Regional Management Q3 2026 Revenue Hits Record, EPS Rises 13%

Regional Management Corp. (NYSE: RM) reported higher third-quarter 2026 earnings as loan growth and an expanding bank partnership helped lift total revenue to a record $178.8 million. Diluted earnings per share rose 13.4% year over year to $1.61, while the consumer lender maintained full-year targets for net income, EPS and receivables growth despite higher delinquencies and credit losses from a year earlier.

Net income increased 5.3% to $15.1 million from $14.4 million in the prior-year quarter. Total revenue advanced 8.0%, supported by an $169.4 million increase in average net finance receivables and fee income from the bank partnership rollout. Interest and fee income was $155.7 million, insurance income totaled $10.7 million and other income rose to $12.3 million.

Ending net finance receivables reached $2.21 billion, up $156.9 million, or 7.6%, year over year and $61.7 million sequentially. Originations increased 1.5% from a year earlier and 5.3% from the second quarter to $530.3 million, with the weighted-average FICO score at origination rising to 642 from 640 a year ago.

Large loans accounted for 78.8% of the portfolio, compared with 73.7% in the third quarter of 2025. The auto-secured portfolio grew $69.5 million, or 25.2%, to $345 million and represented 15.6% of total receivables, up from 13.4% a year earlier. Regional Management said the shift toward larger and auto-secured loans reduced total revenue yield because those products generally carry lower yields and lower loss rates. Bank partnership fee income partially offset that effect.

The company opened 14 branches since the third quarter of 2025. Those locations generated $23.4 million, or 14.9%, of the year-over-year increase in receivables. Same-store receivables rose 6.7%, while receivables per branch increased 6.1% to about $6.2 million.

Credit metrics remain a key focus

The 30-day-plus delinquency rate rose 50 basis points both sequentially and year over year to 7.5%. Regional Management attributed the increase primarily to slower portfolio growth and the performance of higher-risk segments where it has since tightened lending standards.

The net credit loss rate was 10.9%, down 130 basis points from the second quarter due to seasonality but 70 basis points above the prior-year period. The company said the year-over-year increase mainly reflected loans originated in 2025 in higher-risk segments, as well as slower portfolio growth.

The provision for credit losses increased to $66.2 million from $60.5 million. The allowance for credit losses rose by $6.8 million during the quarter to $230.8 million, driven by portfolio growth, while the allowance rate held at 10.4% sequentially. The rate was 10 basis points higher than a year earlier following updates to macroeconomic assumptions.

General and administrative expense increased 7.1% to $68.6 million, but revenue grew faster, reducing the operating expense ratio by 20 basis points to 12.6%. That ratio included a 40-basis-point impact from the bank partnership, under which origination costs are expensed upfront rather than deferred. Interest expense rose to $24.1 million, while the cost of funds remained stable at 4.4% both sequentially and year over year.

Bank partnership and technology investment

Regional Management said its bank partnership now represents more than 40% of current run-rate originations. The program launched in North Carolina during the third quarter, with completion planned for the fourth quarter, while launches in Louisiana and Missouri began in the fourth quarter. Management projects the partnership will produce a pre-tax margin more than 200 basis points above comparable state-licensed loans.

The company also launched end-to-end digital lending in July. Digitally sourced loans represented 32.2% of new-borrower volume in the quarter, although digitally sourced origination volume declined 12.8% year over year to $67.1 million. Large loans, including auto-secured products, accounted for 84.4% of digitally sourced loans to new borrowers.

Regional Management expects to complete the rollout of a new branch origination platform in the fourth quarter. Its proprietary origination scorecard was operating in three states during the third quarter, with a full rollout expected by year-end.

Outlook and funding

For 2026, the company is targeting year-over-year net income growth of 6% to 9%, EPS growth of 10% to 13% and ending net finance receivables growth of 5% to 7%. For the fourth quarter, management expects approximately $60 million of receivables growth, an allowance build of about $6 million and a net credit loss rate of roughly 11.5%, reflecting recent credit trends and an expected seasonal increase. Strategic initiatives are expected to provide an approximately $5 million net income benefit in the quarter.

Management expects strong year-over-year net income growth in 2027, supported by portfolio growth, the bank partnership and improved credit performance. Its longer-term objectives, which are not tied to a specific year, include return on equity of at least 18%, return on assets of at least 3% and a net credit loss rate below 10%.

As of September 30, Regional Management had $324 million of unused borrowing capacity, subject to its borrowing base, and $104 million of available liquidity. Fixed-rate borrowings represented 74% of total debt and carried a weighted-average coupon of 4.8%.

The company identified credit and repayment risk, changing economic conditions, loan demand, interest rates, liquidity access, regulatory developments and execution of its branch, technology and bank-partnership initiatives among the factors that could cause results to differ from its expectations.