Regional Management Caps 2025 with Strong Growth, Eyes Auto Loans and Expansion for 2026
In a clear sign of resilience in the consumer finance sector, Regional Management Corp. (NYSE: RM) closed the books on a strong 2025, with executives projecting even sharper growth for the coming year. The company's performance, driven by record originations and disciplined expense management, suggests it is successfully navigating a complex economic environment for subprime and near-prime borrowers.
"We are entering 2026 from a position of strength," stated President and CEO Lakhbir Lamba on his inaugural earnings call since taking the helm. He credited his predecessor for building a "strong platform" and outlined a focused strategy to grow net income and enhance risk-adjusted returns.
The numbers underscore the momentum. Fourth-quarter net income surged 33% year-over-year to $12.9 million, or $1.30 per diluted share, surpassing company guidance. This was achieved despite a larger provision for credit losses, a direct result of portfolio growth that exceeded expectations. For the full year, net income reached $44.4 million, an 8% increase from 2024.
Driving the results was record lending activity. Q4 originations hit $537 million, a 13% annual jump, propelled by digital leads, the auto-secured product, and 17 new branches opened in the past year. Total revenue rose 10% to a record $170 million. The loan portfolio ended the year at $2.1 billion, marking a 13% increase.
CFO Harp Rana highlighted operational efficiency, noting the Q4 operating expense ratio hit an "all-time best" of 12.4%. Credit trends also improved, with the 30+ day delinquency rate falling 20 basis points year-over-year to 7.5%, and the full-year net credit loss rate improving by 70 basis points.
Looking ahead, management provided ambitious guidance for 2026: ending net receivables growth of at least 10% and net income growth of 20-25%. A key strategic pillar is a heightened focus on auto-secured lending, a product seen as offering better collateralization and risk profiles. The continued expansion of its physical branch network, particularly in underserved rural and small-town markets, remains a core growth driver.
The executives also addressed near-term headwinds, acknowledging typical first-quarter seasonality where credit loss rates usually rise. They pointed to the potential impact of the "One Big Beautiful Bill Act," which could lead to higher tax refunds that may temporarily reduce loan balances as customers pay down debt.
In a shift for investor communication, Rana indicated the company will move away from detailed short-term P&L guidance, opting to focus on full-year performance and long-term value drivers instead.
Analyst & Investor Commentary:
"These are solid results that show RM's model is working," said David Chen, a portfolio manager at Horizon Capital. "The improved credit metrics and operating leverage are exactly what you want to see. Their pivot toward more auto-secured lending is a prudent risk management move in this economic climate."
"I'm cautiously optimistic," noted Sarah Gibson, an independent retail investor from Texas. "As a customer in a smaller market, their local branch was my only real option for a car loan. It's good to see them growing responsibly and investing in tech. The dividend is a nice bonus for shareholders like me."
"Let's not get carried away," fired back Marcus Thorne, a frequent commentator on financial stability. "This is still a business deeply exposed to the most financially vulnerable. A 7.5% delinquency rate isn't something to celebrate—it's a flashing warning light. Their 'record' originations could just be sowing the seeds for future losses when the economic tide truly turns. The guidance shift away from quarterly details feels like preparing cover for volatility."
"The strategic clarity is promising," observed Dr. Anika Patel, a fintech researcher. "Their hybrid digital-and-branch model in underserved areas is a defensible niche. The developing bank partnership capability Lamba mentioned could be a game-changer for scalability and regulatory navigation, though the timeline is vague."