Lender to the unbanked, Regional Management Corp. is approaching the market with a $250 million offering for which BMO Capital Markets is acting as structuring lead. The deal follows its $187 million securitization closed in June that was led by J.P. Morgan Securities, according to Asset Securitization Report's deal database.
The deal is split into four tranches rated by DBRS Morningstar, comprising $175.8 million rated AAA; $18.3 million rated AA+; $28.1 million rated A;and $27.8 million rated BBB. Credit ratings by S&P Global Ratings were identical, except for the $28.1 piece that it rated A+. The notes across all the tranches mature Dec. 15, 2033, with a two-year revolving period ending Nov. 30, 2026.
Regional Management has long been a regular ABS issuer, except for 2023 when it did not approach the market. In 2022 it issued $450 million in asset-backed securities (ABS) split between two offerings, and in 2021 a total of $704 million divided among in three deals.
DBRS says in a presale report issued November 13 that the current Regional Management offering represents the lender's 10th securitization of nonprime consumer loans, comprising convenience checks and small and large loan types. The initial amount of overcollateralization is approximately 11.85% of the initial loan pool, and the reserve account is 0.50% and funded at inception. Tranches rated below AAA are subordinated to the top-rated portion.
The initial excess spread on the deal is approximately 20% per annum based on a weighted average percentage rate (APR) of 30.7%, less servicing fees and a blended note rate of 5.9%.
First incorporated in South Carolina in1987 and going public in 2012, the lender has long catered to borrowers with limited access to banks, thrifts, credit card companies and other traditional lenders. As of Sept. 30, 2024, it operated 340 branches in 19 mostly Southern and Western states.
The rating agency notes that Regional Management's branches enable frequent in-person contact with customers, which the lender believes improves credit performance.
"Regional has operated its business for more than 30 years and has successfully weathered many economic cycles," DBRS says, adding that the firm has remained consistently profitable since 2007.
