Hourly employees were furloughed starting April 14, and salaried employees starting April 18.
The furloughs are a “proactive” measure to safeguard the subprime lender as the pandemic puts pressure on originations, operations and cash flow across its branch network. Nicholas anticipates the furlough period will end May 17. Employees will continue to receive benefits and be eligible to collect unemployment.
Clearwater, Fla.-based Nicholas has a 15-state footprint and around 270 employees.
Reducing its active staff comes on the heels of an announcement to shutter seven branches, about 14% of its network, as of December 31, 2019. However, the branch closures were a part of a previous initiative as those specific branches have “consistently fallen short of management’s expectations” during the lender’s 2020 fiscal year, the company’s April 1 SEC filing noted.
Nicholas originations hit $4.5 million for its direct business and $17.9 million for indirect, according to the company’s latest 10-K filing. On top of that, Nicholas acquired $19 million of Clearwater, Fla.-based Platinum Auto Finance’s active indirect auto portfolio in February.
The lender’s total auto portfolio, prior to the Platinum acquisition, clocked in at $190.3 million.
Nicholas is the latest lender to report furloughs since the coronavirus outbreak has pushed the auto industry into full cash-preservation mode. Earlier this month, subprime lender Crescent Bank & Trust tightened its underwriting policies and furloughed a significant number of its staff as dealership closures across the nation have reduced the company’s origination volumes.
In March, several auto companies — CarMax, Honda, Nissan, Tesla and Toyota — also furloughed or laid off thousands of employees.
Nicholas Financial [NASDAQ: NICK] trading up 5% at $5.25 per share with a market cap of $41.48 million.