Subprime lender Nicholas Financial Inc. suffered losses in 2018 as a result of legacy portfolios with “difficult pools in terms of underwriting quality” from purchases made in previous years, Chief Executive Doug Marohn said in an earnings statement earlier this month.
Clearwater, Fla.-based Nicholas lost $900,000 for the quarter ended Dec. 31, 2018, and originations dropped 39.5% to $16. 5 million year over year.
Marohn added that going forward, the company will continue to focus on “substantially” improving underwriting and operations, an endeavor started mid-2018, to rebound from the past year’s performance and losses. That includes a deliberate reduction in new loan purchases, retraining of field employees, redevelopment of dealer relations and brand remarketing, Marohn said.
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Meanwhile, Nicholas Financial’s provision for credit losses improved 12.4% to $7.9 million for the quarter.
The deceleration of net loss in 2018 was likely the result of tightening underwriting guidelines and an effort “to be more disciplined” in pricing risk, Marohn previously told AFN.
“Whereas it is always disappointing to have a negative earnings quarter, we remain pleased with our continuing efforts to improve the overall health of the company,” he said in a company statement this month.
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