Nicholas Financial Inc. is placing less emphasis on competition and refocusing on purchasing higher-credit quality contracts, reflecting a 23.4% drop in originations, the company announced Wednesday in its earnings report for the three months ended March 31, 2018.
As the first full quarter report under new President and Chief Executive Doug Marohn, the lender was able to “improve our loan metrics by way of lowered amount financed, increased APR / yield and shortened terms,” Marohn said.
The strategy has already improved the company’s delinquency rate. Indirect loan delinquencies 30 or more days past due totaled $33.8 million — down from the $50 million it recorded as delinquent during the same period last year — a 32% drop. Total delinquencies accounted for 8.07% of its indirect portfolio, down from 10.05% the year prior.
The company’s average finance receivables are $310.2 million — a 12% decrease from $352.4 million the year prior. The lender’s average loan term also came down to 50 months, from 56 months last year, according to a Securities and Exchange Commission filing.
Despite the drop in delinquencies, net charge-offs for the whole portfolio grew to 12.26% in 4Q, a year-over-year increase from 11.69%.
Direct auto loans outstanding declined to $9.9 million, from $10.6 million at the same time a year prior. Delinquencies for its direct loans performed predictably better than the indirect portfolio but were still on the rise to 4.88% of the portfolio, up from 3.89% the year prior. However, direct loans only account for approximately 2% of the company’s total receivable portfolio, according to the filing.