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

August 09, 2011 | About:
10qk

10qk

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Nicholas Financial Inc. (NICK) filed Quarterly Report for the period ended 2011-06-30.

Nicholas Financial Inc. has a market cap of $131.3 million; its shares were traded at around $11.12 with a P/E ratio of 7.1 and P/S ratio of 2.1. Nicholas Financial Inc. had an annual average earning growth of 6.1% over the past 10 years. GuruFocus rated Nicholas Financial Inc. the business predictability rank of 2.5-star.

Highlight of Business Operations:

Consolidated net income increased 47% to approximately $5.3 million for the three-month period ended June 30, 2011 as compared to $3.6 million for the corresponding period ended June 30, 2010. Diluted earnings per share increased 47% to $0.44 for the three months ended June 30, 2011 as compared to $0.30 for the three months ended June 30, 2010.

Interest and fee income on finance receivables, predominately finance charge income, increased 11% to approximately $16.6 million for the three-month period ended June 30, 2011 from $14.9 million for the corresponding period ended June 30, 2010. Average finance receivables, net of unearned interest equaled approximately $269.1 million for the three-month period ended June 30, 2011, an increase of 13% from $238.3 million for the corresponding period ended June 30, 2010. 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 (see Contract Procurement and Loan Origination below). The gross finance receivable balance increased 12% to approximately $380.2 million as of June 30, 2011, from $340.7 million as of June 30, 2010. The primary reason interest income increased was the increase in the outstanding loan portfolio. The gross portfolio yield decreased to 24.71% for the three-month period ended June 30, 2011 from 25.08% for the three-month period ended June 30, 2010. The net portfolio yield increased to 22.76% for the corresponding period ended June 30, 2011 from 19.82% for the three-month period ended June 30, 2010. 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 the net charge-off percentage and a corresponding decrease in the provision for credit losses which are discussed below in Analysis of Credit Losses.

Marketing, salaries, employee benefits, depreciation and administrative expenses increased to approximately $6.7 million for the three-month period ended June 30, 2011 from approximately $6.2 million for the corresponding period ended June 30, 2010. The increase of 8% was primarily attributable to salaries expense. The Company opened additional branches and increased average headcount to 279 as of June 30, 2011 from 266 as of June 30, 2010. Marketing, salaries, employee benefits, depreciation, and administrative expenses as a percentage of finance receivables, net of unearned interest, decreased to 9.86% for the three-month period ended June 30, 2011 from 10.39% for the three-month period ended June 30, 2010.

Interest expense decreased to approximately $1.2 million for the three-month period ended June 30, 2011 from $1.5 million for the three-month period ended June 30, 2010. All interest rate swaps agreements matured during fiscal 2011 and no new agreements were entered into. The following table summarizes the Companys average cost of borrowed funds:

Driven by increases in operating income, the provision for income taxes increased to approximately $3.3 million for the three months ended June 30, 2011 from approximately $2.2 million for the three months ended June 30, 2010. The Companys effective tax rate increased to 38.53% for the three months ended June 30, 2011 from 38.48% for the three months ended June 30, 2010.

Read the The complete Report

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