CLEARWATER, Fla., May 09, 2016 (GLOBE NEWSWIRE) -- Nicholas Financial, Inc. (NASDAQ:NICK) announced that for the three months ended March 31, 2016, diluted earnings per share increased 6% to $0.35 as compared to $0.33 for the three months ended March 31, 2015. Net earnings were $2,725,000 and $3,848,000 for the three months ended March 31, 2016 and 2015, respectively. Revenue increased 6% to $23,238,000 for the three months ended March 31, 2016 as compared to $21,934,000 for the three months ended March 31, 2015.
For the year ended March 31, 2016, diluted earnings per share increased 15% to $1.59 as compared to $1.38 for the year ended March 31, 2015. Net earnings were $12,379,000 and $16,856,000 for the year ended March 31, 2016 and 2015, respectively. Revenue increased 5% to $90,707,000 for the year ended March 31, 2016 as compared to $86,790,000 for the year ended March 31, 2015.
Our net earnings for the three months ended March 31, 2016 were adversely affected primarily by an increase in the provision for credit losses and to a lesser extent an increase in interest expense and a reduction in the gross portfolio yield. During the three months ended March 31, 2016, the Company refined its allowance for credit loss model to incorporate recent trends that include the acquisition of longer term contracts and increased delinquencies. We feel that these improvements to our current model better reflect the current trends of incurred losses within our portfolio and better align our allowance for credit losses with the portfolio’s performance indicators. Our per share diluted net earnings for the three months ended March 31, 2016, were positively impacted by the Company’s purchase of 4.7 million of the Company’s common shares by its principal operating subsidiary on March 19, 2015.
Our net earnings for the twelve months ended March 31, 2016 were adversely affected by a reduction in the gross portfolio yield, an increase in interest expense and an increase in the provision for credit losses. Gross portfolio yield and provision for credit losses changes were primarily the result of increased competition. Our per share diluted net earnings for the twelve months ended March 31, 2016, were positively impacted by the Company’s purchase of 4.7 million of the Company’s common shares by its principal operating subsidiary on March 19, 2015.
“During our fourth quarter we opened our second branch location in the state of Texas, specifically in Dallas, We have also commenced contract acquisition in Pittsburgh, Pennsylvania utilizing the underwriting staff of our Columbus, Ohio branch location. During the first quarter of Fiscal 2017 we will further evaluate the Pittsburgh portfolio and decide whether we will open a Pittsburgh branch. We continue to evaluate market conditions which include a continued high level of intense competition. We are currently evaluating our organization and its structure. Our decisions on how we plan to continue operating our business strategy will be influenced by the sustainability of some of our competitors underwriting and risk based pricing stated Ralph T. Finkenbrink, the Company’s President and CEO.
Nicholas Financial, Inc. is one of the largest publicly traded specialty consumer finance companies in North America. The Company operates branch locations in both the Southeastern and the Midwestern states. The Company has approximately 7,753,000 shares of common stock outstanding. For an index of Nicholas Financial, Inc.’s news releases or to obtain a specific release, visit our web site at www.nicholasfinancial.com.
Except for the historical information contained herein, the matters discussed in this news release include forward-looking statements that involve risks and uncertainties including general economic conditions, access to bank financing, and other risks detailed from time to time in the Company’s filings and reports with the Securities and Exchange Commission including the Company’s Annual Report on Form 10-K for the year ended March 31, 2015. Such statements are based on the beliefs of the Company’s management as well as assumptions made by and information currently available to Company management. Actual events or results may differ materially. All forward looking statements and cautionary statements included in this document are made as of the date hereby based on information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward looking statement or cautionary statement.
Nicholas Financial, Inc.
Condensed Consolidated Statements of Income
(Unaudited, Dollars in Thousands, Except Share and Per Share Amounts)
| Three months ended March 31, | Year ended March 31, | |||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||
| Interest and fee income on finance receivables | $ | 23,238 | $ | 21,934 | $ | 90,707 | $ | 86,790 | ||||||
| Expenses: | ||||||||||||||
| Operating | 8,827 | 8,420 | 34,099 | 32,606 | ||||||||||
| Professional fees | 63 | 258 | 1,194 | 1,383 | ||||||||||
| Provision for credit losses | 7,512 | 5,188 | 26,278 | 20,371 | ||||||||||
| Interest expense | 2,256 | 1,578 | 9,007 | 5,970 | ||||||||||
| Change in fair value of interest rate swaps | 152 | 258 | 24 | 364 | ||||||||||
| 18,810 | 15,702 | 70,602 | 60,694 | |||||||||||
| Operating income before income taxes | 4,428 | 6,232 | 20,105 | 26,096 | ||||||||||
| Income tax expense | 1,703 | 2,384 | 7,726 | 9,240 | ||||||||||
| Net income | $ | 2,725 | $ | 3,848 | $ | 12,379 | $ | 16,856 | ||||||
| Earnings per share: | ||||||||||||||
| Basic | $ | 0.35 | $ | 0.34 | $ | 1.60 | $ | 1.40 | ||||||
| Diluted | $ | 0.35 | $ | 0.33 | $ | 1.59 | $ | 1.38 | ||||||
Condensed Consolidated Balance Sheets
(Unaudited, In Thousands)
| March 31, | March 31, | |||||
| 2016 | 2015 | |||||
| Cash | $ | 1,849 | $ | 3,388 | ||
| Finance receivables, net | 311,837 | 288,904 | ||||
| Other assets | 11,623 | 10,237 | ||||
| Total assets | $ | 325,309 | $ | 302,529 | ||
| Line of credit | $ | 211,000 | $ | 199,000 | ||
| Other liabilities | 11,460 | 13,641 | ||||
| Total liabilities | 222,460 | 212,641 | ||||
| Shareholders' equity | 102,849 | 89,888 | ||||
| Total liabilities and | ||||||
| shareholders’ equity | $ | 325,309 | $ | 302,529 | ||
| Three months ended March 31, | Year ended March 31, | |||||||||||
| Portfolio Summary | 2016 | 2015 | 2016 | 2015 | ||||||||
| Average finance receivables, net of unearned interest (1) | $ | 340,763,898 | $ | 314,730,362 | $ | 334,754,250 | $ | 309,994,611 | ||||
| Average indebtedness (2) | $ | 211,680,748 | $ | 141,216,714 | $ | 208,214,246 | $ | 133,433,740 | ||||
| Interest and fee income on finance receivables | $ | 23,238,008 | $ | 21,933,607 | $ | 90,707,306 | $ | 86,789,958 | ||||
| Interest expense | 2,256,195 | 1,578,737 | 9,006,666 | 5,970,434 | ||||||||
| Net interest and fee income on finance receivables | $ | 20,981,813 | $ | 20,354,870 | $ | 81,700,639 | $ | 80,819,524 | ||||
| Weighted average contractual rate (3) | 22.73 | % | 22.93 | % | 22.73 | % | 22.93 | % | ||||
| Average cost of borrowed funds (2) | 4.26 | % | 4.47 | % | 4.33 | % | 4.47 | % | ||||
| Gross portfolio yield (4) | 27.28 | % | 27.88 | % | 27.10 | % | 28.00 | % | ||||
| Interest expense as a percentage of average finance receivables, net of unearned interest | 2.65 | % | 2.01 | % | 2.69 | % | 1.93 | % | ||||
| Provision for credit losses as a percentage of average finance receivables, net of unearned interest | 8.82 | % | 6.59 | % | 7.85 | % | 6.57 | % | ||||
| Net portfolio yield (4) | 15.81 | % | 19.28 | % | 16.56 | % | 19.50 | % | ||||
| Marketing, salaries, employee benefits, depreciation, administrative and professional fee expenses as a percentage of average finance receivables, net of unearned interest (5) | 10.44 | % | 11.03 | % | 10.54 | % | 10.96 | % | ||||
| Pre-tax yield as a percentage of average finance receivables, net of unearned interest (6) | 5.37 | % | 8.25 | % | 6.02 | % | 8.54 | % | ||||
| Write-off to liquidation (7) | 9.39 | % | 7.42 | % | 9.10 | % | 8.13 | % | ||||
| Net charge-off percentage (8) | 8.05 | % | 6.72 | % | 7.56 | % | 7.04 | % | ||||
Note: All three month key performance indicators expressed as percentages have been annualized.
(1) Average finance receivables, net of unearned interest, represents the average of gross finance receivables, less unearned interest throughout the period.
(2) Average indebtedness represents the average outstanding borrowings under the Line. Average cost of borrowed funds represents interest expense as a percentage of average indebtedness.
(3) Weighted average contractual rate represents the weighted average annual percentage rate (“APR”) of all Contracts and Direct Loans as of the period ending date.
(4) Gross portfolio yield represents interest and fee income on finance receivables as a percentage of average finance receivables, net of unearned interest. Net portfolio yield represents interest and fee income on finance receivables minus (a) interest expense and (b) the provision for credit losses as a percentage of average finance receivables, net of unearned interest.
(5) The numerator for the twelve-month period ended March 31, 2015 includes expenses associated with the potential sale of the Company. Absent these expenses, the percentage would have been 10.85%.
(6) Pre-tax yield represents net portfolio yield minus operating expenses as a percentage of average finance receivables, net of unearned interest.
(7) Write-off to liquidation percentage is defined as net charge-offs divided by liquidation. Liquidation is defined as beginning receivable balance plus current period purchases minus voids and refinances minus ending receivable balance.
(8) Net charge-off percentage represents net charge-offs divided by average finance receivables, net of unearned interest, outstanding during the period.
The following tables present certain information regarding the delinquency rates experienced by the Company with respect to automobile finance installment contracts (“Contracts”) and direct consumer loans (“Direct Loans”), excluding any Chapter 13 bankrupt accounts:
| Contracts | Gross Balance Outstanding | 31 – 60 days | 61 – 90 days | Over 90 | Total | ||||||||||||
| March 31, 2016 | $ | 482,863,893 | $ | 17,465,741 | $ | 6,069,074 | $ | 3,365,981 | $ | 26,900,796 | |||||||
| 3.61 | % | 1.26 | % | 0.70 | % | 5.57 | % | ||||||||||
| March 31, 2015 | $ | 443,083,009 | $ | 13,694,370 | $ | 3,435,332 | $ | 1,330,093 | $ | 18,459,795 | |||||||
| 3.09 | % | 0.78 | % | 0.30 | % | 4.17 | % | ||||||||||
| Direct Loans | Gross Balance Outstanding | 31 – 60 days | 61 – 90 days | Over 90 | Total | ||||||||||||
| March 31, 2016 | $ | 10,978,105 | $ | 161,514 | $ | 40,501 | $ | 38,288 | $ | 240,303 | |||||||
| 1.47 | % | 0.37 | % | 0.35 | % | 2.19 | % | ||||||||||
| March 31, 2015 | $ | 10,911,845 | $ | 122,718 | $ | 41,984 | $ | 14,652 | $ | 179,354 | |||||||
| 1.12 | % | 0.39 | % | 0.13 | % | 1.64 | % | ||||||||||
The following table presents selected information on Contracts purchased by the Company, net of unearned interest:
| Three months ended March 31, | Year ended March 31, | |||||||||||
| Contracts | 2016 | 2015 | 2016 | 2015 | ||||||||
| Purchases | $ | 45,106,395 | $ | 48,889,450 | $ | 187,275,490 | $ | 178,368,342 | ||||
| Weighted APR | 22.65 | % | 22.79 | % | 22.66 | % | 22.90 | % | ||||
| Average discount | 7.36 | % | 7.96 | % | 7.51 | % | 8.08 | % | ||||
| Weighted average term (months) | 57 | 55 | 56 | 55 | ||||||||
| Average loan | $ | 11,302 | $ | 10,867 | $ | 11,348 | $ | 10,967 | ||||
| Number of contracts | 3,991 | 4,499 | 16,503 | 16,264 | ||||||||