Regional Management Corp. Fair Value Disclosure
Note 13. Fair Value Measurements
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:
Cash and restricted cash: Cash and restricted cash is recorded at cost, which approximates fair value due to its highly liquid nature.
Restricted AFS investments: The fair value of U.S. Treasury securities is priced using an external pricing service which the Company corroborates using a secondary external vendor. For additional information on the Company's restricted AFS investments, see Note 5, “Restricted Available-for-Sale Investments.”
Net finance receivables: The Company determines the fair value of net finance receivables using a discounted cash flows methodology. The application of this methodology requires the Company to make certain estimates and judgments. These estimates and judgments include, but are not limited to, prepayment rates, default rates, loss severity, and risk-adjusted discount rates.
Debt: The Company estimates the fair value of debt using estimated credit marks based on an index of similar financial instruments (credit facilities) and projected cash flows from the underlying collateralized finance receivables (securitizations), each discounted using a risk-adjusted discount rate.
Certain of the Company’s assets estimated fair value are classified and disclosed in one of the following three categories:
Level 1 – Quoted market prices in active markets for identical assets or liabilities.
Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
Level 3 – Unobservable inputs that are not corroborated by market data.
In determining the appropriate levels, the Company performs an analysis of the assets and liabilities that are estimated at fair value. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs are classified as Level 3.
The following table includes the carrying amounts and estimated fair values of financial assets and liabilities disclosed but not carried at fair value:
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December 31, 2025 |
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December 31, 2024 |
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Dollars in thousands |
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Carrying |
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Estimated |
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Carrying |
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Estimated |
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Assets |
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Level 1: |
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Cash |
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$ |
3,823 |
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$ |
3,823 |
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$ |
3,951 |
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$ |
3,951 |
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Restricted cash |
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|
94,174 |
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|
94,174 |
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|
131,684 |
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131,684 |
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Level 3: |
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Net finance receivables, less unearned insurance |
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1,866,403 |
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1,893,834 |
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1,644,967 |
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1,695,325 |
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Liabilities |
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Level 3: |
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Debt |
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1,650,764 |
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1,636,727 |
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1,478,336 |
|
|
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1,428,607 |
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The following table includes the carrying amounts and estimated fair values of amounts the Company measures at fair value on a recurring basis:
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December 31, 2025 |
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December 31, 2024 |
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Dollars in thousands |
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Carrying |
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Estimated |
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Carrying |
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Estimated |
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Assets |
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Level 2: |
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Restricted AFS investments |
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$ |
24,211 |
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|
$ |
24,211 |
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|
$ |
21,712 |
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|
$ |
21,712 |
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As of the periods indicated above, there were no financial assets or liabilities measured at fair value on a non-recurring basis.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 20, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Mar 4, 2022 | |
| 2015 | Feb 23, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.