13D Filing: Basswood Capital and Regional Management Corp. (RM)

EXPLANATORY NOTE

Pursuant to Rule 13d-2 promulgated under the Act, this Amendment No. 1 to Schedule 13D (this “Amendment No. 1”) is being filed with respect to the common stock, $0.10 par value per share (the “Common Stock”), of Regional Management Corp., a Delaware corporation (the “Issuer”), to amend the Schedule 13D filed on December 15, 2017 (the “Original Schedule 13D” and, as amended by this Amendment No. 1, the “Schedule 13D”).  Capitalized terms used herein but not otherwise defined have the meanings ascribed to such terms in the Original Schedule 13D.

Item 4.          Purpose of Transaction.

implementation of takeover defenses, (c) new or amended incentive compensation plans submitted for stockholder approval, or (d) any other proposal if either Institutional Shareholder Services Inc. or Glass Lewis & Co., LLC do not recommend voting in accordance with the Board’s recommendation with respect to such proposal (other than with respect to the election or removal of directors) at any annual or special meeting of stockholders.

Pursuant to the Cooperation Agreement, the “Standstill Period” is defined to mean the period commencing on January 26, 2018 and ending on the earliest of (i) 12:01 a.m. (New York time) on the date that is 20 days prior to the nomination deadline for the 2019 annual meeting of stockholders (the “2019 Annual Meeting”), (ii) if the Issuer fails to comply with or breaches any of the terms of the Cooperation Agreement in any material respect and, if capable of being cured, such material breach or failure has not been cured within 15 days after receipt by the Issuer of written notice from the Management Company specifying such material breach or failure, provided that the Management Company is not in material breach of the Cooperation Agreement at such time, (iii) the consummation of an extraordinary transaction following which consummation the director designated by the Management Company no longer serves on the Board, and (iv) a reorganization of the Issuer under any federal or state law relating to bankruptcy or insolvency.  If the Issuer provides written notice to the Management Company that it will nominate a director designated by the Management Company for election to the Board at the 2019 Annual Meeting or for any annual meeting of stockholders of the Issuer subsequent thereto (each, an “Applicable Meeting”) at least 20 days prior to the nomination deadline for such Applicable Meeting, and the Management Company has agreed in advance to such nomination, then the Standstill Period will be automatically extended until the date that is 20 days prior to the nomination deadline for the annual stockholders meeting subsequent to such Applicable Meeting.

The Cooperation Agreement terminates upon the expiration of the Standstill Period (subject to any extensions as provided in the Cooperation Agreement), provided that the confidentiality provisions of the Cooperation Agreement will survive for a period of eighteen months following the date upon which no director designated by the Management Company serves as a director of the Issuer.

The foregoing description of the Cooperation Agreement is not complete and is qualified in its entirety by reference to the Cooperation Agreement attached as Exhibit 99.2 to this Amendment No. 1, which is incorporated herein by reference.

Except as set forth herein, the Reporting Persons have no present plan or proposal that would relate to or result in any of the matters set forth in subparagraphs (a)-(j) of the instructions to Item 4 of Schedule 13D, although the Reporting Persons reserve the right to develop such plans or proposals.

Item 5.          Interest in Securities of the Issuer.

Items 5(a) – 5(c) of this Schedule 13D is hereby amended and restated as follows:

(a)          As of the date of this Amendment No. 1, each of the Reporting Persons beneficially owns shares of Common Stock in such numbers as set forth on the cover pages of this Schedule 13D.  The total number of shares each of the Reporting Persons beneficially owns represents such percentages as set forth on the cover pages to this Schedule 13D of the Common Stock outstanding.  The percentages used in this Schedule 13D are calculated based upon the 11,662,737 shares of Common Stock outstanding as of January 26, 2018, as disclosed by the Issuer to the Reporting Persons.

(b)          The Management Company, Matthew Lindenbaum and Bennett Lindenbaum share voting and dispositive power over the 1,511,995 shares of Common Stock held directly by the Funds and the managed accounts.  Basswood Partners, the Management Company, Matthew Lindenbaum and Bennett Lindenbaum share voting and dispositive power over the 407,549 shares of Common Stock held directly by Basswood Financial Fund, LP, Basswood Opportunity Partners, LP and Basswood Financial Long Only Fund, LP.  Basswood Long Short GP, the Management Company, Matthew Lindenbaum and Bennett Lindenbaum share voting and dispositive power over the 690,180 shares of Common Stock held directly by Basswood Enhanced Long Short Fund, LP.

By virtue of the relationships among the Reporting Persons, as described in this Schedule 13D, the Reporting Persons may be deemed to be a “group” under the Federal securities laws. If the Reporting Persons were deemed to be such a “group,” such group would collectively beneficially own 1,511,995 shares of Common Stock.  Except as otherwise set forth in this Schedule 13D, (i) each Fund expressly disclaims voting and investment power with respect to the shares of Common Stock beneficially owned by each other Reporting Person and (ii) each of Basswood Partners and Basswood Long Short GP expressly disclaims voting and investment power with respect to the shares of Common Stock beneficially owned by each other Reporting Person, other than the shares of Common Stock held directly by the Fund or Funds for which each, respectively, serves as general partner, and the filing of this Statement shall not be construed as an admission, for the purposes of Sections 13(d) and 13(g) or under any provision of the Exchange Act or the rules promulgated thereunder or for any other purpose, that any such person is a beneficial owner of any shares as to which it disclaims voting and dispositive power.

(c)          Schedule I hereto sets forth all transactions with respect to the Common Stock effected by the Reporting Persons since the filing of the Original Schedule 13D.  All such transactions were effected in the open market, and per share prices include any commissions paid in connection with such transactions.

Item 6.

Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

Item 4 of this Amendment No. 2 is incorporated by reference herein.

Other than as described herein, there are no contracts, arrangements, understandings or relationships (legal or otherwise) between the Reporting Persons and any other person with respect to the securities of the Issuer.

Item 7.          Material to be filed as Exhibits.

1.	Exhibit 99.2 – Cooperation Agreement, dated January 26, 2018, by and between Basswood Capital Management, L.L.C. and Regional Management Corp. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Regional Management Corp., filed on January 29, 2018).

Dated: January 30, 2018	BASSWOOD CAPITAL MANAGEMENT, L.L.C.
	By:	/s/ Matthew Lindenbaum
		Name: Matthew Lindenbaum
		Title: Managing Member
Dated: January 30, 2018	BASSWOOD PARTNERS, L.L.C.
	By:	/s/ Matthew Lindenbaum
		Name: Matthew Lindenbaum
		Title: Managing Member
Dated: January 30, 2018	BASSWOOD ENHANCED LONG SHORT GP, LLC
	By:	/s/ Matthew Lindenbaum
		Name: Matthew Lindenbaum
		Title: Managing Member
Dated: January 30, 2018	BASSWOOD ENHANCED LONG SHORT FUND, LP
	By: Basswood Capital Management, L.L.C.
	By:	/s/ Matthew Lindenbaum
		Name: Matthew Lindenbaum
		Title: Managing Member
Dated: January 30, 2018	BASSWOOD FINANCIAL FUND, LP
	By: Basswood Capital Management, L.L.C.
	By:	/s/ Matthew Lindenbaum
		Name: Matthew Lindenbaum
		Title: Managing Member

Dated: January 30, 2018	BASSWOOD FINANCIAL LONG ONLY FUND, LP
	By: Basswood Capital Management, L.L.C.
	By:	/s/ Matthew Lindenbaum
		Name: Matthew Lindenbaum
		Title: Managing Member
Dated: January 30, 2018	BASSWOOD FINANCIAL FUND, INC.
	By: Basswood Capital Management, L.L.C.
	By:	/s/ Matthew Lindenbaum
		Name: Matthew Lindenbaum
		Title: Managing Member
Dated: January 30, 2018	BASSWOOD OPPORTUNITY PARTNERS, LP
	By: Basswood Capital Management, L.L.C.
	By:	/s/ Matthew Lindenbaum
		Name: Matthew Lindenbaum
		Title: Managing Member
Dated: January 30, 2018	BASSWOOD OPPORTUNITY FUND, INC.
	By: Basswood Capital Management, L.L.C.
	By:	/s/ Matthew Lindenbaum
		Name: Matthew Lindenbaum
		Title: Managing Member
Dated: January 30, 2018	/s/ Matthew Lindenbaum
	Matthew Lindenbaum
Dated: January 30, 2018	/s/ Bennett Lindenbaum
	Bennett Lindenbaum

Fund	Trade Date	Shares Purchased (Sold)	Price
Basswood Managed Account	12/29/2017	7,881	$26.40
Basswood Financial Fund, LP	01/02/2018	(4,222)	$25.99
Basswood Financial Long Only Fund, LP	01/02/2018	(1,486)	$25.99
Basswood Financial Fund, Inc.	01/02/2018	2,355	$26.18
Basswood Opportunity Fund, Inc.	01/02/2018	3,550	$26.18
Basswood Managed Account	01/19/2018	(4,163)	$27.84
Basswood Managed Account	01/22/2018	(21,799)	$27.50