Regional Management Corp. (Regional) operates as a diversified consumer finance company that provides installment loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies, and other lenders.
As of December 31, 2024, the company operated under the name ‘Regional Finance’ online and in branch locations in 19 states across the United States, serving 575,400 active accounts. Most of the company’s loan products are secured, and each is st...
Regional Management Corp. (Regional) operates as a diversified consumer finance company that provides installment loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies, and other lenders.
As of December 31, 2024, the company operated under the name ‘Regional Finance’ online and in branch locations in 19 states across the United States, serving 575,400 active accounts. Most of the company’s loan products are secured, and each is structured on a fixed-rate, fixed-term basis with fully amortizing equal monthly installment payments, repayable at any time without penalty. The company sources its loans through its omni-channel platform, which includes its branches, centrally managed direct mail campaigns, digital partners, and consumer website. The company operates an integrated branch model in which nearly all loans, regardless of origination channel, are serviced through its branch network with the support of centralized sales, underwriting, service, collections, and administrative teams.
The company’s core products are large and small installment loans. As a complement to its loan products, the company offers its customers optional payment and collateral protection insurance.
Large Loans: The company offers large installment loans. The company’s large loans are typically secured by non-essential household goods and/or a vehicle. As of December 31, 2024, it had 259,500 large loans outstanding.
Small Loans: The company offers small installment loans. The company’s small loans are typically secured by non-essential household goods and/or, to a lesser extent, a lien on a vehicle. As of December 31, 2024, the company had 314,900 small loans outstanding.
Optional Payment and Collateral Protection Insurance Products: The company offers its customers optional payment and collateral protection insurance relating to its loan products, including credit life insurance, accident and health insurance, involuntary unemployment insurance, and personal property insurance.
Through November 2022, the company also offered indirect retail installment loans of up to $7,500. It ceased offering indirect retail installment loans in November 2022 to focus on growing its core loan portfolio, but it continues to own and service the loans that the company previously originated. As of December 31, 2024, the company had 1,000 retail loans outstanding.
Business Model
Omni-Channel Platform: The company’s omni-channel platform, which includes its branches, direct mail campaigns, digital partners, and consumer website, enables thit to offer a range of loan products to new, existing, and former customers throughout its markets. The company began building its branch network to 344 branches in 19 states. The company’s branch personnel market its products in a number of ways, including through customer referrals, direct telephone and mail solicitations of current and former customers, and by leveraging its direct mail program and leads generated by the company’s digital affiliates and consumer website. The company’s direct mail campaigns include mailings of pre-screened convenience checks, pre-qualified offers, and invitations to apply, which enable the company to market its products to millions of current and potential customers in a cost-effective manner. The company has also developed its consumer website and partnered with digital lead generation sources to promote its products and facilitate loan applications and originations via the internet.
Attractive Products for Customers with Limited Access to Credit: The company’s flexible loan products, are competitively priced, easy to understand, and incorporate features designed to meet the varied financial needs and credit profiles of a broad range of consumers. This product diversity distinguishes the company from monoline competitors and provides it with the ability to offer its customers new loan products as their credit profiles evolve, building customer loyalty and increasing the overall value of customer relationships.
Integrated Branch Model with Centralized Support. The company's branch network serves as the foundation of its omni-channel platform and the primary point of contact with its customers. By integrating loan origination and loan servicing at the branch level, its employees are able to maintain a relationship with its customers throughout the life of a loan.
Consistent Portfolio Performance: The company has maintained a sharp focus on credit quality by investing in highly qualified personnel, refining underwriting practices, developing custom credit scorecards, streamlining procedures, automating underwriting decisions, and improving reporting capabilities. These investments allow the company to control the credit quality of its portfolio, maintain compliance with evolving state and federal law, and react quickly whenever market dynamics may change. The company has also expanded its centralized collections department and provided its branches with improved collections tools, training, and incentives.
Strategies
The company's strategies are to expand its geographic presence; leverage direct mail marketing; improve its digital capabilities; enhance its products, channels, and services; and maintain sound underwriting and credit control.
Loan Products
The company offers large and small installment loans to its customers. The company’s underwriting standards focus on its customers’ ability to affordably make loan payments out of their discretionary income, with the value of pledged collateral serving as a credit enhancement rather than the primary underwriting criterion. The interest rates, fees and other charges, maximum principal amounts, and maturities for the company’s loans vary from state to state, depending on the competitive environment and relevant laws and regulations.
Large and small loans are originated by the company’s branch network, by its centralized sales and service team, digitally through its consumer website, and through its convenience check direct mail campaigns. The company’s convenience check direct mail loan offers enable prospective customers to enter into a loan with the company by cashing or depositing the check attached to the loan offer, thereby agreeing to the terms of the loan as prominently set forth on the check and accompanying disclosures. When a customer enters into a loan by cashing or depositing the convenience check, its personnel gather additional information on the borrower to assist in servicing the loan.
Loan renewals are also an important part of its business. The company’s customers use renewals to extend and expand their lending relationships with it. The company generally offers loan renewals to existing customers who have demonstrated an ability and willingness to repay amounts owed to it.
Insurance and Ancillary Products
The company also offers its customers various optional payment and collateral protection insurance products as a complement to its lending operations. The company’s primary insurance products include optional credit life insurance, accident and health insurance, involuntary unemployment insurance, and personal property insurance. The company’s insurance products, including the types of products offered and their terms and conditions, vary from state to state in compliance with applicable laws and regulations.
The company requires that customers maintain property insurance on any personal property securing loans and offer customers the option of providing proof of such insurance purchased from a third party (such as homeowners or renters insurance) in lieu of purchasing property insurance from it. The company also requires proof of insurance on any vehicles securing loans, and in select markets, it offers vehicle single interest insurance on vehicles used as collateral on large and small loans.
Apart from the various optional payment and collateral protection insurance products that it offers to its customers, on certain loans, the company also collects a fee from its customers and, in turn, purchase non-file insurance from an unaffiliated insurance company for its benefit in lieu of recording and perfecting its security interest in personal property collateral.
The company markets and sells insurance policies as an agent of an unaffiliated insurance company, within the limitations established by its agency contracts with the unaffiliated insurance company. The company then remits to the unaffiliated insurance company the premiums it collects, net of refunds on prepaid loans and net of commission on new business. The unaffiliated insurance company then cedes to the company’s wholly owned insurance subsidiary, RMC Reinsurance, Ltd., the net insurance premium revenue and the associated insurance claims liability for all insurance products, including the non-file insurance that the company purchases. Life insurance premiums are ceded as written, and non-life insurance premiums are ceded as earned. In accepting the premium revenue and associated claims liability, RMC Reinsurance, Ltd. acts as reinsurer for all insurance products that it sells to its customers and for the non-file insurance that the company purchases. RMC Reinsurance, Ltd. pays the unaffiliated insurance company a ceding fee for the continued administration of all insurance products.
In addition, in select states, the company offers club membership products that are administered and serviced through a third-party provider. The product generally provides certain automobile, home, travel, and other services and benefits to customers, including emergency towing and roadside assistance, emergency locksmith service, automobile repair reimbursement, stolen car expense benefit, automobile insurance deductible reimbursement, limited legal services, and various travel and other discounts.
Branch Network
The company’s branches are generally located in visible, high-traffic locations, such as shopping centers or, to a lesser extent, commercial office buildings.
Payment and Loan Servicing
The company has implemented company-wide payment and loan servicing policies and procedures, which are designed to maintain consistent portfolio performance and ensure regulatory compliance. The company’s district supervisors, associate vice presidents, state vice presidents, and compliance and internal audit teams regularly review servicing and collection records to ensure compliance with its policies and procedures. The company’s centralized management information system enables regular monitoring of branch portfolio metrics by management, and the compensation opportunities of its operations employees and senior management have a significant performance component that is closely tied to credit quality, among other defined performance targets.
Information Technology
The company utilizes a loan origination and servicing platform offered by Nortridge both to originate loans and to service its loan portfolio. The company has invested in customizing the Nortridge platform to meet its needs based upon its specific products, processes, and reporting requirements. The Nortridge custom decision engine utilizes application information and a credit report detailing the applicant’s credit history to generate an initial credit decision and to guide its branch employees through the loan origination process to the final credit decision.
Seasonality
The company’s loan volume and contractual delinquency follow seasonal trends. Demand for its loans is typically highest during the second, third, and fourth quarters, (year ended December 2024) which is largely due to customers borrowing money for vacation, back-to-school, and holiday spending. Loan demand has generally been the lowest during the first quarter, which is largely due to the timing of income tax refunds. Delinquencies generally reach their lowest point in the first half of the year and rise in the second half of the year. Consequently, the company experience seasonal fluctuations in its operating results.
Government Regulation
Premiums and charges for optional collateral and credit protection insurance products are set at or below authorized statutory rates and are stated separately in the company’s disclosures to customers, as required by the Truth in Lending Act and by various applicable state laws. The company is also subject to state laws and regulations governing insurance agents in the states in which it sells insurance. State insurance regulations require that insurance agents be licensed and limit the premium amount charged for such insurance. The company’s captive insurance subsidiary is regulated by the insurance authorities of the Turks and Caicos Islands of the British West Indies, where the subsidiary is organized and domiciled.
In addition to the Dodd-Frank Act and state and local laws, regulations, and ordinances, numerous other federal laws and regulations affect the company’s lending operations. These laws include the Truth in Lending Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Servicemembers Civil Relief Act, the Military Lending Act, the Gramm-Leach-Bliley Act, and in each case the regulations thereunder, and the Federal Trade Commission’s Credit Practices Rule. These laws require the company to provide complete disclosure of the principal terms of each loan to the borrower prior to the consummation of the loan transaction, prohibit misleading advertising, protect against discriminatory lending practices, govern the manner in which the company reports customer information to consumer reporting agencies, govern the terms of loans to servicemembers, and proscribe unfair credit practices.
History
Regional Management Corp. was founded in 1987. The company, a Delaware corporation, was incorporated in 1987.
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