Nicholas Financial’s increased focus on direct-to-consumer lending has continued to pay off, with the lender posting year-over-year growth for the 12th straight quarter.
In the fourth quarter of fiscal year 2021 ended March 31, 2021, direct loan originations increased 5.8% YoY to $3.3 million in principal balances. Nicholas Financial has increased its direct portfolio on a YoY basis every quarter since Q1 2019 following the company’s increased focus on direct-to-consumer loans, according to Wednesday’s earnings report.
Indirect loan originations also increased 25% YoY in Q4 2021 to $24.6 million, a jump that followed consecutive YoY declines at the end of 2020 and first three quarters of 2021 as the lender expanded its focus.
“We were able to enjoy year-over-year increases in both indirect and direct originations and loan volumes,” Chief Executive Doug Marohn said. “The year-over-year increase on indirect originations was the first we have seen since my return to Nicholas, and it was especially gratifying to see this during the pandemic.” Marohn rejoined Nicholas Financial in December 2017 after a six-year hiatus. Previously, he served as senior vice president of operations at the subprime lender for over 13 years.
As of the end of fiscal year 2021, Nicholas originated $14.1 million in direct loans, an increase of 12% YoY, and $74 million in indirect loans, a YoY decrease of 3.5%.
Direct loan outstandings clocked in at $13.9 million as of March 31, 2021, an increase of 17.4% YoY.
“As we continue to increase our core product market share in the existing branch markets, we remain focused on growing the direct loan business, as well as expanding our branch network in Western states,” Marohn said.
Meanwhile, delinquencies for direct consumer loans 30 to 59 days past due decreased 129 basis points from last quarter and 108 bps YoY to 1.82%. Loans 60 to 89 days delinquent accounted for 0.73%, down 59 bps sequentially and 42 bps YoY.
The net charge-off rate for Nicholas’ total portfolio sat at 6.83% for the quarter, and 6.16% at yearend – YoY decreases of 4.46 and 3.85 percentage points, respectively.
Nicholas added $250,000 for provision for credit losses in the fourth quarter, accounting for 0.54% of the lender’s outstanding portfolio, down from 1.35% last quarter and 7.34% a year ago. Allowance for credit losses accounted for 3.34% of the portfolio in the third quarter, a decrease of 147 bps from last quarter.
Shares of Nicholas Financial [Nasdaq: NICK] were trading at $10.50 as of market close today, a decrease of 1.04% since market open. Nicholas Financial has a market capitalization of $134.2 million.