RIFCO Returns to Profitability in Q2



    RED DEER, AB, Nov. 23 /CNW/ - RIFCO Inc. (TSX.V-RFC) today announced that
it has filed its unaudited financial statements for the second quarter ended
September 30, 2007, and related management's discussion and analysis with the
regulatory authorities. Copies can be obtained from SEDAR at www.sedar.com or
on the Company's website at www.rifco.net .
    In the second quarter ending on September 30, 2007, the Company reported
net income of $57K compared to net income of $89K in the same quarter of the
prior year. Revenue in the quarter was $1.64M a 13.6% increase over the $1.44M
recorded in the same period of the prior year. Managed loans grew to $24.3M an
increase of 34.4% from $18.1M in the prior year. RIFCO has now reported
quarterly net income in six out of the last seven quarters.
    The Company is very pleased to report that loan losses were significantly
reduced in the quarter. As such, credit performance for the year to date
period has solidly returned to the Company's targeted range. Delinquency
levels are currently at the top end of our acceptable range. Management is
confident that credit quality remains within our targets levels.
    RIFCO has witnessed significant competition in the Canadian auto finance
market over the past quarter. Most notably, unusually aggressive non-prime
auto loan pricing had been witnessed. Certain non-captive competitors had
relaxed their documentation requirements and/or their underwriting standards
as compared to interest rate pricing. Certain auto dealers have also reported
that Original Equipment Manufacturer (OEM) captive finance companies had also
been aggressive in credit approvals in order to finance the sale of remaining
inventories of 2007 models.
    The Company believes that some of the marginal pricing witnessed is
unprofitable and unsustainable. Credit quality remains a key RIFCO priority.
The company has not made adjustments in order to match pricing that it feels
is inadequate to compensate for the underwriting risk. Partially as a result
of loan pricing discrepancies, the company experienced a reduction in loan
originations in the quarter to $5.15M from $5.64M in the prior quarter.
    RIFCO also believes that the credit pricing disconnect seen in the
marketplace may have contributed to RIFCO's larger than normal prepayment
rates that has been experienced in the first two quarters of this year. In the
year to date, a larger than historic number of RIFCO loans were paid out
early. The prepayment expenses for the year have reached $412K compared to
$157K in the prior year. The company has significantly increased its
provisions in the first two quarters which has negatively affected earnings.
However, we believe that these larger provisioning levels are now adequate for
the future.
    The company believes that the short term pricing by certain competitors
will not have a long term effect on RIFCO's growth prospects. RIFCO has
continued to invest in increasing capacity and increasing efficiency through
the building of infrastructure. One such investment has been in the
implementation of a sophisticated loan origination processing system. Loan
origination growth and increased assets under management will allow these
investments to be leveraged toward improved earnings.
    RIFCO's sales and marketing efforts were redeployed late in the second
quarter and are squarely refocused on Canada's automotive dealer network. As
such, we have very high expectations for auto loan origination growth for the
second half of this year. As recently announced RIFCO's web based application
solution for dealers will be a key driver in future growth. The initial
response to the new interface from existing dealers has been excellent.
    Since last quarter's report, the global "Credit/Liquidity Crunch" caused
by the poor performance of the US sub-prime mortgage market has had a
disruptive effect on much of the Asset Backed Commercial Paper (ABCP) market
and conversely many lenders have been impacted. However, as reported in a
Sept 4th press release, it has been business as usual for RIFCO. The company
has not been directly affected by the market disruption. RIFCO's funding
solutions remain as a $7.5M senior debt from BMO Bank of Montreal, $30M in a
securitization facility from Securcor Trust and $30M in a securitization
facility from Community Credit Union. RIFCO's liquidity position remains
excellent.
    Ultimately, changes to the global and Canadian credit environment will
impact the credit underwriting of all lenders. We remain optimistic that those
lenders that remain true to rational and appropriately priced underwriting
standards will ultimately be rewarded as industry wide risk adjusted pricing
returns to more profitable levels.

    
    -   Loan Originations year to date up 4.8% to $10.79M year-over-year
        (YOY)
    -   On-book Loans up 23.7% to $8.6M (YOY)
    -   Revenue in Q2 increased 13.6% to $1.63M (YOY)
    -   Managed Loans up 34.4% to $24.3M (YOY)
    -   Average Cost of Borrowing reduced by 0.13% to 8.17% (YOY)
    -   Funding Costs increased to 6.89% from 6.71% (YOY)
    -   Operating Expense Ratio reduced by 1.29% to 11.01% (YOY)
    -   Delinquency Ratio increased by 1.43% to 3.63% (YOY)
    -   Average Loan Loss Rate increased from 4.71% to 5.20% (YOY)
    -   Net Income in Q2 reduced to $57K from $89K (YOY)
    -   Book value per share has increased to $0.33 from $0.27 (YOY)
    -   Year to date EPS was $0.00 from $0.02 (YOY)
    

    About RIFCO Inc
    ---------------
    RIFCO Inc. operates through its wholly owned subsidiary Repair Industry
Finance Corporation. RIFCO is a specialty consumer finance corporation
currently providing motorists with non-prime Auto Purchase Financing and
mid-market Automotive & Commercial Repair Financing. RIFCO has a growing
network of new & used vehicle dealers and licensed repair facilities operating
in all provinces except Saskatchewan and Quebec.
    The common shares of RIFCO INC. are traded on the TSX Venture Exchange
under the symbol "RFC". RIFCO Inc. has 19.23 million shares outstanding.

    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this release





For further information:

For further information: RIFCO INC., Lance A. Kadatz, Vice President and
Chief Financial Officer, Telephone: (403) 314-1214 Ext 111, Fax: (403)
314-1132, Email: kadatz@rifco.net, Website: www.rifco.net

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RIFCO INC.

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