Regional Management Corp. Income Taxes Disclosure
Note 14. Income Taxes
The Company and its subsidiaries file a consolidated federal income tax return. The Company files consolidated or separate state income tax returns as required by individual states in which it operates. The Company is generally no longer subject to federal, state, or local income tax examinations by taxing authorities before 2021.
Income tax expense attributable to total income before income taxes consists of the following for the periods indicated:
|
|
Year Ended December 31, |
|
|||||||||
Dollars in thousands |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Current: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
$ |
444 |
|
|
$ |
7,886 |
|
|
$ |
3,567 |
|
State and local |
|
|
273 |
|
|
|
724 |
|
|
|
1,146 |
|
|
|
|
717 |
|
|
|
8,610 |
|
|
|
4,713 |
|
Deferred: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
|
12,106 |
|
|
|
3,821 |
|
|
|
289 |
|
State and local |
|
|
542 |
|
|
|
417 |
|
|
|
(177 |
) |
|
|
|
12,648 |
|
|
|
4,238 |
|
|
|
112 |
|
Total |
|
$ |
13,365 |
|
|
$ |
12,848 |
|
|
$ |
4,825 |
|
Income tax expense differed from the amount computed by applying the federal income tax rate to total income before income taxes as a result of the following:
|
Year Ended December 31, |
|
||||||||||||||||
|
2025 |
|
2024 |
|
2023 |
|
||||||||||||
Dollars in thousands |
$ |
|
% |
|
$ |
|
% |
|
$ |
|
% |
|
||||||
Federal tax expense at statutory rate |
$ |
12,133 |
|
|
21.0 |
% |
$ |
11,356 |
|
|
21.0 |
% |
$ |
4,364 |
|
|
21.0 |
% |
Increase (reduction) in income taxes resulting from: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
, net of federal income tax effect (1) |
|
870 |
|
|
1.5 |
% |
|
943 |
|
|
1.7 |
% |
|
399 |
|
|
1.9 |
% |
Tax credits: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Research and development |
|
(749 |
) |
|
(1.3 |
)% |
|
(999 |
) |
|
(1.8 |
)% |
|
(1,550 |
) |
|
(7.5 |
)% |
Other |
|
(55 |
) |
|
(0.1 |
)% |
|
(257 |
) |
|
(0.5 |
)% |
|
(201 |
) |
|
(1.0 |
)% |
Nontaxable or nondeductible items: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Nondeductible compensation |
|
1,240 |
|
|
2.1 |
% |
|
1,334 |
|
|
2.5 |
% |
|
1,106 |
|
|
5.3 |
% |
Other |
|
128 |
|
|
0.2 |
% |
|
201 |
|
|
0.4 |
% |
|
113 |
|
|
0.5 |
% |
Unrecognized tax benefits |
|
120 |
|
|
0.2 |
% |
|
324 |
|
|
0.6 |
% |
|
382 |
|
|
1.8 |
% |
Other adjustments |
|
(322 |
) |
|
(0.5 |
)% |
|
(54 |
) |
|
(0.1 |
)% |
|
212 |
|
|
1.2 |
% |
Total |
$ |
13,365 |
|
|
23.1 |
% |
$ |
12,848 |
|
|
23.8 |
% |
$ |
4,825 |
|
|
23.2 |
% |
(1) In 2025, Texas, Illinois, and Virginia made up the majority of the tax effect in this category. In 2024, Texas, North Carolina, and South Carolina made up the majority of the tax effect in this category. In 2023, Texas made up the majority of the tax effect in this category.
Income taxes paid (net of refunds) consisted of the following jurisdictions for the periods indicated:
|
Year Ended December 31, |
|
|||||||
Dollars in thousands |
2025 |
|
2024 |
|
2023 |
|
|||
Federal |
$ |
5,670 |
|
$ |
2,870 |
|
$ |
1,020 |
|
State: |
|
|
|
|
|
|
|||
Texas |
|
579 |
|
|
661 |
|
|
320 |
|
South Carolina |
|
151 |
|
|
(574 |
) |
|
— |
|
Illinois |
|
72 |
|
|
137 |
|
|
132 |
|
Missouri |
|
— |
|
|
— |
|
|
271 |
|
North Carolina |
|
(67 |
) |
|
(194 |
) |
|
416 |
|
Alabama |
|
(72 |
) |
|
(161 |
) |
|
603 |
|
Other |
|
(222 |
) |
|
(5 |
) |
|
288 |
|
|
|
441 |
|
|
(136 |
) |
|
2,030 |
|
Total |
$ |
6,111 |
|
$ |
2,734 |
|
$ |
3,050 |
|
Net deferred tax assets and liabilities consist of the following as of the periods indicated:
|
|
December 31, |
|
|||||
Dollars in thousands |
|
2025 |
|
|
2024 |
|
||
Deferred tax assets: |
|
|
|
|
|
|
||
Allowance for credit losses |
|
$ |
52,488 |
|
|
$ |
47,296 |
|
Lease liability |
|
|
11,022 |
|
|
|
9,716 |
|
Unearned insurance commissions |
|
|
8,522 |
|
|
|
7,760 |
|
Share-based compensation |
|
|
2,843 |
|
|
|
3,011 |
|
Accrued expenses |
|
|
2,414 |
|
|
|
2,444 |
|
State net operating loss carryforward |
|
|
2,177 |
|
|
|
1,638 |
|
Research and experimental expenditures |
|
|
— |
|
|
|
4,408 |
|
Unearned premium reserves |
|
|
— |
|
|
|
234 |
|
Other |
|
|
462 |
|
|
|
59 |
|
Deferred tax assets |
|
|
79,928 |
|
|
|
76,566 |
|
|
|
|
|
|
|
|
||
Deferred tax liabilities: |
|
|
|
|
|
|
||
Fair market value adjustment of net finance receivables |
|
|
60,313 |
|
|
|
49,942 |
|
Lease assets |
|
|
10,510 |
|
|
|
9,207 |
|
Deferred loan costs |
|
|
5,215 |
|
|
|
4,162 |
|
Depreciation and software amortization |
|
|
3,733 |
|
|
|
2,580 |
|
Research and experimental expenditures |
|
|
1,995 |
|
|
|
— |
|
Prepaid expenses |
|
|
1,375 |
|
|
|
1,305 |
|
Unearned premium reserves |
|
|
13 |
|
|
|
— |
|
Other |
|
|
119 |
|
|
|
84 |
|
Deferred tax liabilities |
|
|
83,273 |
|
|
|
67,280 |
|
Deferred tax assets (liabilities), net |
|
$ |
(3,345 |
) |
|
$ |
9,286 |
|
The Company had a state net operating loss carryforward of approximately $66.0 million as of December 31, 2025. These carryforwards are available to offset future taxable income. If not used, the carryforward will expire beginning in 2032.
Companies are not permitted to recognize the tax benefit attributable to a tax position unless such position is more likely than not to be sustained upon examination by taxing authorities, based solely on the technical merits of the position. At December 31, 2025, the Company had $1.0 million of unrecognized tax benefits that, if recognized, would affect the effective tax rate. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in the income tax line of the consolidated statements of comprehensive income. The Company recognized approximately $42 thousand, $0.1 million, and $0.1 million of interest and penalties for the years ended December 31, 2025, 2024, and 2023, respectively.
The following schedule reconciles unrecognized tax positions for the periods indicated:
|
|
As of and for the Year Ended December 31, |
|
|||||||||
Dollars in thousands |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Beginning balance |
|
$ |
984 |
|
|
$ |
733 |
|
|
$ |
414 |
|
Additions based on tax positions related to the current year |
|
|
206 |
|
|
|
247 |
|
|
|
268 |
|
Additions for tax positions of prior years |
|
|
— |
|
|
|
4 |
|
|
|
51 |
|
Reductions for tax positions of prior years |
|
|
(175 |
) |
|
|
— |
|
|
|
— |
|
Ending balance |
|
$ |
1,015 |
|
|
$ |
984 |
|
|
$ |
733 |
|
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 Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.