Direct loan originations for Nicholas Financial increased 18% year over year to $2.4 million in principal balances in the first quarter of the fiscal year 2021 that ends June 30, according to the company’s earnings report. While direct loans increased, indirect loans fell 11.9% YoY to $16.8 million due to the COVID-19 pandemic.
“Although the pandemic had an early negative impact on new loans and originations in April and May, we were able to outproduce both 2018’s and 2019’s loan volume for the month of June,” said Doug Marone, Nicholas’ president and chief executive in the earnings statement. “Our loans tend to be smaller than most of our competitors and, therefore, payments are lower and exposure on those accounts is shorter. The vehicle is one that they need — not just want — and the payments are affordable even in times of economic crisis.”
In what Marone called “the best earnings quarter in recent history,” the Clearwater, Fla.-based auto lender originated a total of $19.4 million in direct and indirect loans, bringing the company’s portfolio to $208.6 million, down from $235.4 million YoY.
Nicholas also added $3.3 million for provision for credit losses “out of an abundance of caution… in case the pandemic has a more negative impact on our receivables in the upcoming quarters,” Marone added. Allowance for credit losses totaled 5.39% of Nicholas’ total portfolio.
Delinquency statuses on both direct and indirect contracts also fell across the board from the prior year, according to the statement. The largest fall in delinquencies was in 30 to 59 days past due, which dropped to 4.87% from 7.23% in the last quarter. Charge-offs, likewise, were cut in half YoY to 6.01% of total managed receivables.
“From a portfolio management perspective, we enjoyed decreases in 31+ delinquency, 61+ delinquency, repossessions and losses,” Marone added. Nicholas Financial did not comment on deferral program extensions by press time.
Shares of Nicholas Financial [Nasdaq: NICK] were trading at $8.33 at 2:31 p.m. EDT, down 2.00% from market open. Nicholas Financial has a market capitalization of $64.97 million.
Originally published on Auto Finance News