Nicholas Financial Shifts Strategy to Focus on Core Nonprime | Auto Finance News | Auto Finance News

Nicholas Financial Shifts Strategy to Focus on Core Nonprime

Nicholas Financial attempted to expand its product offerings and provide lower interest rates, but the company’s fiscal year results released this week show that the strategy has not been working and it has decided to move back to its core subprime base.

The lender’s total receivables are down 14.8% to $284.6 million for the year reflecting a 33% drop in contracts originated. Meanwhile, delinquencies across all the company’s products rose to 10.33% of the overall portfolio, up from 9.92% the year prior.

Nicholas Financial appointed Douglas Marohn as president and chief executive in December following Ralph Finkenbrink’s retirement. Since then, he has been working to turn the results around.

“Over the course of fiscal 2016, 2017, and most of fiscal 2018, the company attempted to expand its product mix to include larger loans with lower APRs and reduced discounts,” the company said in earnings reports ended March 31. “With the recent change in management, the company rededicated itself to its core product of financing primary transportation to and from work for the subprime borrower and refocused on pricing integrity on those Contracts acquired.”

The company has had significant executive turnover beyond the CEO as well. Kelly Malson was named chief financial officer in March following the resignation of Katie MacGillivary. Additionally, the company’s controller position was replaced and Senior Vice President of Branch Operations Kevin Bates did not have his contract renewed by the company.

These executive changes come at a time when Nicholas is looking to reinsert itself into the competitive subprime space

“The non-prime consumer-finance industry is highly competitive, and the competitiveness of the market continues to increase as new competitors continue to enter the market and certain existing competitors continue to expand their operations and become more aggressive in offering competitive terms,” the company wrote in its report.

Correction: An earlier version of this story misstated the company’s receivables and originations as they were reported in earning. Auto Finance News apologizes for the mistake. 

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