Regional Management Corp. ($RM)

Greetings, and welcome to the Regional Management First Quarter 2026 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Garrett Edson. Please go ahead.

Thank you, and good afternoon. By now, everyone should have access to our earnings announcement and supplemental presentation, which were released prior to this call and may be found on our website at regionalmanagement.com. Before we begin our formal remarks, I will direct you to Page 2 of our supplemental presentation, which contains important disclosures concerning forward-looking statements and the use of non-GAAP financial measures. Part of our discussion today may include forward-looking statements, which are based on management's current expectations, estimates and projections about the company's future financial performance and business prospects. These forward-looking statements speak only as of today and are subject to various assumptions, risks, uncertainties and other factors that are difficult to predict and that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. These statements are not guarantees of future performance, and therefore, you should not place undue reliance upon them. We refer all of you to our press release, presentation and recent filings with the SEC for a more detailed discussion of our forward-looking statements and the risks and uncertainties that could impact our future operating results and financial condition. Also, our discussion today may include references to certain non-GAAP measures. A reconciliation of these measures to the most comparable GAAP measures can be found within our earnings announcement or earnings presentation and posted on our website at regionalmanagement.com. I would now like to introduce Lakhbir Lamba, President and CEO of Regional Management Corp.

Thanks, Garrett, and good afternoon, everyone. We delivered a strong start to 2026 with solid financial performance, continued year-over-year portfolio growth and further progress on our strategic priorities. Over the past few months, I've spent significant time across the organization, continuing to listen, learn and evaluate our business. And I'm increasingly excited about the opportunities ahead. As I've deepened my understanding of our customers, products and markets, I see a clear path to stronger performance and improving return outcomes over time. Our results in the first quarter reflect the strength of our operating model, disciplined execution and continued investment in the business. Joining me on the call today is Harp Rana, our Chief Financial and Administrative Officer. I'll begin with a summary of our first quarter results, provide an update on our strategic initiatives, and then Harp will walk through the financial details. We generated net income of $11.4 million or $1.18 of diluted earnings per share, representing an increase of 69% year-over-year. These results were driven by continued portfolio growth, strong revenue performance and further improvement in operating efficiency. Our loan portfolio increased by $214 million year-over-year to $2.1 billion, representing 11% growth, and we generated record revenue for the first quarter, up 9% compared to the prior year period. Demand for our products remains healthy, and we continue to grow this portfolio in a disciplined manner. We also delivered strong operating leverage. G&A expenses declined 2% year-over-year, even as we continue to invest in growth initiatives, technology and digital capabilities. Our operating expense ratio improved 180 basis points year-over-year to 12.2%, another all-time best for the company. Notably, revenue growth outpaced G&A and interest expense growth by a wide margin, reflecting the scalability of our model. Capital generation remained strong in the quarter. We had $12 million of capital generation and returned more than $10 million to shareholders through dividends and share repurchases while continuing to fund portfolio growth. Our 30-plus day delinquency and net credit loss rates in Q1 were flat year-over-year after adjusting for this year's larger portfolio liquidation. Our customers remain stable and resilient in the current economic environment and overall credit trends continue to perform within our expectations. That said, we are closely monitoring macroeconomic conditions, including elevated gas prices and inflation, and we remain disciplined and conservative in our underwriting. As we discussed on our last call, we are focused on continuing to improve our net credit loss rate over time with a long-term target below 10%. In support of this objective, we are increasing our investment in data, credit analytics, emerging AI capabilities and fraud detection, including first-party and synthetic fraud controls. We are actively evaluating and beginning to deploy AI initiatives to enhance our underwriting, decisioning capabilities and collections over time, while maintaining appropriate risk controls. These investments are critical to improving credit performance as we scale the portfolio and enter new markets. We continue to make good progress on our key strategic priorities. First, we are continuing to invest in market expansion. We plan to enter the state of Florida in the second quarter, which will mark our expansion into our 20th state and represents an important long-term growth opportunity. Second, responsible portfolio growth remains a core priority. We are seeing continued strength in our auto-secured lending product. The auto-secured portfolio reached $300 million in outstandings at the end of the first quarter, representing a 38% increase year-over-year. It now accounts for 14% of our total portfolio and carries a 30-plus day delinquency rate of 2%. This product continues to deliver attractive credit performance and returns. Third, we are advancing our bank partnership strategy. In early March, we announced the launch of our partnership with Column, a nationally chartered bank. We expect this partnership to provide several important strategic benefits over time as it scales, including optimization of risk-adjusted yields, expanded relationships with existing customers and a broader addressable market, greater product and operational uniformity across states, faster entry into new markets, additional fee income opportunities and increased wallet share over time from the introduction of new products. We launched the partnership in one branch with select products and have since expanded to 12 branches. We are encouraged by the early results, particularly in the origination trends, including volume, mix and revenue characteristics. As we expected, at this stage, our data is primarily focused on origination, credit quality and yield metrics, and we expect to begin seeing early credit performance in the coming months. We plan to expand the partnership throughout the year as we continue to evaluate results, assess customer adoption and refine the strategy. Fourth, we are continuing to invest in an end-to-end digital originations capability. We see meaningful long-term opportunity in this channel, including the ability to reach higher credit quality customers and expand our addressable market. We are focused on creating a frictionless digital experience with strong fraud detection, credit underwriting and risk-based pricing capabilities as we scale this channel. We are also evaluating the use of AI to enhance customer acquisition, improve decisioning speed and accuracy and optimize channel performance. Our bank partnership will play an important role in supporting this initiative over time. Looking ahead, our expectations for the year remain unchanged. We continue to target full year portfolio growth of 10% and net income growth in the range of 20% to 25%, while remaining prepared to moderate portfolio growth if warranted by macroeconomic or credit conditions. As a reminder, we expect second quarter net income to represent the low point for the year, consistent with normal seasonal trends. First quarter tax refund activity results in portfolio liquidation, which impacts second quarter revenue, while growth begins to accelerate as we move through the second quarter, driving sequentially higher CECL provisioning and G&A expenses. Portfolio growth in the second quarter and throughout the remainder of the year supports stronger revenue and earnings in the third and fourth quarters. We also expect net credit losses to remain seasonally elevated in the second quarter before improving to lower levels in the second half of the year. In addition, we anticipate the benefits of our bank partnership, portfolio growth and other strategic initiatives will build throughout the year, supporting stronger earnings performance in the third and fourth quarters. Over the longer term, our objective remains clear. We will deliver sustainable profitable growth while generating attractive returns for shareholders. We will continue to improve our return on equity through responsible portfolio growth, improving credit performance, operating leverage and disciplined capital management. Regional is off to a strong start in 2026. We have a clear strategy, strong execution and meaningful opportunities ahead. And we remain focused on delivering long-term value for our shareholders. With that, I will turn the call over to Harp.

Thank you, Lakhbir, and good afternoon, everyone. I'll now take you through our first quarter results in more detail. Starting on Page 4 of the supplemental presentation, we delivered another quarter of strong year-over-year improvement across our key financial metrics. Net income was $11.4 million and diluted earnings per share were $1.18, both driven by continued year-over-year portfolio and revenue growth, stable credit performance, strong operating leverage and a disciplined balance sheet. Return on equity improved to 12.2%, up 430 basis points year-over-year, reflecting higher earnings and operating efficiency. Turning to Pages 5 and 6. Total originations were $388 million, down modestly year-over-year, as expected, due to a stronger tax refund season and disciplined underwriting. Portfolio growth remains strong with ending net receivables of $2.1 billion, representing 11% year-over-year growth. This growth continues to be driven by larger loans, including our auto-secured product as well as contributions from new branches. Average receivables per branch increased to approximately $5.9 million, up nearly 11% year-over-year, reflecting improved branch productivity and continued maturation of our newer locations. From a sequential perspective, we saw a $36 million reduction in receivables, consistent with normal seasonal patterns driven by first quarter tax refund activity. Looking ahead, we expect to return to sequential portfolio growth in the second quarter while maintaining the flexibility to adjust originations if macroeconomic or credit conditions warrant. Turning to Page 7. Total revenue was a first quarter record of $167 million, increasing 9% year-over-year, driven by higher average receivables. Total revenue yield declined on both a sequential and a year-over-year basis, primarily due to normal seasonality and continued mix shift towards larger, lower-yielding loans. As we move into the second quarter, we expect revenue yield to increase modestly on a sequential basis, consistent with typical seasonal trends. Turning to Page 8. Credit performance remained stable. Our 30-plus day delinquency rate was 7.2%, up 10 basis points year-over-year and improved 30 basis points sequentially, reflecting normal seasonal patterns. Our net credit loss rate increased modestly by 10 basis points year-over-year, also consistent with expectations. Both our delinquency rate and NCL rate included roughly 10 basis points of impact from higher liquidation in the first quarter of 2026 compared to the first quarter of 2025. Looking ahead to the second quarter, we expect delinquency and net credit losses to decline sequentially, consistent with seasonal patterns. Overall, credit performance remains in line with our expectations, and we continue to monitor macroeconomic conditions closely. Turning to Page 9. The allowance for credit losses declined by $1.4 million during the quarter, primarily reflecting seasonal portfolio liquidation. The allowance rate increased slightly to 10.4%, reflecting updates to macroeconomic assumptions and continued prudence in reserving. Subject to economic conditions and credit performance, we expect our allowance rate to stay flat sequentially in the second quarter. Turning to Page 10. We continue to demonstrate strong operating leverage. Our operating expense ratio improved to 12.2%, an all-time best and a 180 basis point improvement year-over-year, while we continue to invest in key initiatives. Total G&A expenses declined modestly year-over-year, reflecting continued discipline in managing expenses while scaling the business. For the second quarter, we expect a sequential increase in our operating expense ratio, but a year-over-year improvement from the second quarter of last year. Turning to Pages 11 and 12. Interest expense was $22.9 million or 4.3% of average receivables on an annualized basis. We continue to maintain a strong and flexible funding profile, including $516 million of unused capacity, a diversified funding structure and a high proportion of fixed rate debt, which represented 84% of total debt at quarter end. This positions us well to support continued portfolio growth. Looking ahead, we anticipate that our funding costs will tick up slightly in the second quarter. Turning to Page 13. We continue to generate strong capital and allocate it in a disciplined manner. During the quarter, we had approximately $12 million of capital generation, and we returned over $10 million to shareholders through dividends and share repurchases. Our Board declared a $0.30 per share dividend, and we repurchased approximately 208,000 shares during the quarter. Finally, turning to Page 14 and building on Lakhbir's comments about second quarter net income and seasonality, I'll provide some additional detail on how we expect the year to progress from a quarterly perspective. As we noted, we expect second quarter net income to represent the low point for the year, followed by stronger performance in the third and fourth quarters, consistent with our normal seasonal patterns. The primary driver of this cadence is the impact of first quarter tax refund activity, which results in seasonal portfolio liquidation in the first quarter and in turn, impacts average receivables and revenue in the second quarter. At the same time, we begin to rebuild the portfolio during the second quarter with growth typically accelerating as we move through the quarter. This results in a sequential increase in provision for credit losses in the second quarter as we reserve for new originations. As that portfolio growth takes hold, we see the benefit in the second half of the year. The increase in receivables exiting the second quarter drives higher revenue in both the third and fourth quarters, and those growth tailwinds continue throughout the back half of the year. While provisioning for loan growth remains elevated in the third and fourth quarters, relative to the first quarter, it is more comparable to second quarter levels, allowing revenue growth to drive stronger earnings. From a credit perspective, we expect net credit losses to remain seasonally elevated in the second quarter before improving in the third and fourth quarters. Finally, as Lakhbir mentioned, we expect the benefits of our strategic initiatives to build as we move through the year with increasing contribution in the second half. That concludes my remarks, and I'll now turn the call back over to Lakhbir.

To close, we are very pleased with how we started 2026, and are encouraged by the momentum we are carrying into the rest of the year. We delivered strong results while continuing to invest in the business, improve underlying credit performance and drive operating leverage. Importantly, we did this in a disciplined way that positions us well for sustainable, profitable growth. As we look ahead, our priorities are clear: continue growing the portfolio responsibly, improving credit outcomes, expanding into attractive new markets and investing in our people, technology and digital data and AI-driven capabilities to enhance risk-adjusted returns. We believe the opportunities in front of us across products, markets and operating efficiency are compelling, and we are focused on executing against them thoughtfully. We have a strong foundation, a resilient customer base and a highly capable team. I am confident in our ability to continue creating long-term value for our shareholders. My sincere thanks to the Regional team for delivering a great quarter.

[Operator Instructions] And our first question will come from Kyle Joseph with Stephens.

Just curious, a lot of moving parts in the first quarter with elevated tax refunds and then gas prices rising in March. Just kind of walk us through how loan demand and credit kind of performed and kind of the cadence of demand and then how that's trended into April with gas prices remaining elevated.

Kyle, it's Harp. So I'll take that question. So in terms of the elevated refunds, that was something that we had expected, right? We had all heard that refunds were going to be outsized. And they did come in, right, higher than where they were last year, but not quite as high as what everyone expected. Demand was where we expected it to be, knowing that refunds were going to be higher. So that's what we saw there. In terms of the gas prices, it continues to be something that we're watching. What we found in first quarter is our customers continue to be adaptable, resilient, but we do understand that inflation, and particularly gas prices, can take a toll on their wallet. So we continue to watch that through first payment default, delinquency rate and also through any listing that we do when we have conversations with our customers, particularly even collection conversations just to understand sort of what is causing them the pain point. So right now, they appear to continue to be resilient. But again, in second quarter, we continue to watch the gas prices, particularly given how much they've increased this week.

Yes. Kyle, the only thing I'll add to that is we are, to Harp's point, monitoring the portfolio, looking at roll rates both early and late stage. And reserve posture reflects the higher gas prices and potential near-term impact on inflation, where the segment of consumer we are really monitoring is high debt service coverage or debt to income and low fee income consumer that if gas prices remain elevated for a prolonged period, that discretionary spending gets tested. And so we're sort of continuing to monitor that.

Got it. Really helpful. And then second question, kind of a 2-part question. First, I mean, as you think about AI and you guys talked about incorporating AI, I mean, talk about where you think OpEx can go over that time frame? And then, just a follow-up to that. Obviously, the relationship with Column is very exciting, but walk us through how you think about that impacting the P&L as that expands.

Thanks, Kyle. Let me take a crack at the first one. On the AI, one, I think we see our investment in machine learning models and origination and collection. Some I think we've mentioned in the past that are already in production in the company that we've deployed. Those models help us take more -- take better risk and then price better for risk. And then in terms of Gen AI and agentic AI deployments, although I don't have a specific guidance for you on the subject, I think both are cost to originate and cost to service/collect over time. We believe as we automate both the origination and collection journeys using agentic AI workflows, we believe both those cost numbers on a variable basis can come down over time. So that's kind of the track we are taking in this space. In terms of your second question, I'll start and then I'll have Harp add to it. On the Column partnership, we believe, as I mentioned in the remarks, there are certain segments of consumers we cannot serve today because we are focused on implementing based on state laws and state charter. Those segments of consumers, we believe we can originate using a national charter over time. So that's a state-by-state specific kind of analysis and execution. Second, I think we are now going to be in 20 states. We still have a bunch of work to do to expand in other markets. We believe a national charter execution and product uniformity increases our speed to market in those markets, we can scale up faster, especially with the digital originations capability we are building in parallel. And then I think the third thing I would say is there are pockets of customers or business where we don't get paid for the risk we take, and that's something that we are very thoughtful in terms of evaluating opportunities where we can optimize risk and return better in the business as we go forward. And then the last thing is, as I mentioned, the Column Bank's technology stack is pretty advanced. We believe the consumer we serve has needs for a bunch of other products. So we will evaluate each one of them on their own business cases and see if we can launch and diversify our product set and serve the products through branches and/or digital channels using the Column tech stack and the charter there. So -- but that's as we go forward next year and beyond opportunity. Harp, anything you want to add?

Yes. Just in terms of where OpEx can go. So how I would think about OpEx in the near term is as we talked about some of the investments that we're going to continue to make in those areas. And how I would think about OpEx is there will be some productivity improvement in the short to the medium term. And then really, right, in terms of OpEx, that will come through scale. And then you'll see if there are enhancements in the cost to originate and the cost to service, those will come in the medium term. That's how I would think about that.

Our next question comes from Vincent Caintic with BTIG.

I really appreciate the very detailed quarterly guidance that you gave. First question, I wanted to go over maybe some of the macro assumptions that you're having in your guidance estimates, particularly when you're thinking about your credit reserve rate, I noticed that it's going to be flat for the rest of the year implied in guidance. Just wondering what you're assuming in there, if there's any like macro changes or what you're thinking about unemployment.

Vincent, it's Harp. So we did take the reserve rate up quarter-over-quarter versus where we were in fourth quarter of last year. And the reason why we took that up was just based upon some of the macro that we were seeing, which was basically oil prices and also gas prices and just being prudent around that in terms of what that could mean for our customers. In terms of where we're going to be next quarter or a quarter out, I can't really say right now. Right now, in the prepared remarks, right, we've assumed that we're going to be flat to the 10.4% that we're at in the first quarter, of course, barring any other macro news. So it could go up if things get a little bit tighter in terms of oil continues to increase and inflation continues to increase and gas prices continue to increase, or it could absolutely come back down based upon, right, if oil prices come back down to where they were a few weeks ago and gas prices moderate.

Okay. Got it. That's helpful. And then second question, I wanted to ask about how we should think about product growth. So I appreciate the overall loan growth guidance. But if you could talk about, say, between your small dollar loans versus your large loans, it looks like auto is doing really well, and you sound pretty excited about that. But if you could describe like mix shift in terms of where you want to go, where the customer demand is as you're thinking about the year?

So Vincent, this is Harp again. So here's what I would say. So in terms of our priorities, auto-secured is one of the priorities that Lakhbir laid out in his prepared remarks, and you can sort of see how our large loans have grown over time. So that continues to be a priority just given the returns on that product. However, we remain very much committed to our small loans as well. We often talk about our graduation strategy. And again, in 2025, we did refinance 26,000 of those small loan customers. And then we moved them up to larger small loans or large loans, and then we're also able to bring down their rate. So that is really a part of our acquisition and our customer life cycle journey. So we remain committed to the small loans, but large loans, particularly auto-secured, is a focus, given the returns on that product.

[Operator Instructions] We'll go next to Zachary Oster with Citizens Capital.

I wanted to dig in a little bit on the tax refund side and kind of see if we can get some sort of disaggregated number, or really just, I guess, a "normalized" sense of where origination growth would have been, had that been excluded for this quarter?

So Zach, it's really hard to give you what a normal number would be, but you're probably looking at last year as well, right? So in terms of what we saw this year, I would say it's pretty typical. I think what we've read is tax refunds on average were up by about $300 over last year. In terms of our portfolio liquidation, we saw about $36 million quarter-over-quarter. Last year, right, we only saw $2.2 million. And you have to remember that last year, what we saw was masked by the number of de novos that we had come online in first quarter of 2025. So what we saw this year is exactly what we expected in terms of knowing that refunds on average were going to be a little bit larger. And then typically, we do see a liquidation of small dollar loans as people get their refunds and they go ahead and they pay us with the refund money. So what we saw was actually quite typical of what we expected, given our portfolio size. Now as we move into second quarter, right, we are going to have growth in second quarter. So you have the $36 million in liquidation in the first quarter. And on Page 14 of the supplement, we've actually guided to an approximation of where growth is expected. So when you're modeling, what you have to keep in mind is we had a provision release of $1.4 million in the first quarter based upon that liquidation. We've also provided you with a range based upon growth in terms of what that provision increase will be in second quarter. And then going back to Lakhbir's remarks, right, that swing in provision from the $1.4 million release up to, if I take the midpoint, a $7 million build, that swing of $8.4 million is going to drop right down to the bottom line. Of course, other things are going to continue to improve, such as revenue is going to continue to improve. So you will -- and that will be -- right, the growth will end up being a tailwind for the rest of the year. So you will see revenue improve. But in the second quarter, you will see that swing because of the growth in the CECL provision that will drop down to the bottom line.

Got it. Understood. And then one more question, if I could just add it on. Just digging also into the macro assumptions, I wanted to see if you guys have any updated commentary on rate cuts or kind of any assumptions going into -- or exiting the quarter on the allowance rate in terms of the rate cuts.

So in terms of the rate cuts, right, the Fed held flat today. That was our expectation. I think when we all entered the year, we probably thought that there was going to be one rate cut right at the beginning of the year. So now, right, with them holding flat, we've taken what the forecast is on rates as well as, right, the forecast and other macro narratives into account when we did our reserve calculation. So when we look at the macro, we do look at the ratings agency and sort of their predictions of all of those things into the future. So we took all of that into consideration as well as, of course, our own portfolio, right, where we look at the product mix, we look at delinquency status, we look at FICO. We look at our own portfolio and then we go ahead and we look at sort of what the macro assumptions are for the rest of the year in order to come up with the reserve rate. So I would tell you that we sort of anticipated where we are today in terms of coming up with that reserve rate, if that helps.

Zach, I would just add, the biggest levers in our credit assumptions essentially are the labor market, which are -- which have been stable. It's -- number two, it's inflation, which is an outcome of everything that's happening around gas prices and what have you. And so those -- and GDP, obviously, those are big levers as we model our reserve content. So I think the biggest uncertainty that remains, I think, on the credit side, the obvious one is gas prices and how prolonged this whole geopolitical conflict in the Middle East is going to stay.

Zach, I'm sorry, I'll add one other thing to what Lakhbir just said, right? So in terms of open jobs, we talk about that on these calls. So there's still about 7 million open jobs. And again, we know that open jobs for our target segment, there are ample jobs out there. So that's just something else that we take into consideration as we're looking out into the future when we do our reserve just in terms of what does the unemployment picture look like. So right now, again, we'll say that our customers are resilient. They're adaptable. There's plenty of open jobs available for them. As Lakhbir mentioned, right, inflation, gas prices, we continue to watch those as we move into second quarter.

And moving next to Bill Dezellem with Tieton Capital.

A couple of questions. First of all, relative to your originations in the first quarter, the small loan originations were down, call it, 19%, while the large loan originations were up 10%. Can you walk us through the dynamics that led to that differential in origination change versus the first quarter of last year?

Yes. So Bill, it's Harp. So a couple of things. So I think on the small loan originations, a couple of things that I would point out, right? One is we had -- in higher tax season, we do expect our small loans to pay off. And we do expect originations in terms of response rates to be muted in first quarter. So that's really what you're seeing in 2026. When you compare that to 2025, in 2025, we had 17 de novos come online between fourth quarter and first quarter. And in those de novos, they have mail support. So although you did have an origination impact on small loans last year, that was masked by the fact that we had those de novos coming online. So that's really part of what you're seeing there in terms of year-over-year originations. And then in terms of the small loans, it's really our -- the auto-secured, right? As we grow that business, that is what you're seeing on the large loans year-over-year.

That's very helpful. And would you want to take that last comment a step further and segment the auto-secured origination growth versus the non-auto-secured large loan origination growth?

Yes. And Bill, the best way for me to answer that is that portfolio grew $83 million, the auto-secured portfolio. And now it's 14.3% of our portfolio. Compared to last year, it was only 11.6% of our portfolio. So that continues to be a driver within large loans.

Fair enough. And then you referenced...

And Bill, I'm sorry. I apologize. One other thing that I would add there is just the growth rate on the auto-secured compared to the growth rate on ENR on large loans. So auto-secured grew by 38%. And so again, that's a component of what you're seeing on the ENR in terms of large loans. But again, auto-secured is a driver of that.

Yes. And then shifting to the Column relationship. I believe in your opening [Audio Gap], you referenced to you started with one branch up to a dozen. When are you anticipating that, that relationship will be across all branches?

So that -- Bill, here's what I would say. I would say that we're going to continue to roll that out. We're going to be quite measured. The reason why we roll out one is to make sure it works the way that we think it's going to work from a technological perspective and also from a branch operational perspective and also from a customer perspective. So you roll it out into one and then you roll it out a little bit larger and again, make sure that it's working the way that you want it to work. What I would say is it is very much -- in terms of the data that we're seeing, we're quite -- it's exactly what we thought it was going to be. So we're quite pleased with that. And in terms of the rollout, what I would say is that we're going to continue to be measured in rolling it out. But as Lakhbir said earlier, right, we're now in 20 states. And we'll take a look and see what makes sense over time, particularly given where we're rolling it out currently and how we want to roll that out going forward. That's probably as much information as I can give you right now on that.

Okay. And I'm going to dive into that a bit further here, please. So my perception, having never rolled out this sort of a relationship would be that once you get up to 50 branches or so, that going from 50 to 250, you really aren't going to learn [ anything ] there, going from 1 to 12 or a dozen to 50, very much maybe. So assuming that, that presumption is correct, do you have operational heavy lifting or lifting that needs to be done each time this has moved into a branch, therefore, it's not as easy as flipping a switch once you're at whatever your maximum test number is using my example, 50, or do you really need to take that at whatever pace your operations team [ follow up ]?

So here's how I would think about that, Bill. You're absolutely right, right? After you hit a critical mass, it becomes easier to roll that out because you know that technologically, it works. And it's really about training the staff in the branches where you are. So you're absolutely right on that, and it just becomes sort of the flywheel of training the branches. What I would think about is, again, right, we will soon be in 20 states and rolling it out in each state probably is where we're focused and making sure that we are going to do that right in one state and then eventually in multiple states, the flywheel approach of, hey, if you've done 50 and now you know how to train the folks and you know what works, that would absolutely be a true statement.

And this now concludes our question-and-answer session. I would like to turn the floor back over to Lakhbir Lamba for closing comments.

Thank you so much. As I said earlier on the call, we're very pleased with how we started 2026. I'm excited about opportunities ahead this year and as we go forward for Regional Management. As we also mentioned, just -- and we just talked in the Q&A, we are watching the macroeconomic conditions carefully, and we'll adjust our posture in terms of, be it underwriting or what have you, relative to how macroeconomic conditions perform. But outside of that, really excited about where we are and how we started the year. My sincere thanks to the whole Regional Management team, and we've got exciting times ahead. Thank you.

And ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.