Nicholas Financial is expanding with new branches and is looking to grow its direct loan portfolio despite the destabilizing effect the COVID-19 pandemic has had on the auto industry, Chief Executive Doug Marohn told Auto Finance News.
Nicholas plans to increase direct loan originations across the company’s entire network following recent successes in its direct loan product, Marohn said. “The expansion of our direct loan product has been a focus of ours for the last 18 months. By the end of FY 2020 we were able to expand our product into all offices except for our Pittsburgh branch,” he added. “Having all branches contributing to the direct loan production is key to the proliferation of that product line.”
In line with its goal of direct loan growth, the company is adding branches in Boise, Idaho; Columbia, S.C.; Las Vegas; Milwaukee and Salt Lake City, Marohn said.
During the first quarter of fiscal year 2021 ended June 30, Nicholas increased direct loan originations by 18% year over year to $2.4 million in principal balances, while indirect loans declined 11.9% YoY to $16.8 million largely due to the pandemic, according to the earnings report. “There is no doubt that the Covid-19 pandemic had an impact on our operations overall, and particularly on our new loan originations. However, times like these … validate our branch-based model nicely,” Marohn said on the earnings call.
Nicholas Financial also posted $2.2 million in pre-tax earnings for the fiscal year ending March 31, 2020, making it “the best earnings quarter in recent history,” Marohn told AFN. The recent success follows losses in FY18 and FY19, a turnaround that can be attributed to two years’ dedicated effort, he noted.
“We have been hyper focused on improving our underwriting, servicing and quality control. It takes a while to convert a stressed portfolio, but we have been able to do exactly that,” Marohn said.
— Additional reporting by Garret Reich
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