Nicholas Financial Earned 37 Cents Per Share

Nicholas Financial ($NICK) earned 37 cents per share for the December quarter which is their Q3. Don’t worry, they had a six-cent charge related to the special dividend. Except for that, these results were largely what I expected.

Nicholas Financial, Inc., announced that for the three months ended December 31, 2012 net earnings decreased 15% to $4,566,000 as compared to $5,363,000 for the three months ended December 31, 2011. Per share diluted net earnings decreased 18% to $0.37 as compared to $0.45 for the three months ended December 31, 2011. Revenue increased 4% to $17,889,000 for the three months ended December 31, 2012 as compared to $17,140,000 for the three months ended December 31, 2011.

For the nine months ended December 31, 2012, net earnings decreased 7% to $15,101,000 as compared to $16,186,000 for the nine months ended December 31, 2011. Per share diluted net earnings decreased 9% to $1.24 as compared to $1.35 for the nine months ended December 31, 2011. Revenue increased 4% to $52,940,000 for the nine months ended December 31, 2012 as compared to $50,985,000 for the nine months ended December 31, 2011.

“During the three months ended December 31, 2012, our results were affected by an increase in the net charge-off rate and an after-tax charge of $747,000 or $0.06 per share, which is related to a 5% withholding tax associated with the one-time special cash dividend of $2.00 per share paid in December 2012. The withholding is required under the Canada-United States Income Tax Convention. While competition remains fierce, we are committed to maintaining our conservative underwriting principles. We will continue to develop additional markets and expect to continue our branch network expansion”, stated Peter L. Vosotas, Chairman and CEO.

A few few things to note. Operating costs rose by 6.3% over Q4 2011 which is steeper than I expected. The provision for credit losses jumped to $819,000 last quarter. That’s the most in two years. We knew the ultra-low numbers weren’t going to last forever, but this provision is still well below what NICK had been setting aside a few years ago.

Outside that and the special dividend taxes, the numbers here are almost the same as the previous few quarters. The portfolio’s gross yield is the highest in four years. Even with the dividend tax, the pre-tax yield is over 10%. During the financial crises and recession, NICK wasn’t able to hit 10% pre-tax for more than three straight years. Without the dividend tax, NICK would have earned 43.6 cents per share last quarter.

Posted by on January 30th, 2013 at 4:48 pm


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