. Therefore, investors should not place undue reliance on such statements. Factors that could cause actual results or performance to differ from the expectations expressed or implied in forward-looking statements include, but are not limited to, the following: managing growth effectively, implementing Regional Management's growth strategy, and opening new branches as planned; Regional Management's convenience check strategy; Regional Management's policies and procedures for underwriting, processing, and servicing loans; Regional Management's ability to collect on its loan portfolio; Regional Management's insurance operations; exposure to credit risk and repayment risk, which risks may increase in light of adverse or recessionary economic conditions; the implementation of evolving underwriting models and processes, including as to the effectiveness of Regional Management’s custom scorecards; changes in the competitive environment in which Regional Management operates or a decrease in the demand for its products; the geographic concentration of Regional Management's loan portfolio; the failure of third-party service providers, including those providing information technology products; changes in economic conditions in the markets Regional Management serves, including levels of unemployment and bankruptcies; the ability to achieve successful acquisitions and strategic alliances; the ability to make technological improvements as quickly as competitors; security breaches, cyber-attacks, failures in information systems, or fraudulent activity; the ability to originate loans; reliance on information technology resources and providers, including the risk of prolonged system outages; changes in current revenue and expense trends, including trends affecting delinquencies and credit losses; any future public health crises, including the impact of such crisis on our operations and financial condition; changes in operating and administrative expenses; the departure, transition, or replacement of key personnel; the ability to timely and effectively implement, transition to, and maintain the necessary information technology systems, infrastructure, processes, and controls to support Regional Management's operations and initiatives; changes in interest rates; existing sources of liquidity may become insufficient or access to these sources may become unexpectedly restricted; exposure to financial risk due to asset-backed securitization transactions; risks related to regulation and legal proceedings, including changes in laws or regulations or in the interpretation or enforcement of laws or regulations; changes in accounting standards, rules, and interpretations and the failure of related assumptions and estimates; the impact of changes in tax laws and guidance, including the timing and amount of revenues that may be recognized; risks related to the ownership of Regional Management's common stock, including volatility in the market price of shares of Regional Management's common stock; the timing and amount of future cash dividend payments; and anti-takeover provisions in Regional Management's charter documents and applicable state law. The foregoing factors and others are discussed in greater detail in the Company's filings with the SEC. The Company will not update or revise forward-looking statements to reflect events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events or the non-occurrence of anticipated events, whether as a result of new information, future developments, or otherwise, except as required by law. This presentation also contains certain non-GAAP measures. Please refer to the Appendix accompanying this presentation for a reconciliation of non-GAAP measures to the most comparable GAAP measures. 2

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2Q 24 Highlights 545,900 Customer Accounts Up 7.4% YoY $1.77 billion Net Finance Receivables Up 5.0% YoY $426 million Origination Volume Up 6.8% YoY 13.8% Operating Expense Ratio* Continued expense management 32.7% Total Revenue Yield* Up 80 basis points YoY 6.9% 30+ Delinquencies Down 20 basis points from 1Q 24 12.7% Net Credit Loss Rate* Down 40 basis points YoY 1.9% Return on Assets* Up 50 basis points YoY $0.86 Diluted Earnings Per Share Up from $0.63 per share in 2Q 23 4.2% Dividend Yield* 2Q 24 $0.30 dividend per share $564 million Unused Capacity Substantial bandwidth to fund growth 88% Fixed-Rate Debt $187 million securitization added in 2Q 24 3 *See appendix for glossary

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2Q 24 Financial Highlights Net income of $8.4 million and diluted EPS of $0.86, up $0.23, or 36.5%, versus 2Q 23 Total revenue increased $9.5 million, or 7.1%, due to the impact of pricing changes flowing into the portfolio, growth in our higher-rate small loan business, and an increase in ANR* of 4.5% Provision for credit losses increased by $1.3 million, or 2.4% 2Q 24 net credit losses increased $0.6 million from higher ANR Lower provision release of $0.7 million year-over-year 2Q 24 operating expense ratio increased 20 basis points The prior-year ratio included insurance settlement proceeds of $1.0 million, which decreased the ratio by 20 basis points Revenue growth outpaced G&A expense growth by 2.9x compared to the prior-year period Interest expense increased $1.6 million due to higher interest rates and ANR growth of $74.6 million 4 *See appendix for glossary

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Record direct mail originations for a second quarter of $104.7 million, up from $97.4 million in 2Q 23 Originations were concentrated on programs to present and former borrowers, who perform better than new borrowers 2Q 24 digital, direct mail, and branch originations were up year-over-year by 16.7%, 7.4%, and 4.9%, respectively Originations Trend Quarterly Origination Trend ($ in millions) 5

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Controlled Portfolio Growth and Solid Small Loan Growth Generated sequential portfolio growth of $29 million, or 1.7%, in 2Q 24 Achieved year-over-year portfolio growth of $85 million, or 5.0%, in 2Q 24, down from 10.7% in 2Q 23 due to credit tightening for disciplined growth Produced solid year-over-year small loan portfolio growth of $61 million, or 13.7%, in 2Q 24 As of June 30, 2024, 83% of our portfolio carried an APR at or below 36%, down from 86% as of the prior-year period due to product mix shift to higher-rate small loan business ENR* at or below 36% APR and Product Mix 6 *See appendix for glossary

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Revenue grew 7.1% year-over-year to $143.0 million in 2Q 24 Year-over-year ANR growth of 4.5%, down from 13.8% year-over-year growth in 2Q 23 due to credit tightening for disciplined growth Interest and fee yield increased 110 basis points year-over-year due to the impact of pricing changes flowing into the portfolio, growth in our higher-rate small loan business, and improved credit performance; total revenue yield increased by 80 basis points year-over-year due to lower insurance revenue from portfolio mix shift Total Revenue ($ in millions) 7 Revenue Up 7.1% on Controlled Receivable Growth Average Net Finance Receivables ($ in millions) Total Revenue and Interest & Fee Yields *See appendix for glossary

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Recent Credit Trends – Starting to See Improvement in 2Q 24 2Q 24 delinquency of 6.9% improved 20 basis points sequentially 2Q 24 30+ delinquency is inclusive of a 10 basis point impact from growing higher-rate small loan business since 2Q 23 30+ days past due of $122.7 million compares favorably to loan loss reserves of $185.4 million as of 2Q 24 2Q 24 net credit loss rate of 12.7%, down 40 basis points from 2Q 23, inclusive of a 20 basis point impact from higher-rate small loan business 30+ & 90+ Delinquency Rates ($ in millions) Net Credit Loss Rates 8

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Front Book 83% of Total Portfolio Total delinquency over 30 days is 6.9% Total portfolio loan loss reserve rate is 10.5% *See appendix for glossary 9 Reserved at 13.7% Reserved at 10.0% 30+ DQ at 6.4% 30+ DQ at 9.8% Higher-credit-quality ENR from the front book is performing as expected and becoming a larger portion of the portfolio Front book is 83% of the total portfolio, an increase from 78% as of March 31, 2024 Front book is 77% of the 30+ delinquent loan receivables Front and back book delinquencies are 6.4% and 9.8%, respectively; front book continues to mature Loans from our back book represent 20% of 30+ delinquent loan receivables as of June 30, 2024, and are expected to represent only 8% to 10% of the total portfolio by the end of 2024 Front and back book loan loss reserves are 80% and 18% of total loan loss reserves, respectively Front and back book loan loss reserve rates* are 10.0% and 13.7%, respectively $1,774 $123 (1) $185 (2) Reserved at 7.2% 30+ DQ at 8.4%

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Reserved For Stressed Credit Losses In 2Q 24, we decreased our loan loss reserves by $1.7 million primarily due to changes in estimated future macroeconomic impacts on credit losses, partially offset by portfolio growth during the quarter Changes in our product mix may impact our loan loss reserve rate 10 Loan Loss Reserves ($ in millions)

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Continued Focus on Operating Leverage & Expense Control 2Q 24 operating expense ratio increased 20 basis points from the prior-year period 2Q 23 included insurance settlement proceeds of $1.0 million, which decreased the ratio 20 basis points 2Q 24 year-over-year total revenue growth outpaced G&A expense growth by 2.9x Operating Expense ($ in millions) 11 Operating Expense Ratio ($ in millions)

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12 2Q 24 cost of funds* increased 20 basis points year-over-year on higher interest rates and portfolio growth Interest Expense ($ in millions) Cost of Funds – Flat for 4 Quarters Due to Proactive Interest Rate Management *See appendix for glossary

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As of June 30, 2024, total unused capacity was $564 million (subject to borrowing base)  Available liquidity of $149 million as of June 30, 2024 Fixed-rate debt represented 88% of total debt as of June 30, 2024, and had a weighted-average revolving duration of 1.2 years Strong Funding Profile Unused Capacity ($ in millions) Fixed vs. Variable Debt Funded Debt Ratios 13 (1) This is a non-GAAP measure. Refer to the Appendix for a reconciliation to the most comparable GAAP measure. *See appendix for glossary

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2Q 24 Results and Outlooks 14 Prior to discrete items, such as any tax impacts of equity compensation Key Metrics 2Q 24 Results 3Q 24 Outlook FY 24 Outlook ENR Growth $29.5 million ~$48.0 million ~6.0% ANR Growth/(Liquidation) $(10.0) million ~$43.0 million ~4.0 - 4.5% Total Revenue Yield 10 basis points sequential decrease ~40 basis points sequential increase ~60 - 70 basis points year-over-year increase Net Credit Losses/ Net Credit Loss Rate $55.5 million ~$47.5 million ~11.1 - 11.2% Reserves as % of ENR 10.5% ~10.4 - 10.5% ~10.2 - 10.3% G&A Expense $60.1 million ~$64.5 million ~$250.0 million Interest Expense/ Cost of Funds $17.9 million ~$19.8 million ~4.3% Effective Tax Rate 24.7% ~24.5%(1) ~24.0 - 25.0%(1) Full Year Net Income $41.0 - $44.0 million

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Appendix 15

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Higher ENR Per Branch is Driving Efficiency 16 Branch consolidations and our new-state, lighter-footprint strategy with larger branches are driving higher ENR per branch Same store* year-over-year growth rate of 4.5% in 2Q 24 vs. 7.2% in the prior-year period Less than one year branch cohort consists of two branches that opened in 2Q 24, compared to 18 branches as of 2Q 23 *See glossary

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Digital volume represented 30.5% of our total new borrower volume in 2Q 24 Large loans represented 72.0% of new borrower digitally sourced loans booked in 2Q 24 Digitally Sourced Origination Volume ($ in millions) Digitally Sourced Originations 17

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Significant Capacity to Absorb Losses 18 *See glossary

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Diversified Liquidity Profile Long history of liquidity support from a strong group of banking partners Diversified funding platform with a senior revolving facility, warehouse facilities, and securitizations 19

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Consolidated Income Statements 20

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Consolidated Balance Sheets 21

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Non-GAAP Financial Measures In addition to financial measures presented in accordance with generally accepted accounting principles (“GAAP”), this presentation contains certain non-GAAP financial measures. The Company’s management utilizes non-GAAP measures as additional metrics to aid in, and enhance, its understanding of the Company’s financial results. The Company believes that these non-GAAP measures provide useful information by excluding certain material items that may not be indicative of our operating results. As a result, the Company believes that the non-GAAP measures that it has presented will aid in the evaluation of the operating performance of the business. Pre-tax pre-provision income and absorption capacity including pre-tax pre-provision income are non-GAAP measures that adjust GAAP measures to exclude income taxes and provision for credit losses. Management uses these absorption measures to evaluate and manage the Company’s position to absorb losses. The Company also believes that these absorption measures provide useful information to users of the Company’s financial statements in the evaluation of its capacity to absorb losses. Furthermore, tangible equity and the funded debt-to-tangible equity ratio are non-GAAP measures that adjust GAAP measures to exclude intangible assets. Management uses these equity measures to evaluate and manage the company’s capital and leverage position. The Company also believes that these equity measures are commonly used in the financial services industry and provide useful information to users of the Company’s financial statements in the evaluation of its capital and leverage position.  As a result, the Company also believes that these adjusted measures will aid users of its financial statements in the evaluation of its operating performance. This non-GAAP financial information should be considered in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. In addition, the Company’s non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies. The following tables provide reconciliations of GAAP measures to non-GAAP measures. 22

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Non-GAAP Financial Measures (Cont’d) 23

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Non-GAAP Financial Measures (Cont’d) 24

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Glossary 25 ANR – average net finance receivables Back book – loans originated from 4Q 21 to 3Q 22 and all delinquent renewals associated with loans originated prior to 4Q 22 Cost of funds – annualized interest expense as a percentage of average net finance receivables DQ % – delinquent loans outstanding as a percentage of ending net finance receivables Dividend yield – annualized dividends per share divided by the closing share price as of the last day of the quarter ENR – ending net finance receivables Front book – loans originated during or after 4Q 22 excluding delinquent renewals associated with loans originated prior to 4Q 22 Funded debt ratio – total debt divided by total assets Interest and fee yield – annualized interest and fee income as a percentage of average net finance receivables Loan loss reserve rate – loan loss reserves as a percentage of ending net finance receivables MTM – mark-to-market value increase/decrease on interest rate caps Net credit loss rate – annualized net credit losses as a percentage of average net finance receivables Operating expense ratio – annualized general and administrative expenses as a percentage of average net finance receivables Other book – loans originated prior to 4Q 21 PTPP – pre-tax pre-provision income (non-GAAP) is defined as net income, plus income taxes and provision for credit losses ROA – return on assets is annualized net income as a percentage of average total assets ROE – return on equity is annualized net income as a percentage of average stockholders’ equity Same store – comparison of branches with a comparable branch base; the comparable branch base includes those branches open for at least one year Total revenue yield – annualized total revenue as a percentage of average net finance receivables TTM – trailing twelve months WAC – weighted-average coupon

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v3.24.2

Document and Entity Information	Jul. 31, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Jul. 31, 2024
Entity Registrant Name	Regional Management Corp.
Entity Central Index Key	0001519401
Entity Emerging Growth Company	false
Entity File Number	001-35477
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	57-0847115
Entity Address, Address Line One	979 Batesville Road, Suite B
Entity Address, City or Town	Greer
Entity Address, State or Province	SC
Entity Address, Postal Zip Code	29651
City Area Code	(864)
Local Phone Number	448-7000
Entity Information, Former Legal or Registered Name	Not Applicable
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.10 par value
Trading Symbol	RM
Security Exchange Name	NYSE

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