• Net Income: $9.9 million for Q4 2024.
• Diluted Earnings Per Share (EPS): $0.98 for Q4 2024.
• Revenue: Record quarterly revenue of $155 million, up 9.3% from Q4 2023.
• Total Revenue Yield: 33.4%, up 110 basis points from the prior year period.
• Portfolio Growth: Increased by $73 million sequentially to nearly $1.9 billion.
• Operating Expense Ratio: 14%, an 80 basis points improvement from the prior year period.
• 30+ Day Delinquency Rate: 7.7%, up 80 basis points from the end of 2023.
• Net Credit Loss Rate: 10.8%, 430 basis points better than the prior year period.
• Auto Secured Portfolio Growth: Grew 34% in 2024, representing 10.9% of the total portfolio.
• G&A Expenses: $64.6 million in Q4 2024, roughly flat year over year.
• Interest Expense: $19.8 million for Q4 2024.
• Effective Tax Rate: 22.3% for Q4 2024.
• Book Value Per Share: Approximately $35.67.

• Warning! GuruFocus has detected 6 Warning Sign with RM.

Release Date: February 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Regional Management Corp (NYSE:RM) reported strong bottom line results with a net income of $9.9 million and $0.98 diluted earnings per share, exceeding expectations.
• The company achieved record quarterly revenue of $155 million, a 9.3% increase from the previous year.
• RM's portfolio grew by $73 million sequentially, reaching an all-time high of nearly $1.9 billion.
• The company maintained a strong credit performance with a net credit loss rate improvement of 430 basis points from the prior year.
• RM plans to open additional branches and expects a minimum of 10% portfolio growth in 2025, indicating confidence in future expansion.

Negative Points

• The 30-plus day delinquency rate increased to 7.7%, up 80 basis points from the end of 2023.
• The company's net credit loss rate was 10.8%, which, despite improvements, remains a significant figure.
• RM's growth in higher margin portfolios increased both delinquency and net credit loss rates by 20 basis points.
• The slower pace of portfolio growth in 2024 negatively impacted the delinquency and net credit loss rates.
• Interest expenses are expected to rise due to the use of more costly funding to grow the portfolio.

Q & A Highlights

Q: As we go into 2025, is there anything we should think about in terms of a mix shift in products, including the auto secured product? A: We will continue to lean into the auto secured business. Our barbell strategy is working well, balancing growth in the auto secured business with the higher rate small loan business. This strategy will remain consistent in 2025.

Q: Can you provide details on the performance of the 2024 vintage versus the 2023 vintages? A: The new originations are performing in line with expectations. The front book delinquency rate is 7.2%, while the back book is at 11.9%. The reserve levels are 10.2% for the front book and 14.1% for the back book, indicating improved performance.

Q: How might interest rate changes impact your margins? A: We've calculated the impact of a 25 basis point change on both variable and fixed rate debt. However, specific details are not disclosed. We plan to enter the market for new fixed rate debt in 2025.

Q: What indicators give you confidence in improving consumer health? A: It's a combination of better credit from tightening and macroeconomic factors like low unemployment and real wage growth. We are cautious but optimistic about consumer health improving, which supports our growth plans.

Q: Are you seeing any changes in competition or funding in the small loan category? A: We haven't noticed significant changes in competitive dynamics or funding pressures in the small loan space. We believe we can grow this segment as needed while being strategic about it.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.