Q1 2026 Regional Management Corp Earnings Call

April 29, 2026

Operator: Greetings, welcome to the Regional Management Q1 2026 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Garrett Edson. Please go ahead.

Speaker #2: If anyone should require operator assistance during the conference, please press *0 on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Garrett Edson.

Speaker #2: Please go ahead. Thank you and good afternoon. By now, everyone should have access to our earnings announcements supplemental presentation which were released prior to this call and may be found on our website at regionalmanagement.com.

Garrett Edson: Thank you and good afternoon. By now, everyone should have access to our earnings announcement supplemental presentation, which were released prior to this call and may be found on our website at regionalmanagement.com. Before we begin our formal remarks, I will direct you to page 2 of our supplemental presentation, which contains important disclosures concerning forward-looking statements and the use of non-GAAP financial measures. Part of our discussion today may include forward-looking statements, which are based on management's current expectations, estimates, and projections about the company's future financial performance and business prospects. These forward-looking statements speak only as of today and are subject to various assumptions, risks, uncertainties, and other factors that are difficult to predict, and that could cause actual results to differ materially from those expressed or implied in the forward-looking statements.

Garrett Edson: Thank you and good afternoon. By now, everyone should have access to our earnings announcement supplemental presentation, which were released prior to this call and may be found on our website at regionalmanagement.com. Before we begin our formal remarks, I will direct you to page two of our supplemental presentation, which contains important disclosures concerning forward-looking statements and the use of non-GAAP financial measures. Part of our discussion today may include forward-looking statements, which are based on management's current expectations, estimates, and projections about the company's future financial performance and business prospects. These forward-looking statements speak only as of today and are subject to various assumptions, risks, uncertainties, and other factors that are difficult to predict, and that could cause actual results to differ materially from those expressed or implied in the forward-looking statements.

Speaker #2: Before we begin our formal remarks, I will direct you to page two of our supplemental presentation which contains important disclosures concerning forward-looking statements and the use of non-gap financial measures.

Speaker #2: Part of our discussion today may include forward-looking statements which are based on management's current expectations, estimates, and projections about the company's future financial performance and business prospects.

Speaker #2: These forward-looking statements speak only as of today and are subject to various assumptions, risks, uncertainties, and other factors that are difficult to predict and that could cause actual results to differ materially from those expressed or implied in the forward-looking statements.

Speaker #2: These statements are not guarantees of future performance, and therefore you should not place undue reliance upon them. We refer all of you to our press release, presentation, and recent filings with the SEC for a more detailed discussion of our forward-looking statements and the risks and uncertainties that could impact our future operating results and financial condition.

Garrett Edson: These statements are not guarantees of future performance, therefore you should not place undue reliance upon them. We refer all of you to our press release presentation of recent filings with the SEC for a more detailed discussion of our forward-looking statements and the risks and uncertainties that could impact our future operating results and financial condition. Our discussion today may include references to certain non-GAAP measures. A reconciliation of these measures to the most comparable GAAP measures can be found within our earnings announcement or earnings presentation and posted on our website at regionalmanagement.com. I would now like to introduce Lakhbir Lamba, President and CEO of Regional Management Corp.

Speaker #2: Also, our discussion today may include references to certain non-gap measures. A reconciliation of these measures to the most comparable gap measures can be found within our earnings announcement or earnings presentation and posted on our website at regionalmanagement.com.

Speaker #2: I would now like to introduce Latvier Lemba, President and CEO of Regional Management. Q2.

Speaker #3: Thanks, Garrett, ett, and good afternoon, everyone. We delivered a strong start to 2026 with solid financial performance, continued year-over-year portfolio growth, and further progress on our strategic priorities.

Lakhbir Lamba: Thanks, Garrett. Good afternoon, everyone. We delivered a strong start to 2026 with solid financial performance, continued year-over-year portfolio growth, and further progress on our strategic priorities. Over the past few months, I've spent significant time across the organization continuing to listen, learn, and evaluate our business. I'm increasingly excited about the opportunities ahead. As I've deepened my understanding of our customers, products, and markets, I see a clear path to stronger performance and improving return outcomes over time. Our results in the Q1 reflect the strength of our operating model, disciplined execution, and continued investment in the business. Joining me on the call today is Harp Rana, our Chief Financial and Administrative Officer. I'll begin with a summary of our Q1 results, provide an update on our strategic initiatives, and then Harp will walk through the financial details.

Speaker #3: Over the past few months, I've spent significant time across the organization continuing to listen, learn, and evaluate our business. And I'm increasingly excited about the opportunities ahead.

Speaker #3: As I've deepened my understanding of our customers, products, and markets, I see a clear path to stronger performance and improving return outcomes over time.

Speaker #3: Our results in the first quarter reflect the strength of our operating model, disciplined execution, and continued investment in the business. Joining me on the call today is Harpreet Rana, our Chief Financial and Administrative Officer. I'll begin with a summary of our first quarter results, provide an update on our strategic initiatives, and then Harp will walk through the financial details.

Speaker #3: We generated net income of $11.4 million or $1.18 of diluted earnings per share. Representing an increase of 69% year over year. These results were driven by continued portfolio growth, strong revenue performance, and further improvement in operating efficiency.

Lakhbir Lamba: We generated net income of $11.4 million or $1.18 of diluted earnings per share, representing an increase of 69% year over year. These results were driven by continued portfolio growth, strong revenue performance, and further improvement in operating efficiency. Our loan portfolio increased by $214 million year over year to $2.1 billion, representing 11% growth. We generated record revenue for our Q1, up 9% compared to the prior year period. Demand for our products remains healthy. We continue to grow this portfolio in a disciplined manner. We also delivered strong operating leverage. G&A expenses declined 2% year over year, even as we continued to invest in growth initiatives, technology, and digital capabilities. Our operating expense ratio improved 180 basis points year over year to 12.2%.

Speaker #3: Our loan portfolio increased by $214 million year over year to $2.1 billion representing 11% growth, and we generated record revenue for our first quarter up 9% compared to the prior year period.

Speaker #3: Demand for our products remains healthy, and we continue to grow this portfolio in a disciplined manner. We also delivered strong operating leverage, GNA expenses declined 2% year over year, even as we continue to invest in growth initiatives, technology, and digital capabilities.

Speaker #3: Our operating expense ratio improved 180 basis points year over year to 12.2%. Another all-time best for the company. Notably, revenue growth outpaced GNA, and interest expense growth by a wide scalability of our model.

Lakhbir Lamba: Another all-time best for the company. Notably, revenue growth outpaced G&A and interest expense growth by a wide margin, reflecting the scalability of our model. Capital generation remained strong in the quarter. We had $12 million of capital generation and returned more than $10 million to shareholders through dividends and share repurchases while continuing to fund portfolio growth. Our 30-plus day delinquency and net credit loss rates in Q1 were flat year-over-year after adjusting for this year's larger portfolio liquidation. Our customers remain stable and resilient in the current economic environment, and overall credit trends continue to perform within our expectations. That said, we are closely monitoring macroeconomic conditions, including elevated gas prices and inflation, and we remain disciplined and conservative in our underwriting.

Speaker #3: Capital generation remained strong in the quarter; we had $12 million of capital generation and returned more than $10 million to shareholders through dividends, and share repurchases while continuing to fund portfolio growth.

Speaker #3: Our 30-plus-day delinquency and net credit loss rates in Q1 were flat year over year, after adjusting for this year's larger portfolio liquidation. Our customers remained stable and resilient in the current economic environment, and overall credit trends continue to perform within our expectations.

Speaker #3: That said, we are closely monitoring macroeconomic conditions including elevated gas prices, and inflation, and we remain disciplined and conservative in our underwriting. As we discussed on our last call, we are focused on continuing to improve our net credit loss rate over time, with a long-term target below 10%.

Lakhbir Lamba: As we discussed on our last call, we are focused on continuing to improve our net credit loss rate over time with a long-term target below 10%. In support of this objective, we are increasing our investment in data, credit analytics, emerging AI capabilities, and fraud detection, including first-party and synthetic fraud controls. We are actively evaluating and beginning to deploy AI initiatives to enhance our underwriting, decisioning capabilities, and collections over time while maintaining appropriate risk controls. These investments are critical to improving credit performance as we scale the portfolio and enter new markets. We continue to make good progress on our key strategic priorities. First, we are continuing to invest in market expansion. We plan to enter the state of Florida in Q2, which will mark our expansion into our 20th state and represents an important long-term growth opportunity.

Speaker #3: In support of this objective, we are increasing our investment in data, credit analytics, emerging AI capabilities, and fraud detection. Including first-party and synthetic fraud controls.

Speaker #3: We are actively evaluating and beginning to deploy AI initiatives to enhance our underwriting, decisioning capabilities, and collections over time. While maintaining appropriate risk controls.

Speaker #3: These investments are critical to improving credit performance as we scale the portfolio and enter new markets. We continue to make good progress on our key strategic priorities.

Speaker #3: First, we are continuing to invest in market expansion. We plan to enter the state of Florida in the second quarter, which will mark our expansion into our 20th state, and represents an important long-term growth opportunity.

Speaker #3: Second, responsible portfolio growth remains a core priority. We are seeing continued strength in our auto-secured lending product, the auto-secured portfolio reached $300 million in outstandings at the end of the first quarter.

Lakhbir Lamba: Second, responsible portfolio growth remains a core priority. We are seeing continued strength in our auto-secured lending product. The auto-secured portfolio reached $300 million in outstandings at the end of Q1, representing a 38% increase year over year. It now accounts for 14% of our total portfolio and carries a 30-plus day delinquency rate of 2%. This product continues to deliver attractive credit performance and returns. Third, we are advancing our bank partnership strategy. In early March, we announced the launch of our partnership with Column, a nationally chartered bank.

Speaker #3: Representing a 38% increase year over year. It now accounts for 14% of our total portfolio, and carries a 30-plus-day delinquency rate of 2%. This product continues to deliver attractive credit performance and returns.

Speaker #3: Third, we are advancing our bank partnership strategy. In early March, we announced the launch of our partnership with Column, a nationally chartered bank. We expect this partnership to provide several important strategic benefits over time as it scales.

Lakhbir Lamba: We expect this partnership to provide several important strategic benefits over time as it scales, including optimization of risk-adjusted yields, expanded relationships with existing customers and a broader addressable market, greater product and operational uniformity across states, faster entry into new markets, additional fee income opportunities, and increased wallet share over time from the introduction of new products. We launched the partnership in 1 branch with select products and have since expanded to 12 branches. We are encouraged by the early results, particularly in the origination trends, including volume, mix, and revenue characteristics. As we expected at this stage, our data is primarily focused on origination, credit quality, and yield metrics, and we expect to begin seeing early credit performance in the coming months. We plan to expand the partnership throughout the year as we continue to evaluate results, assess customer adoption, and refine the strategy.

Speaker #3: Including optimization of risk-adjusted yields, expanded relationships with existing customers, and a broader addressable market, greater product and operational uniformity across states, faster entry into new markets, additional fee income opportunities, and increased wallet share over time from the introduction of new products.

Speaker #3: We launched the partnership in one branch, with select products, and have since expanded to 12 branches. We are encouraged by the early results, particularly in the origination trends, including volume, mix, and revenue characteristics.

Speaker #3: As we expected at this stage, our data is primarily focused on origination, credit quality, and yield metrics. And we expect to begin seeing early credit performance in the coming months.

Speaker #3: We plan to expand the partnership throughout the year, as we continue to evaluate results, assess customer adoption, and refine the strategy. Fourth, we are continuing to invest in an end-to-end digital originations capability.

Lakhbir Lamba: Fourth, we are continuing to invest in an end-to-end digital originations capability. We see meaningful long-term opportunity in this channel, including the ability to reach higher credit quality customers and expand our addressable market. We are focused on creating a frictionless digital experience with strong fraud detection, credit underwriting, and risk-based pricing capabilities as we scale this channel. We are also evaluating the use of AI to enhance customer acquisition, improve decisioning speed and accuracy, and optimize channel performance. Our bank partnership will play an important role in supporting this initiative over time. Looking ahead, our expectations for the year remain unchanged. We continue to target full-year portfolio growth of 10% and net income growth in the range of 20% to 25% while remaining prepared to moderate portfolio growth if warranted by macroeconomic or credit conditions.

Speaker #3: We see meaningful long-term opportunity in this channel, including the ability to reach higher credit quality customers and expand our addressable market. We are focused on creating a frictionless digital experience, with strong fraud detection, credit underwriting, and risk-based pricing capabilities, as we scale this channel.

Speaker #3: We are also evaluating the use of AI to enhance customer acquisition, improve decisioning speed, and accuracy, and optimize channel performance. Our bank partnership will play an important role, in supporting this initiative over time.

Speaker #3: Looking ahead, our expectations for the year remain unchanged. We continue to target full-year portfolio growth of 10%, and net income growth in the range of 20% to 25%.

Speaker #3: While remaining prepared to moderate portfolio growth if warranted by macroeconomic or credit conditions. As a reminder, we expect second quarter net income to represent the low point for the year.

Lakhbir Lamba: As a reminder, we expect Q2 net income to represent the low point for the year, consistent with normal seasonal trends. Q1 tax refund activity results in portfolio liquidation, which impacts Q2 revenue. Growth begins to accelerate as we move through Q2, driving sequentially higher CECL provisioning and G&A expenses. Portfolio growth in Q2 and throughout the remainder of the year supports stronger revenue and earnings in Q3 and Q4. We also expect net credit losses to remain seasonally elevated in Q2 before improving to lower levels in H2 of the year. We anticipate the benefits of our bank partnership, portfolio growth, and other strategic initiatives will build throughout the year, supporting stronger earnings performance in Q3 and Q4. Over the longer term, our objective remains clear.

Speaker #3: Consistent with normal seasonal trends. First quarter tax refund activity results in portfolio liquidation, which impacts second quarter revenue, while growth begins to accelerate as we move through the second quarter, driving sequentially higher CSIL provisioning, and GNA expenses.

Speaker #3: Portfolio growth in the second quarter and throughout the remainder of the year supports stronger revenue and earnings in the third and fourth quarters. We also expect net credit losses to remain seasonally elevated in the second quarter, before improving to lower levels in the second half of the year.

Speaker #3: In addition, we anticipate the benefits of our bank partnership, portfolio growth, and other strategic initiatives will build throughout the year. Supporting stronger earnings performance in the third and fourth quarters.

Speaker #3: Over the longer term, our objective remains clear. We will deliver sustainable profitable growth, while generating attractive returns for shareholders. We will continue to improve our return on equity, through responsible portfolio growth, improving credit performance, operating leverage, and disciplined capital management.

Lakhbir Lamba: We will deliver sustainable profitable growth while generating attractive returns for shareholders. We will continue to improve our return on equity through responsible portfolio growth, improving credit performance, operating leverage, and disciplined capital management. Regional is off to a strong start in 2026. We have a clear strategy, strong execution, and meaningful opportunities ahead, and we remain focused on delivering long-term value for our shareholders. With that, I will turn the call over to Harp.

Speaker #3: Regional is off to a strong start in 2026, we have a clear strategy, strong execution, and meaningful opportunities ahead. And we remain focused on delivering long-term value for our shareholders.

Speaker #3: With that, I will turn the call over to Harp.

Speaker #1: Thank you, Lockbier, and good afternoon, everyone. I'll now take you through our first quarter results in more detail. Starting on page 4 of the supplemental presentation, we delivered another quarter of strong year-over-year improvement across our key financial metrics.

Harp Rana: Thank you, Lakhbir, and good afternoon, everyone. I'll now take you through our Q1 results in more detail. Starting on page 4 of the supplemental presentation, we delivered another quarter of strong year-over-year improvement across our key financial metrics. Net income was $11.4 million and diluted earnings per share were $1.18, both driven by continued year-over-year portfolio and revenue growth, stable credit performance, strong operating leverage, and a disciplined balance sheet. Return on equity improved to 12.2%, up 430 basis points year-over-year, reflecting higher earnings and operating efficiency. Turning to pages 5 and 6, Total originations were $388 million, down modestly year-over-year as expected, due to a stronger tax refund season and disciplined underwriting. Portfolio growth remained strong, with ending net receivables of $2.1 billion, representing 11% year-over-year growth.

Speaker #1: Net income was $11.4 million, and diluted earnings per share were $1.18, both driven by continued year-over-year portfolio and revenue growth, stable credit performance, strong operating leverage, and a disciplined balance sheet.

Speaker #1: Return on equity improved to 12.2%, up 430 basis points year over year, reflecting higher earnings and operating efficiency. Turning to pages 5 and 6, total originations were $388 million, down modestly year over year as expected, due to a stronger tax refund season and disciplined underwriting.

Speaker #1: Portfolio growth remained strong, with ending net receivables of $2.1 billion, representing 11% year-over-year growth. This growth continues to be driven by larger loans, including our auto-secured product, as well as contributions from new branches.

Harp Rana: This growth continues to be driven by larger loans, including our auto-secured product, as well as contributions from new branches. Average receivables per branch increased to approximately $5.9 million, up nearly 11% year-over-year, reflecting improved branch productivity and continued maturation of our newer locations. From a sequential perspective, we saw a $36 million reduction in receivables, consistent with normal seasonal patterns driven by Q1 tax refund activity. Looking ahead, we expect to return to sequential portfolio growth in Q2 while maintaining the flexibility to adjust originations if macroeconomic or credit conditions warrant. Turning to page seven, total revenue was a Q1 record of $167 million, increasing 9% year-over-year, driven by higher average receivables. Total revenue yield declined on both a sequential and a year-over-year basis, primarily due to normal seasonality and continued mix shift towards larger, lower-yielding loans.

Speaker #1: Average receivables per branch increased to approximately $5.9 million, up nearly 11% year over year, reflecting improved branch productivity and continued maturation of our newer locations.

Speaker #1: From a sequential perspective, we saw a 36 million reduction in receivables, consistent with normal seasonal patterns driven by first quarter tax refund activity. Looking ahead, we expect to return to sequential portfolio growth in the second quarter, while maintaining the flexibility to adjust originations if macroeconomic or credit conditions warrant.

Speaker #1: Turning to page 7, total revenue was a first quarter record of $167 million, increasing 9% year over year, driven by higher average receivables. Total revenue yield declined on both a sequential and a year-over-year basis, primarily due to normal seasonality and continued mix shift towards larger, lower-yielding loans.

Speaker #1: As we move into the second quarter, we expect revenue yield to increase modestly on a sequential basis, consistent with typical seasonal trends. Turning to page 8, credit performance remained stable.

Harp Rana: As we move into Q2, we expect revenue yield to increase modestly on a sequential basis, consistent with typical seasonal trends. Turning to page 8, credit performance remains stable. Our 30-plus day delinquency rate was 7.2%, up 10 basis points year-over-year and improved 30 basis points sequentially, reflecting normal seasonal patterns. Our net credit loss rate increased modestly by 10 basis points year-over-year, also consistent with expectations. Both our delinquency rate and NCL rate included roughly 10 basis points of impact from higher liquidation in Q1 2026 compared to Q1 2025. Looking ahead to Q2, we expect delinquency and net credit losses to decline sequentially, consistent with seasonal patterns. Overall, credit performance remains in line with our expectations, and we continue to monitor macroeconomic conditions closely.

Speaker #1: Our 30-plus-day delinquency rate was 7.2%, up 10 basis points year over year, and improved 30 basis points sequentially, reflecting normal seasonal patterns. Our net credit loss rate increased modestly, by 10 basis points year over year, also consistent with expectations.

Speaker #1: Both our delinquency rate and NCL rate included roughly 10 basis points of impact, from higher liquidation in the first quarter of 2026, compared to the first quarter of 2025.

Speaker #1: Looking ahead to the second quarter, we expect delinquency and net credit losses to decline sequentially, consistent with seasonal patterns. Overall, credit performance remains in line with our expectations and we continue to monitor macroeconomic conditions closely.

Speaker #1: Turning to page 9, the allowance for credit losses declined by 1.4 million during the quarter, primarily reflecting seasonal portfolio liquidation. The allowance rate increased slightly to 10.4%, reflecting updates to macroeconomic assumptions and continued prudence in reserving.

Harp Rana: Turning to page nine, the allowance for credit losses declined by $1.4 million during the quarter, primarily reflecting seasonal portfolio liquidation. The allowance rate increased slightly to 10.4%, reflecting updates to macroeconomic assumptions and continued prudence in reserving. Subject to economic conditions and credit performance, we expect our allowance rate to stay flat sequentially in Q2. Turning to page ten, we continue to demonstrate strong operating leverage. Our operating expense ratio improved to 12.2%, an all-time best and a 180 basis point improvement year-over-year, while we continue to invest in key initiatives. Total G&A expenses declined modestly year-over-year, reflecting continued discipline in managing expenses while scaling the business. For Q2, we expect a sequential increase in our operating expense ratio, but a year-over-year improvement from Q2 of last year.

Speaker #1: Subject to economic conditions and credit performance, we expect our allowance rate to stay flat sequentially in the second quarter. Turning to page 10, we continue to demonstrate strong operating leverage.

Speaker #1: Our operating expense ratio improved to 12.2%, and all-time best, an $180 basis point improvement year over year, while we continue to invest in key initiatives.

Speaker #1: Total G&A expenses declined modestly year over year, reflecting continued discipline in managing expenses while scaling the business. For the second quarter, we expect a sequential increase in our operating expense ratio, but a year-over-year improvement from the second quarter of last year.

Speaker #1: Turning to pages 11 and 12, interest expense was 22.9 million, or 4.3% of average receivables on an annualized basis. We continue to maintain a strong and flexible funding profile, including $516 million of unused capacity, a diversified funding structure, and a high proportion of fixed-rate debt, which represented 84% of total debt at quarter-end.

Harp Rana: Turning to pages 11 and 12, interest expense was $22.9 million or 4.3% of average receivables on an annualized basis. We continue to maintain a strong and flexible funding profile, including $560 million of unused capacity, a diversified funding structure and a high proportion of fixed rate debt, which represented 84% of total debt at quarter end. This positions us well to support continued portfolio growth. Looking ahead, we anticipate that our funding costs will tick up slightly in Q2. Turning to page 13, we continue to generate strong capital and allocate it in a disciplined manner. During the quarter, we had approximately $12 million of capital generation, and we returned over $10 million to shareholders through dividends and share repurchases.

Speaker #1: This positions us well to support continued portfolio growth. Looking ahead, we anticipate that our funding costs will tick up slightly in the second quarter.

Speaker #1: Turning to page 13, we continue to generate strong capital and allocate it in a disciplined manner. During the quarter, we had approximately $12 million of capital generation, and we returned over $10 million to shareholders through dividends and share repurchases.

Speaker #1: Our board declared a 30 cent per share dividend, and we repurchased approximately $208,000 shares during the quarter. Finally, turning to page 14 and building on Lockbier's comments about second quarter net income and seasonality, I'll provide some additional detail on how we expect the year to progress from a quarterly perspective.

Harp Rana: Our board declared a $0.30 per share dividend, and we repurchased approximately 208,000 shares during the quarter. Finally, turning to page 14 and building on Lakhbir's comments about Q2 net income and seasonality, I'll provide some additional detail on how we expect the year to progress from a quarterly perspective. As we noted, we expect Q2 net income to represent the low point for the year, followed by stronger performance in Q3 and Q4, consistent with our normal seasonal patterns. The primary driver of this cadence is the impact of Q1 tax refund activity, which results in seasonal portfolio liquidation in Q1 and, in turn, impacts average receivables and revenue in Q2. At the same time, we begin to rebuild the portfolio during Q2, with growth typically accelerating as we move through the quarter.

Speaker #1: As we noted, we expect second quarter net income to represent the low point for the year. Followed by stronger performance in the third and fourth quarters, consistent with our normal seasonal pattern.

Speaker #1: The primary driver of this cadence is the impact of first quarter tax refund activity. Which results in seasonal portfolio liquidation in the first quarter and, in turn, impacts average receivables and revenue in the second quarter.

Speaker #1: At the same time, we begin to rebuild the portfolio during the second quarter, with growth typically accelerating as we move through the quarter. This results in a sequential increase in provision for credit losses in the second quarter, as we reserve for new originations.

Harp Rana: This results in a sequential increase in provision for credit losses in Q2 as we reserve for new originations. As that portfolio growth takes hold, we see the benefit in the H2 of the year. The increase in receivables exiting Q2 drives higher revenue in both Q3 and Q4. Those growth tailwinds continue throughout the H2 of the year. While provisioning for loan growth remains elevated in Q3 and Q4 relative to Q1, it is more comparable to Q2 levels, allowing revenue growth to drive stronger earnings. From a credit perspective, we expect net credit losses to remain seasonally elevated in Q2 before improving in Q3 and Q4.

Speaker #1: As that portfolio growth takes hold, we see the benefit in the second half of the year. The increase in receivables exiting the second quarter drives higher revenue in both the third and fourth quarters, and those growth tailwinds continue throughout the back half of the year.

Speaker #1: While provisioning for loan growth remains elevated in the third and fourth quarters relative to the first quarter, it is more comparable to second quarter levels, allowing revenue growth to drive stronger earnings.

Speaker #1: From a credit perspective, we expect net credit losses to remain seasonally elevated in the second quarter, before improving in the third and fourth quarters.

Speaker #1: Finally, as Lockbier mentioned, we expect the benefits of our strategic initiatives to build as we move through the year, with increasing contribution in the second half.

Harp Rana: Finally, as Lakhbir mentioned, we expect the benefits of our strategic initiatives to build as we move through the year, with increasing contribution in H2. That concludes my remarks, and I'll now turn the call back over to Lakhbir.

Speaker #1: That concludes my remarks, and I'll now turn the call back over to Lockbier.

Speaker #2: To close, we are very pleased with how we started 2026. And our encouragement by the momentum we are carrying into the rest of the year.

Lakhbir Lamba: To close, we are very pleased with how we started 2026 and are encouraged by the momentum we are carrying into rest of the year. We delivered strong results while continuing to invest in the business, improve underlying credit performance, and drive operating leverage. Importantly, we did this in a disciplined way that positions us well for sustainable, profitable growth. As we look ahead, our priorities are clear. Continue growing the portfolio responsibly, improving credit outcomes, expanding into attractive new markets, and investing in our people, technology, and digital data and AI-driven capabilities to enhance risk-adjusted returns. We believe the opportunities in front of us across products, markets, and operating efficiency are compelling, and we are focused on executing against them thoughtfully. We have a strong foundation, a resilient customer base, and a highly capable team.

Speaker #2: We delivered strong results while continuing to invest in the business, improve underlying credit performance, and drive operating leverage. Importantly, we did this in a disciplined way that positions us well for sustainable, profitable growth.

Speaker #2: As we look ahead, our priorities are clear, continue growing the portfolio responsibly, improving credit outcomes, expanding into attractive new markets, and investing in our people, technology, and digital data and AI-driven capabilities to enhance risk-adjusted returns.

Speaker #2: We believe the opportunities in front of us, across products, markets, and operating efficiency, are compelling, and we are focused on executing against them thoughtfully.

Speaker #2: We have a strong foundation, a resilient customer base, and a highly capable team. I am confident in our ability to continue creating long-term value for our shareholders.

Lakhbir Lamba: I am confident in our ability to continue creating long-term value for our shareholders. My sincere thanks to the regional team for delivering a great quarter.

Speaker #2: My sincere thanks to the regional team for delivering a great quarter.

Speaker #1: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press *1 on your telephone keypad.

Operator: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question will come from Kyle Joseph with Stephens.

Speaker #1: A confirmation tone will indicate your line is in the question queue. You may press *2 if you would like to remove your question from the queue.

Speaker #1: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the * keys. In our first question, we'll come from Kyle Joseph with Stevens.

Speaker #3: Hey, good afternoon, guys. Thanks for taking my question. Just curious—a lot of moving parts in the first quarter with elevated tax refunds, and then gas prices rising in March.

Kyle Joseph: Hey, good afternoon, guys. Thanks for taking my questions. Just curious, a lot of moving parts in Q1 with elevated tax refunds and then gas prices, you know, rising in March. Just kind of walk us through, you know, how loan demand and credit kind of performed and kind of the cadence of demand, and then, you know, how that's trended into April with, you know, gas prices remaining elevated.

Speaker #3: Just kind of walk us through how loan demand and credit kind of performed and kind of the cadence of demand, and then how that's trended into April with gas prices remaining elevated.

Speaker #4: So hey, Kyle. It's Harp. So I'll take that question. So in terms of the elevated refunds, that was something that we had expected, right?

Harp Rana: Hey, Kyle. It's Harp. I'll take that question. In terms of the elevated refunds, that was something that we had expected, right? We had all heard that refunds were going to be outsized. And they did come in, right, higher than where they were last year, but not quite as high as what everyone expected. You know, demand was where we expected it to be, knowing that refunds were going to be higher. That's what we saw there. In terms of the gas prices, it continues to be something that we're watching. What we found in Q1 is, you know, our customers continue to be adaptable, resilient, but we do understand that inflation, and particularly gas prices, can take a toll on their wallet.

Speaker #4: We had all heard that refunds were going to be outsized, and they did come in higher than where they were last year, but not quite as high as what everyone expected.

Speaker #4: Demand was where we expected it to be, knowing that refunds were going to be higher. So that's what we saw there. In terms of the gas prices, it continues to be something that we're watching.

Speaker #4: What we found in first quarter is our customers continued to be adaptable, resilient, but we do understand that inflation, in particularly gas prices, can take a toll on their wallet.

Speaker #4: So we continue to watch that through first payment defaults, delinquency rates, and also through any listing that we do when we have conversations with our customers, particularly even collections conversations just to understand sort of what is causing them the pain points.

Harp Rana: We continue to watch that through first payment defaults, delinquency rates, and also through any listening that we do, you know, when we have conversations with our customers, particularly even collections conversations, just to understand sort of what is causing them the pain point. Right now, you know, they appear to continue to be resilient. Again, in Q2, we continue to watch the gas prices, particularly given how much they've increased this week.

Speaker #4: So right now, they appear to continue to be resilient, but again, in second quarter, we continue to watch the gas prices, particularly given how much savings boost this week.

Speaker #3: Yeah, Kyle, the only thing I'll add to that is we are to our smart monitoring the portfolio, looking at all rates, both early and late stage.

Lakhbir Lamba: Yeah, Kyle, the only thing I'll add to that is we are, to Harp's point, monitoring the portfolio, looking at roll rates, both early and late stage. You know, our reserve posture reflects the higher gas prices and potentially has some impact on inflation. You know, we're the segment of consumer we are really monitoring is high debt service coverage or debt to income, and, you know, low free income consumer that, you know, if gas prices remain elevated for a long period, you know, that discretionary spending gets tested. We're sort of continuing to monitor that.

Speaker #3: And a reserve posture reflects the higher gas prices and potential near-term impact on inflation, where the segment of consumer we are really monitoring is high debt service coverage, or debt to income, and low free income consumer.

Speaker #3: That's if gas prices remain elevated for a prolonged period, that discretionary spending gets tested. And so we're sort of continuing to monitor that.

Speaker #2: Got it. Really helpful. Thanks. And then second question, kind of a two-part question. First, I mean, as you think about AI and you guys talked about incorporating AI, I mean, talk about where you think OPEX can go over that timeframe.

Kyle Joseph: Got it. Really helpful. Thanks. Second question, kind of a two-part question. First, I mean, as you think about AI, and you guys talked about incorporating AI, I mean, talk about where you think OpEx can go over that timeframe. Just follow up to that, obviously the relationship with Column is very exciting, but walk us through how you think about that impacting the PNL as that expands.

Speaker #2: And then just follow up to that, obviously, the relationship with Column is very exciting, but walk us through how you think about that impacting the P&L as that expands.

Speaker #3: Thanks, Kyle. Let me take a crack at the first one on the AI one. I think we see our investment in machine learning models and origination and collections some, I think we've mentioned in the past, that are already in production in the company that we've deployed.

Lakhbir Lamba: Thanks, Kyle. Let me take a crack at the first one. On the AI one, I think we see our investment in machine learning models and origination and collection. Some I think we've mentioned in the past that are already in production in the company that we've deployed. Those models help us take more, take better risks and then price better for risk. Then in terms of GenAI and agentic AI deployments, you know, although I don't have a specific guidance for you on the subject, I think both are cost to originate and cost to service/collect over time. We believe as we automate both the origination collection journeys using agentic AI workflows, we believe both those cost numbers on a variable basis can come down over time.

Speaker #3: Those models help us take more take better risks and then price better for risk. And then in terms of Gen AI and agentic AI deployments, although I don't have a specific guidance for you on the subject, I think both are cost to originate and cost to service/collect over time.

Speaker #3: We believe as we automate the both the origination and collection journeys, using agentic AI workflows, we believe both those cost numbers on a variable basis can come down over time.

Speaker #3: And so that's kind of the back we are taking in the space. In terms of your second question, I'll start, and then I'll start to it.

Lakhbir Lamba: That's kind of the fact we are taking into the space. In terms of your second question, I'll start and then I'll have Harp add to it. On the Column partnership, we believe, you know, as I mentioned in the remarks, there are certain segments of consumers we can't serve today because we are, you know, focused on implementing based on state laws and state charter. Those segments of consumers we believe we can originate using a national charter over time. That's a state-by-state specific kind of analyses and execution. Second, I think, we are now going to be in 20 states. We still have a bunch of work to do to expand in other markets. We believe a national charter execution and product uniformity increase their speed to market.

Speaker #3: On the column partnership, we believe as I mentioned in the remarks, there are certain segments of consumers we can't serve today because we are focused on implementing based on state laws and state charter.

Speaker #3: Those segments of consumers, we believe we can originate using a national charter over time. So that's a state-by-state specific kind of analysis and execution.

Speaker #3: Second, I think we are now going to be in 20 states. We still have a bunch of work to do to expand in other markets.

Speaker #3: We believe a national charter execution and product uniformity increase their speed to market in those markets. We can scale up faster, especially with the digital origination capability we are building in parallel.

Lakhbir Lamba: In those markets, we can scale up faster, especially with the digital originations capability we are building in parallel. Then I think the third thing I would say is there are pockets of customers or business where we don't get paid for the risk we take, and that's something that we are very thoughtful in terms of evaluating opportunities where we can optimize risk and return better in the business as we go forward. Then, you know, the last thing is, as I mentioned, the Column, N.A.'s technology stack is pretty advanced. We believe the consumer we serve has needs for a bunch of other products.

Speaker #3: And then I think the third thing I would say is there are our pockets of customers or business where we don't get paid for the risk we take.

Speaker #3: And that's something that we are very thoughtful in terms of evaluating opportunities where we can optimize risk and return better in the business as we go forward.

Speaker #3: And then the last thing is, as I mentioned, the column bank’s technology stack is pretty advanced. We believe the consumer we serve has needs for a bunch of other products.

Speaker #3: So we will evaluate each one of them on their own business cases and see if we can launch and diversify our products sets and serve the product through branches and/or digital channels.

Lakhbir Lamba: We will evaluate each one of them on their own business cases and see if we can, you know, launch and diversify our product set and serve the product through branches and/or digital channels, using the Column tech stack and the charter there. That's, you know, as we go forward next year and beyond, opportunity. Harp, anything you want to add?

Speaker #3: Using the column tech stack and the charter there. So but that's as we go forward next year and beyond opportunity. Harpa, anything you want to add?

Speaker #4: Yeah, just in terms of where OPEX can go. So how I would think about OPEX in the near term is as we talked about some of the investment that we're going to continue to make in those areas and how I would think about OPEX is there will be some productivity improvements in the short to the medium term.

Harp Rana: Just in terms of where OpEx can go. How I would think about OpEx in the near term is, as we talked about some of the investments that we're going to continue to make in those areas. How I would think about OpEx is, you know, there will be some productivity improvement in the short to the medium term, and then really right in terms of OpEx, that'll come through scale. You'll see if there are enhancements in the cost to originate and the cost to service. Those will come, you know, in the medium term, Kyle. That's how I would think about that.

Speaker #4: And then really, right, in terms of OPEX, that'll come through scale, and then you'll see if there are enhancements in the cost to originate and the cost to service.

Speaker #4: Those will come in the medium-term file. That's how I would think about that.

Speaker #2: Thanks for taking my questions.

Kyle Joseph: Thanks for taking my questions.

Lakhbir Lamba: Yeah.

Speaker #4: Thank you.

Lakhbir Lamba: Thank you.

Harp Rana: Thank you.

Speaker #1: Our next question comes from Vincent Siatek with BTIG.

Operator: Our next question comes from Vincent Caintic with BTIG.

Speaker #5: Hey, good afternoon. Thanks for taking my questions. And I really appreciate the very detailed quarterly guidance that you gave. So thank you very much for that.

Vincent Caintic: Hey, good afternoon. Thanks for taking my questions. I really appreciate the very detailed quarterly guidance that you gave, so thank you very much for that. First question, I wanted to go over maybe some of the macro assumptions that you're having in your guidance estimates, particularly when you're thinking about your credit reserve rate. I noticed that it's gonna be flat for the rest of the year, implied in guidance. Just wondering what you're assuming there from if there's any, like, macro changes or what you're thinking about on employment. Thank you.

Speaker #5: First question, I wanted to go over maybe some of the macro assumptions that you're having in your guidance estimates, particularly when you're thinking about your credit reserve rate.

Speaker #5: I noticed that it's going to be flat for the rest of the year implied in guidance. Just wondering what you're assuming in there from if there's any macro changes or what you're thinking about on employment.

Speaker #5: Thank you.

Speaker #4: So hey, Vincent, it's Harp. So we did take the reserve rate up quarter over quarter versus where we were in fourth quarter of last year.

Harp Rana: Hey, Vincent. It's Par. We did take the reserve rate up quarter over quarter versus where we were in Q4 of last year. The reason why we took that up was just based upon some of the macro that we were seeing, which was basically oil prices, and also gas prices, and just being prudent around that in terms of what that could mean for our customers. In terms of, where we're gonna be, next quarter or quarter out, I can't really say right now. Right now in the prepared remarks, we've assumed that we're gonna be flat to the 10.4% that we're at in Q1, of course, barring any other macro news.

Harp Rana: Hey, Vincent. It's Harp. We did take the reserve rate up quarter over quarter versus where we were in Q4 of last year. The reason why we took that up was just based upon some of the macro that we were seeing, which was basically oil prices, and also gas prices, and just being prudent around that in terms of what that could mean for our customers. In terms of, where we're gonna be, next quarter or quarter out, I can't really say right now. Right now in the prepared remarks, we've assumed that we're gonna be flat to the 10.4% that we're at in Q1, of course, barring any other macro news.

Speaker #4: And the reason why we took that up was just based upon some of the macro that we were seeing, which was basically oil prices, and also gas prices, and just being prudent around that in terms of what that could mean for our customers.

Speaker #4: In terms of where we're going to be next quarter or quarter out, I can't really say right now. Right now, in the prepared remarks, right, we've assumed that we're going to be flat to the 10.4 that we're at in first quarter.

Speaker #4: Of course, barring any other macro news. So it could go up if things get a little bit tighter in terms of oil continues to increase.

Harp Rana: You know, it could go up if things get, you know, a little bit tighter in terms of, you know, oil continues to increase, and, you know, inflation continues to increase and gas prices continue to increase. It could absolutely, you know, come back down based upon, right, if oil prices come back down to where they were, you know, a few weeks ago and gas prices moderate.

Speaker #4: And inflation continues to increase and gas prices continue to increase. Or it could absolutely come back down based upon right if oil prices come back down to where they were a few weeks ago and gas prices moderate.

Speaker #5: Okay, got it. That's helpful. Thank you. And then second question, wanted to ask about how we should think about product growth. So I appreciate the overall loan growth guidance.

Vincent Caintic: Okay, got it. That's helpful. Thank you. Second question, I wanted to ask about how we should think about product growth. I appreciate the overall loan growth guidance. If you could talk about, say, between your small dollar loans versus your large loans. Looks like auto is doing really well, and you sound pretty excited about that. If you could describe, like, mix shift in terms of where you want to go, where the customer demand is, as you're thinking about the year. Thank you.

Speaker #5: But if you could talk about, say, between your small-dollar loans versus your large loans, it looks like auto is doing really well and you sound pretty excited about that.

Speaker #5: But if you could describe makeshift in terms of where you want to go, where the customer demand is as you're thinking about the year.

Speaker #5: Thank you.

Speaker #4: So Vincent, it's Harp again. So here's what I would say. So in terms of our priorities, auto secured is one of the priorities that LockBeer laid out in his prepared remarks.

Harp Rana: Vincent, it's Harp again. Here's what I would say. In terms of, you know, our priorities, auto-secured is one of the priorities that Lakhbir laid out in his prepared remarks, and you can sort of see, you know, how our large loans have grown over time. That continues to be a priority just given the returns on that product. However, we remain very much committed to our small loans as well. We often talk about our graduation strategy. Again, you know, in 2025, we did refinance, you know, 26,000 of those small loan customers. Then, you know, we moved them up to larger small loans or large loans, and then we're also able to bring down their rate.

Speaker #4: And you can sort of see how our large loans have grown over time. So that continues to be a priority, just given the returns on that product.

Speaker #4: However, we remain very much committed to our small loans as well. We often talk about our graduation strategy. And again, in 2025, we did refinance.

Speaker #4: customers and then we moved them up to larger small loans or large loans. And then we're also able to bring down their rate. So that is really a part of our acquisition and our customer lifecycle journey.

Harp Rana: That is really a part of our acquisition and our customer life cycle journey. We remain committed to the small loans, but large loans, particularly auto-secured, you know, is a focus given the returns on that product.

Speaker #4: So we remain committed to the small loans, but large loans, particularly auto secured, is a focus given the returns on that product.

Speaker #5: Okay, great. Thank you.

Vincent Caintic: Okay, great. Thank you.

Speaker #1: And as a reminder, it is Star One if you would like to ask a question. We'll go next to Zachary Oster with Citizens Capital.

Operator: As a reminder, it is star 1 if you would like to ask a question. We'll go next to Zachary Oster with Citizens JMP.

Operator: As a reminder, it is star 1 if you would like to ask a question. We'll go next to Zachary Oster with Citizens Capital.

Speaker #6: Hey, everyone. Good afternoon. Thanks for taking my question. I want to dig in a little bit on the tax refund side and kind of see if we can get some sort of disaggregated number or really just, I guess, a quote-unquote "normalized" sense of where origination growth would have been had that been excluded for this quarter.

Zachary Oster: Hey everyone. Good afternoon. Thanks for taking my question. Wanted to dig in a little bit on the tax refund side and kind of see if we can get some sort of disaggregated number, or really just, I guess, a quote-unquote normalized sense of where origination growth would have been had that been excluded for this quarter.

Speaker #4: So, Zach, it's really hard to give you what a normal number would be, but you're probably looking at last year as well, right? So, in terms of what we saw this year, I would say it's pretty typical.

Harp Rana: Zach, it's really hard to give you know, what a normal number would be, you're probably looking at last year as well, right? In terms of what we saw this year, I would say it's pretty typical. I think what, you know, we've read is, tax refunds on average were up by about $300, you know, over last year. You know, in terms of our portfolio liquidation, we saw about $36 million quarter over quarter. Last year, right, we only saw $2.2 million. You have to remember that last year what we saw was masked by the number of de novos that we had come online in Q1 2025.

Speaker #4: I think what we've read is tax refunds on average were up by about $300 over last year. In terms of our portfolio liquidation, we saw about 36 million quarter over quarter.

Speaker #4: Last year, right, we only saw 2.2 million. And you have to remember that last year, what we saw was masked by the number of de novos that we had come online in first quarter of 2025.

Speaker #4: So what we saw this year is exactly what we expected in terms of knowing that refunds on average were going to be a little bit larger and then typically we do see a liquidation of small dollar loans as people get their refunds and they go ahead and they pay us with the refund money.

Harp Rana: What we saw this year is exactly what we expected in terms of knowing that refunds on average were gonna be a little bit larger. Typically we do see, you know, a liquidation of small dollar loans as people get their refunds and they go ahead and they, you know, pay us with the refund money. What we saw was actually quite typical of what we expected given our portfolio size. As we move into Q2, right, we are gonna have growth in Q2. You have the $36 million in liquidation in Q1, and on page 14 of the supplement, we've actually guided to an approximation of where growth is expected.

Speaker #4: So what we saw was actually quite typical of what we expected given our portfolio size. Now, as we move into second quarter, right, we are going to have growth in second quarter.

Speaker #4: So, you have the $36 million in liquidation in the first quarter, and on page 14 of the supplement, we've actually guided to an approximation of where growth is expected.

Speaker #4: So when you're modeling, what you have to keep in mind is we had a provision release of 1.4 million in the first quarter based upon that liquidation.

Harp Rana: When you're modeling, what you have to keep in mind is, you know, we had a provision release of $1.4 million in Q1 based upon that liquidation. We've also provided you with a range based upon growth in terms of what that provision increase will be in Q2. Then going back to Lakhbir's remarks, right, that swing in provision from, you know, the $1.4 release up to, you know, if I take the midpoint, a $7 million bill, that swing of $8.4 million is gonna drop right down to the bottom line. Of course, other things are going to continue to improve, such as, you know, revenue is gonna continue to improve. You will, and that'll be, right? The growth will end up being a tailwind for the rest of the year.

Speaker #4: We've also provided you with a range based upon growth in terms of what that provision increase will be in second quarter. And then going back to LockBeer's remarks, right, that swing in provision from the 1.4 release up to if I take the midpoint, a 7 million bill, that swing of 8.4 million is going to drop right down to the bottom line.

Speaker #4: Of course, other things are going to continue to improve, such as revenue is going to continue to improve. So you will and that'll be right the growth will end up being a tailwind for the rest of the year.

Speaker #4: So you will see revenue improve, but in the second quarter, you will see that swing because of the growth in the Cecil provision that'll drop down to the bottom line.

Harp Rana: You will see revenue improve, but in the Q2 you will see that swing because of the growth in the CECL provision that'll drop down to the bottom line.

Speaker #6: Got it. Understood. And then one more question, if I could just add it on. Just thinking also into the macro assumptions, wanted to see if you guys have any updated commentary on rate cuts or kind of any assumptions going into or exiting the quarter on the allowance rate in terms of the rate cuts.

Zachary Oster: Got it. Understood. One more question, if I could just add it on. Just digging also into the macro assumptions. Wanted to see if you guys have any updated commentary on rate cuts, or kind of any assumptions going into or exiting the quarter on the allowance rate in terms of the rate cuts.

Speaker #4: So, in terms of the rate cuts, right, the Fed held flat today. That was our expectation. I think when we all entered the year, we probably thought that there was going to be one rate cut, right, at the beginning of the year.

Harp Rana: You know, in terms of the rate cuts, right, Fed held flat today. That was our expectation. I think when we all entered the year, we probably thought that there was gonna be one rate cut right at the beginning of the year. Now, right, with them holding flat, we've taken what the forecast is on rates, as well as, right, the forecast and other macro narratives into account when we did our reserve calculation. When we look at the macro, you know, we do, you know, look at a ratings agency and sort of their predictions of all of those things into the future. We took all of that into consideration as well as, of course, our own portfolio, right, where we look at the product mix. We look at, you know, delinquency status. We look at FICO.

Speaker #4: So now, right, with them holding flat, we've taken what the forecast is on rates as well as, right, the forecast and other macro narratives into account when we did our reserve calculation.

Speaker #4: So when we look at the macro, we do look at a ratings agency and sort of their predictions of all of those things into the future.

Speaker #4: So we took all of that into consideration, as well as, of course, our own portfolio, right, where we look at the product mix. We look at delinquency status.

Speaker #4: We look at FICO. We look at our own portfolio, and then we go ahead and we look at sort of what the macro assumptions are for the rest of the year in order to come up with the reserve rate.

Harp Rana: We look at our own portfolio, then we go ahead and we look at sort of what the macro assumptions are for the rest of the year in order to come up with the reserve rate. I would tell you that, you know, we sort of anticipated where we are today in terms of coming up with that reserve rate, if that helps.

Speaker #4: So I would tell you that we sort of anticipated where we are today in terms of coming up with that reserve rate if that helps.

Speaker #6: Yep, understood. Thank you very much. Sorry, go ahead.

Zachary Oster: Yep, understood. Thank you very much. Sorry, go ahead.

Speaker #3: Zach, I was just the biggest lovers in our credit. Assumptions, essentially, are the labor markets which are been stable. It's number two, it's inflation.

Lakhbir Lamba: Zach, the biggest levers in our credit, you know, assumptions essentially are the labor market, which have been stable. Number two is inflation, which is an outcome of everything that's happening around gas prices and what have you. GDP, obviously, those are big levers and as we model our reserve content. I think the biggest uncertainty that remains, I think on the credit side, the obvious one is gas prices and how prolonged this whole, you know, geopolitical conflict in the Middle East is going to stay.

Speaker #3: Which is an outcome of everything that's happening around gas prices and what have you. And so those and GDP, obviously. Those are big levers as we model our reserve contents.

Speaker #3: So I think the biggest uncertainty that remains I think on the credit side is the obvious one is gas prices and how prolonged this whole geopolitical conflict in the Middle East is going to stay.

Speaker #4: Again, Zach, I'm sorry. I'll add one other thing to what LockBeer just said, right? So, in terms of open jobs, we talk about that on these calls.

Harp Rana: Zach, I'm sorry. I'll add one other thing to what Lakhbir just said, right? In terms of open jobs, we talk about that on these calls. There's still about 7 million open jobs. Again, we know that open jobs for our target segment, there are ample jobs out there. That's just, you know, something else that we take into consideration as we're looking out into the future when we do our reserve, just in terms of what does the unemployment picture look like. Right now, again, we'll say that our customers are resilient or adaptable. There's plenty of open jobs, you know, available for them. As Lakhbir mentioned, right, inflation, gas prices, we continue to watch those as we move into Q2.

Speaker #4: So there are still about 7 million open jobs. And again, we know that for our target segment, there are ample jobs out there.

Speaker #4: So that's just something else that we take into consideration as we're looking out into the future when we do our reserve just in terms of what is the unemployment picture look like.

Speaker #4: So right now, again, we'll say that our customers are resilient. They're adaptable. There are plenty of open jobs available for them, as LockBeer mentioned, right?

Speaker #4: Inflation, gas prices, we continue to watch those as we move into second quarter.

Speaker #6: Understood. Thank you for the color.

Zachary Oster: Understood. Thank you for the color.

Lakhbir Lamba: Thank you.

Speaker #7: And moving next to Bill DeVellum with Titan Capital.

Operator: Moving next to Bill Dezellem with Tieton Capital.

Speaker #8: Thank you. A couple of questions. First of all, relative to your originations in the first quarter, the small loan originations were down, call it 19%, while the large loan originations were up 10.

Bill Dezellem: Thank you. A couple questions. First of all, relative to your originations in Q1, the small loan originations were down, call it, 19%, while the large loan originations were up 10. Can you walk us through the dynamics that led to that differential in origination change versus Q1 of last year?

Speaker #8: Can you walk us through the dynamics that led to that differential in origination change versus the first quarter of last year?

Speaker #4: Yeah. So hey, Bill, it's Harp. Nice to hear from you. So a couple of things. So I think on the small loan originations, a couple of things that I would point out, right?

Harp Rana: Yeah. Hey, Bill Dezellem, it's Harp Rana. Nice to hear from you. A couple of things. I think on the small loan origination, a couple of things that I would point out, right? One is we had, in higher tax season, we do expect our small loans to pay off. We do expect originations in terms of response rates to be muted in Q1. That's really what you're seeing, you know, in 2026. When you compare that to 2025, in 2025, we had 17 de novos come online between Q4 and Q1. In those de novos, you know, they have, you know, mail support. Although you did have an origination impact on small loans last year, that was masked by the fact that we had those de novos coming online.

Speaker #4: One is we had in higher tax season, we do expect our small loans to pay off. And we do expect originations in terms of response rates to be muted in first quarter.

Speaker #4: So that's really what you're seeing in 2026 when you compare that to 2025. In 2025, we had 17 de novos come online between fourth quarter and first quarter.

Speaker #4: And in those de novos, they have mail support. So although you did have an origination impact on small loans last year, that was masked by the fact that we had those de novos coming online.

Speaker #4: So that's really part of what you're seeing there in terms of year-over-year originations. And then in terms of the small loans, it's really our the auto-secured, right?

Harp Rana: That's really, you know, part of what you're seeing there in terms of year-over-year origination. In terms of the small loans, it's really, you know, our, the auto-secured, right? As we grow that business, that is what you're seeing on the large loans year-over-year.

Speaker #4: As we grow that business, that is what you're seeing on the large loans year over year.

Bill Dezellem: That's very helpful. Thank you. Would you want to take that last comment a step further and segment the auto-secured origination growth versus the non-auto-secured large loan origination growth?

Speaker #8: That's very helpful. Thank you. And would you want to take that last comment a step further and segment the auto-secured origination growth versus the non-auto-secured large loan origination growth?

Speaker #4: Yeah. And Bill, the best way for me to answer that is that portfolio grew 83 million, the auto-secured portfolio, and now it's 14.3% of our portfolio compared to last year.

Harp Rana: Yeah. Bill, the best way for me to answer that is that portfolio grew $83 million, the auto-secured portfolio. Now it's 14.3% of our portfolio. Compared to last year, it was only 11.6% of our portfolio. That continues to be a driver within large loans.

Speaker #4: It was only 11.6% of our portfolio, so that continues to be a driver within large loans.

Speaker #8: Fair enough. And then you referenced.

Bill Dezellem: Fair enough. Then you referenced.

Speaker #4: And Bill, I'm sorry. I apologize. One other thing that I would add there is just the growth rate. On the auto-secured compared to the growth rate on ENR, on large loans, so auto-secured grew by 38%.

Harp Rana: Bill, I'm sorry.

Bill Dezellem: Column-

Harp Rana: I apologize. One other thing that I would add there is just the growth rate on the auto-secured compared to the growth rate, you know, on ENR, on large loans. auto-secured grew by 38%. again, that's a component of what you're seeing on the ENR, in terms of large loans. again, auto-secured, you know, is a driver of that.

Speaker #4: And again, that's a component of what you're seeing on the ENR. In terms of large loans, but again, auto-secured is a driver of that.

Speaker #8: Yes. Thank you. And then shifting to the column relationship, I believe in your opening reference to, you started with one branch. Up to a dozen.

Bill Dezellem: Yes. Thank you. Then shifting to the Column relationship, I believe in your opening reference to you started with 1 branch, up to 12. When are you anticipating that relationship will be across all branches?

Speaker #8: What are you anticipating that that relationship will be across all branches?

Speaker #4: So that bill here is what I would say. I would say that we're going to continue to roll that out. We're going to be quite measured.

Harp Rana: That. Bill, here is what I would say. I would say that, you know, we're going to continue to roll that out. We're gonna be quite measured. The reason why we roll out one is to make sure it works the way that we think it's going to work from a technological perspective and also from a branch operational perspective, and also from a customer perspective. You roll it out into one, and then you roll it out a little bit larger and again, make sure that it's working the way that you want it to work. What I would say is it is very much, you know, in terms of the data that we're seeing, we're quite. It's exactly what we thought it was gonna be. We're quite pleased with that.

Speaker #4: The reason why we roll out one is to make sure it works the way that we think it's going to work from a technological perspective, and also from a branch operational perspective, and also from a customer perspective.

Speaker #4: So you roll it out into one, and then you roll it out a little bit larger and again, make sure that it's working the way that you want it to work.

Speaker #4: What I would say is it is very much in terms of the data that we're seeing, we're quite it's exactly what we thought it was going to be.

Speaker #4: So we're quite pleased with that. And in terms of the rollout, what I would say is we're going to continue to be measured in rolling it out.

Harp Rana: In terms of the rollout, what I would say is we're gonna continue to be measured in rolling it out. As, you know, Lakhbir said earlier, right, we're now in 20 states. We'll take a look and see, you know, what makes sense over time, particularly given where we're rolling it out currently and how we want to roll that out going forward. That's probably as much information as I can give you right now on that.

Speaker #4: But as LockBeer said earlier, right, we're now in 20 states. And we'll take a look and see what makes sense over time. Particularly given where we're rolling it out currently and how we want to roll that out going forward.

Speaker #4: That's probably as much information as I can give you right now on that.

Speaker #8: Okay. And I'm going to dive into that a bit further here, please. So my perception having never rolled out this sort of a relationship would be that once you get up to 50 branches, or so, that going from 50 to 250, you really aren't going to learn anything there.

Bill Dezellem: Okay. I'm going to dive into that a bit further here, please. My perception, having never rolled out this sort of a relationship, would be that once you get up to 50 branches or so, that going from 50 to 250, that you really aren't going to learn anything there. You know, going from 1 to 12 or a dozen to 50, very much maybe. Assuming that that presumption is correct, do you have operational heavy lifting or lifting that needs to be done each time this is moved into a branch, therefore it's not as simple as flipping a switch once you're at whatever your maximum test number is, using my example, 50? Do you really need to take that kind of at whatever pace your operations team follow?

Speaker #8: Going from 1 to 12 or a dozen to 50, very much maybe. So assuming that that presumption is correct, do you have operational heavy lifting or lifting that needs to be done each time this is moved into a branch?

Speaker #8: Therefore, it's not as simple as flipping a switch once you're at whatever your maximum test number is. Using my example, 50. Or do you really need to take that at whatever pace your operations team follow?

Speaker #4: So here's how I would think about that, Bill. You're absolutely right, right? After you hit a critical mass, it becomes easier to roll that out because you know that technologically it works.

Harp Rana: Here's how I would think about that, Bill. You're absolutely right? After you hit a critical mass, it becomes easier to roll that out because you know that technologically it works, and it's really about training the staff in the branches where you are. You're absolutely right on that, and it just becomes sort of the flywheel of training the branches. You know, what I would think about is, you know, again, right, we will soon be in 20 states, and rolling it out in each state probably is where we're focused and making sure that we are going to do that right.

Speaker #4: And it's really about training the staff in the branches where you are. So you're absolutely right on that. And it just becomes sort of the flywheel of training the branches.

Speaker #4: What I would think about is, again, right, we will soon be in 20 states. And rolling it out in each state probably is where we're focused in making sure that we are going to do that right.

Speaker #4: That in one state and then eventually in multiple states, the flywheel approach of, "Hey, if you've done 50 and now you know how to train the folks and you know what works," that would absolutely be a true statement.

Harp Rana: That in one state and then eventually in multiple states, the flywheel approach of, hey, if you've done 50 and now you know how to train the folks and you know what works, that would absolutely be a true statement.

Speaker #8: That's very helpful. Thank you for the depth of answers.

Bill Dezellem: That's very helpful. Thank you, for the depth of answers.

Speaker #7: Thanks, Bill.

Lakhbir Lamba: Thanks, Bill.

Speaker #9: And this now concludes our question and answer session. I would like to turn the floor back over to LockBeer Lemba for closing comments.

Operator: This now concludes our question and answer session. I would like to turn the floor back over to Lakhbir Lamba for closing comments.

Operator: This now concludes our question-and-answer session. I would like to turn the floor back over to Lakhbir Lamba for closing comments.

Speaker #7: Thank you so much. As I said earlier on the call, we're very pleased with how we started 2026. I'm excited about the opportunities ahead this year.

Lakhbir Lamba: Thank you so much. You know, as I said earlier on the call, we're very pleased with how we started 2026. I'm excited about opportunities ahead this year, and as we go forward, for Regional Management. As we also mentioned, just, you know, we just talked in the Q&A, you know, we are watching the macroeconomic conditions, you know, carefully and we'll, you know, adjust our posture in terms of be it underwriting or what have you, relative to how macroeconomic conditions perform. Outside of that, really excited about where we are and how we started the year. My sincere thanks to the whole Regional Management team, we got exciting times ahead. Thank you.

Speaker #7: And as we go forward for regional management, as we also mentioned, just we just talked in the Q&A, we're watching the macroeconomic conditions. Carefully.

Speaker #7: And we'll adjust our posture in terms of, be it underwriting or what have you, relative to how macroeconomic conditions perform. But outside of that, really excited about where we are and how we started the year.

Speaker #7: My sincere thanks to the whole Regional Management team, and we’ve got exciting times ahead. Thank you.

Operator: Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.

Q1 2026 Regional Management Corp Earnings Call

Request DemoDemo

Regional Management

Earnings