Regional Management Corp.

Our business is impacted by several factors affecting our revenues, costs, and results of operations, including the following:

Quarterly Information and Seasonality. Our loan volume and contractual delinquency follow seasonal trends. Demand for our loans is typically highest during the second, third, and fourth quarters, which we believe 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 we believe 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. Changes in the portfolio could result in releases of the allowance for credit losses in periods of portfolio liquidation and increases to the allowance for credit losses in periods of portfolio growth. Consequently, we experience seasonal fluctuations in our operating results. However, changes in macroeconomic factors, including inflation, higher interest rates, and geopolitical conflict, have impacted our typical seasonal trends for loan volume and delinquency.

Growth in Loan Portfolio. The revenue that we generate from interest and fees is largely driven by the balance of loans that we originate. We source our loans through our branches, centrally-managed direct mail program, digital partners, and consumer website. The majority of our loans, regardless of origination channel, are serviced through our branches. Increasing the number of loans per branch and growing our state footprint allows us to increase the number of customers we are able to serve. We grew our state footprint from 19 to 20 states in May 2026, expanding our operations to Florida. We continue to assess our branch network for clear opportunities to add branches in new and existing states where it is favorable for us to conduct business or consolidate operations into larger branches within close geographic proximity. This branch optimization is consistent with our omni-channel strategy and builds upon our recent successes in entering new states with a lighter branch footprint, while still providing customers with best-in-class service.

Product Mix. We are exposed to different credit risks and charge different interest rates and fees with respect to the various types of loans we offer. Our product mix also varies to some extent by state, and we may further diversify our product mix in the future. The interest rates and fees vary from state to state, depending on the competitive environment and relevant laws and regulations.

Asset Quality and Allowance for Credit Losses. Our results of operations are highly dependent upon the credit quality of our loan portfolio. The credit quality of our loan portfolio is the result of our ability to enforce sound underwriting standards, maintain diligent servicing of the portfolio, and respond to changing economic conditions as we grow our loan portfolio.

The primary underlying factors driving the provision for credit losses for each loan type are our underwriting standards, delinquency trends, the general economic conditions in the areas in which we conduct business, loan portfolio growth, and the effectiveness of our servicing and collection efforts. We monitor these factors, and the amount and past due status of all loans, to identify trends that might require us to modify the allowance for credit losses.

Interest Rates. Our costs of funds are affected by changes in interest rates, as the interest rates that we pay on certain of our credit facilities are variable. As a component of our strategy to manage the interest rate risk associated with future interest payments on our variable-rate debt, a majority of our funding was held at a fixed rate as of June 30, 2026, representing 80% of our total debt balance.

Operating Costs. Our financial results are impacted by the costs of operations and head office functions. Those costs are included in general and administrative expenses within our consolidated statements of comprehensive income.

Bank Partnership Program. On March 2, 2026, we entered an agreement with Column, under which Column originates certain unsecured and auto-secured installment loan products offered through our platform and other approved channels. This program is an important enabler of our long-term strategy, providing greater product and operational uniformity across states, faster entry into new markets, expanded relationships with our customers, and attractive unit economics as it scales. We act as Column's service provider and program manager by performing marketing, processing, and servicing activities. We will purchase any such loans offered by Column, except in limited circumstances.

The bank partnership program impacts the timing and classification of certain revenues and expenses as compared to loans originated under our state-licensed operations. For loans originated under the program, we earn marketing and processing fees from Column that are recognized in other income at the time of origination. In contrast, origination fees associated with loans originated directly by us are generally deferred and recognized in interest and fee income over the life of the loan using the constant yield method. We also receive servicing fee income related to loans retained by Column that are recognized in other income.

In addition, certain personnel and digital affiliate marketing costs that would otherwise be deferred and recognized over the life of a state-licensed originated loan are generally expensed as incurred for loans originated under the bank partnership program within personnel expense and marketing expense, respectively. Other program costs include monthly platform fees and certain ongoing program monitoring expenses that are recorded to other expenses.

As bank partnership loan volumes increase, the program may result in differences in the timing and classification of certain revenues and expenses and changes the classification of those amounts within the statement of comprehensive income. Accordingly, growth in bank partnership loan volume may affect the comparability of period-to-period trends in interest and fee income, other income, and general and administrative expenses, as compared to periods prior to the implementation of the program.