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Nicholas Financial Inc. Reports Operating Results (10-Q)

November 12, 2010 | About:
10qk

10qk

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Nicholas Financial Inc. (NICK) filed Quarterly Report for the period ended 2010-09-30.

Nicholas Financial Inc. has a market cap of $122.9 million; its shares were traded at around $10.43 with a P/E ratio of 8.9 and P/S ratio of 2.2. Nicholas Financial Inc. had an annual average earning growth of 4.7% over the past 10 years.NICK is in the portfolios of Glenn Greenberg of Brave Warrior Capital, Inc., Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Consolidated net income increased 64% to approximately $4.0 million for the three-month period ended September 30, 2010 as compared to $2.4 million for the corresponding period ended September 30, 2009. Net income for the three months ended September 30, 2010 and 2009 includes a pre-tax gain of approximately $138,000 and $235,000, respectively, related to the change in fair value of interest rate swaps. Diluted earnings per increased 62% to $0.34 for the three months ended September 30, 2010 as compared to $0.21 for the three months ended September 30, 2009. Consolidated net income increased to approximately $7.6 million for the six-month period ended September 30, 2010 as compared to $4.7 million for the corresponding period ended September 30, 2009. Net income for the six months ended September 30, 2010 and 2009 includes a pre-tax gain of approximately $382,000 and $532,000, respectively, related to the change in fair value of interest rate swaps. Diluted earnings per increased 60% to $0.64 for the six months ended September 30, 2010 as compared to $0.40 for the six months ended September 30, 2009.

For the three months ended September 30, 2010, net earnings, excluding changes in fair value of interest rate swaps (non-GAAP), increased 70% to $3.9 million compared to $2.3 million for the three months ended September 30, 2009. Per share diluted net earnings, excluding changes in fair value of interest rate swaps (non-GAAP), increased 65% to $0.33 for the three months ended September 30, 2010 as compared to $0.20 for the three months ended September 30, 2009.

For the six months ended September 30, 2010, net earnings, excluding changes in fair value of interest rate swaps (non-GAAP), increased 68% to $7.3 million compared to $4.4 million for the six months ended September 30, 2009. Per share diluted net earnings, excluding changes in fair value of interest rate swaps (non-GAAP), increased 63% to $0.62 for the six months ended September 30, 2010 as compared to $0.38 for the six months ended September 30, 2009.

Interest and fee income on finance receivables, predominately finance charge income, increased 11% to approximately $15.7 million for the three-month period ended September 30, 2010 from $14.1 million for the corresponding period ended September 30, 2009. Average finance receivables, net of unearned interest equaled approximately $249.1 million for the three-month period ended September 30, 2010, an increase of 12% from $222.7 million for the corresponding period ended September 30, 2009. The primary reason average finance receivables, net of unearned interest, increased was the increase in the receivable base of several existing branches in younger markets and also the opening of new branch locations. The gross finance receivable balance increased 12% to approximately $355.4 million as of September 30, 2010, from $316.5 million as of September 30, 2009. The primary reason interest income increased was the increase in the outstanding loan portfolio. The gross portfolio yield decreased to 25.25% for the three-month period ended September 30, 2010 from 25.39% for the three-month period ended September 30, 2009. The net portfolio yield increased to 20.17% for the corresponding period ended September 30, 2010 from 17.23% for the three-month period ended September 30, 2009. The gross portfolio yield decreased primarily due to a lower weighted APR earned on finance receivables. The net portfolio yield increased primarily due to a decrease in change of charge offs and a corresponding decrease in the provision for credit losses.

Interest expense increased to approximately $1.4 million for the three-month period ended September 30, 2010 from $1.3 million for the three-month period ended September 30, 2009. The following table summarizes the Companys average cost of borrowed funds:

Interest and fee income on finance receivables, predominately finance charge income, increased 10% to approximately $30.7 million for the six-month period ended September 30, 2010 from $27.8 million for the corresponding period ended September 30, 2009. Average finance receivables, net of unearned interest equaled approximately $243.7 million for the six-month period ended September 30, 2010, an increase of 11% from $219.2 million for the corresponding period ended September 30, 2009. The primary reason average finance receivables, net of unearned interest, increased was the increase in the receivable base of several existing branches in younger markets and also the opening of new branch locations. The gross finance receivable balance increased 12% to approximately $355.4 million as of Sept

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