New Student Loan Debt Could Spell Trouble For Regional Management

2025-06-04 23:39:13 ET

Summary

• US consumer debt is at record highs, with rising delinquencies and student loan repayments worsening the risk environment for lenders like Regional Management Corporation.
• RM's Q1 2025 results showed solid loan growth and stable delinquency trends. After earning $4.16 in FY 2024, the company is projected to earn $4.37 this year, a 5% increase.
• Despite RM's low valuation and attractive dividend yield, the company faces heightened credit risk, due to its exposure to financially stressed, low-credit-score borrowers.
• Given the challenging macro backdrop, I recommend a hold rating on RM until US consumer debt trends stabilize and repayment behaviors improve.

A recent report in Fortune Magazine painted a rather ugly picture for consumer debt in the US. Credit scores for millions of Americans are falling, in part, because of the government’s decision to restart collections on defaulted student loans. One source in the Fortune article described student loan delinquency as “severe”....

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