Carfinco Announces Record Revenue and Net Earnings for Third Quarter 2009

Carfinco Income Fund

TSX: CFN.UN

EDMONTON, Nov. 10 /CNW/ - Carfinco Income Fund, Canada's leading automotive specialty finance income fund, today announced its results for the third quarter of 2009.

We are pleased to report that Carfinco has successfully achieved a number of financial milestones during the third quarter of 2009. The Fund recorded the highest finance receivables, revenue, and net earnings and also matched its highest earnings per unit in its history.

Beginning as early as Q4 2007, and through to Q1 2009 Carfinco endured what we, and many others, refer to as the "perfect storm." There were unprecedented meltdowns in the credit market and automotive industry, fuel prices were at an all time high, auction values on used vehicles were at historical lows and the unemployment rate in Canada was rising. All of these factors contributed to higher delinquencies and increased charge offs in the Fund's loan portfolio, forcing Management and the Board of Trustees to take necessary measures to weather the storm. During 2008, distributions to Unitholders were halted, credit policies were tightened, portfolio growth was curtailed, allowances for future credit loses were significantly increased and the Fund focused on improving the delinquencies and losses with experienced personnel and the implementation of technology.

The Fund has emerged from this period stronger than ever. During the third quarter of 2009 revenues were a record $8.6 million compared to $8.3 million in the same period last year. Net earnings were a record $2.2 million, an increase of $1.5 million over the $0.7 million recorded during the same period last year. Earnings of $0.09 per unit represent a 200% increase over the $0.03 earnings per unit recorded for the third quarter of last year.

Our balance sheet continues to be strong with an allowance for credit losses of $12.4 million and a dealer reserve of $4.5 million making our total reserves $16.9 million, an increase of $2.9 million from the $14.0 million recorded a year ago. As at September 30, the amount over 30 days delinquent has decreased to 4.5% of the finance receivables for the third quarter of 2009 from 6.4% for the third quarter of 2008; a significant improvement.

Loan originations for the third quarter were $18.0 million, an increase of 16.9% and 7.9% over the first and second quarters respectively, and a modest increase from the $17.9 million recorded for the third quarter of 2008. The majority of new loans originated utilize the GPS and "Starter Interrupt" technology mentioned in previous reports.

As of September 30, finance receivables were $111.5 million versus $108.6 million one year ago. Emphasis is now being placed on increasing the growth of the finance receivables, in a prudent and controlled manner without compromising the credit policies implemented in 2008.

For the first nine months of 2009 revenues were $24.8 million compared to $23.8 million last year, an increase of 3.9%. Net earnings for the first nine months were $4.7 million, or 20 cents per unit, an increase of $6.1 million, or 26 cents per unit, from the net loss of $1.4 million for the same time frame in 2008.

During the third quarter the Board of Trustees reinstated monthly cash distributions to Unitholders, announcing a 1.5 cent distribution per unit to Unitholders for August. Subsequently, 1.5 cent monthly distributions were also announced for the months of September and October.

We remain cautiously optimistic for continued steady improvement in our business throughout the balance of the year and confident in the effort, expertise, and dedication of our employees.

About Carfinco Income Fund

Carfinco focuses on providing consumer vehicle loans to borrowers unable to obtain financing through traditional lending sources. A network of select independent and franchise dealerships offer Carfinco's payment plan to their customers who must, along with the vehicle, meet Carfinco's underwriting guidelines. The units of the Fund trade on The Toronto Stock Exchange under the symbol "CFN.UN".

Caution Regarding Forward-Looking Statements - This news release contains certain forward-looking statements, including statements regarding the business and anticipated financial performance of the Fund. These statements are subject to a number of risks and uncertainties. Actual results may differ materially from results contemplated by the forward-looking statements. When relying on forward-looking statements to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and should not place undue reliance on such forward-looking statements.

    
    Carfinco Income Fund
    Consolidated Balance Sheets
    -------------------------------------------------------------------------

                                                  September 30,  December 31,
                                                          2009          2008
                                                  ------------- -------------
                                                    (unaudited)     (audited)

    Assets
      Finance receivables                         $111,507,669  $108,016,961
        Allowance for credit losses                (12,400,000)  (12,190,000)
        Dealer reserve                              (4,461,555)   (2,454,715)
                                                  ------------- -------------
          Finance receivables - net                 94,646,114    93,372,246
                                                  ------------- -------------

      Cash                                             702,701        29,162
      Other assets                                     611,330       633,178
      Equipment                                        391,544       456,841
                                                  ------------- -------------
                                                     1,705,575     1,119,181
                                                  ------------- -------------

                                                  $ 96,351,689  $ 94,491,427
                                                  ------------- -------------
                                                  ------------- -------------

    -------------------------------------------------------------------------

    Liabilities
      Bank credit facility                        $ 66,054,052  $ 67,878,411
      Accounts payable and accrued liabilities         857,793       502,989
      Deferred dealer obligation                     1,711,879     1,604,385
      Derivatives                                    1,277,811     1,983,486
      Long term debt                                 2,143,000     2,300,000
                                                  ------------- -------------
                                                    72,044,535    74,269,271
                                                  ------------- -------------

    Unitholders' Equity
      Unitholders' capital                          29,635,129    29,583,463
      Deficit                                       (5,327,975)   (9,361,307)
                                                  ------------- -------------
                                                    24,307,154    20,222,156
                                                  ------------- -------------

                                                  $ 96,351,689  $ 94,491,427
                                                  ------------- -------------
                                                  ------------- -------------

    -------------------------------------------------------------------------



    Carfinco Income Fund
    Consolidated Statements of Earnings (Loss), Comprehensive Income and
    Deficit
    -------------------------------------------------------------------------

                     Three months ended Sept. 30  Nine months ended Sept. 30
                     ---------------------------- ---------------------------
                           2009          2008          2009          2008
                        (unaudited)   (unaudited)   (unaudited)   (unaudited)
                      ------------- ------------- ------------- -------------

    Financial revenue
      Interest        $  8,004,958  $  7,840,568  $ 23,199,783  $ 22,364,330
      Administration
       fees                596,311       497,071     1,570,842     1,477,109
                      ------------- ------------- ------------- -------------
                         8,601,269     8,337,639    24,770,625    23,841,439

    Financial expense
      Interest           1,012,678     1,255,588     3,212,465     3,511,238
                      ------------- ------------- ------------- -------------
    Net financial
     income before
     provision for
     credit losses       7,588,591     7,082,051    21,558,160    20,330,201

      Provision for
       credit losses     3,073,993     3,824,534    10,075,004    14,161,226
                      ------------- ------------- ------------- -------------

    Net financial
     income before
     operating expenses  4,514,598     3,257,517    11,483,156     6,168,975
                      ------------- ------------- ------------- -------------

    Operating expenses
      General and
       administrative    2,475,160     2,330,486     7,316,797     7,060,934
      (Gain) loss on
       derivatives        (195,777)      203,749      (705,675)      443,548
      Amortization of
       equipment            49,366        33,534       138,685        91,938
                      ------------- ------------- ------------- -------------
                         2,328,749     2,567,769     6,749,807     7,596,420
                      ------------- ------------- ------------- -------------

    Net earnings (loss)
     and comprehensive
     income (loss)    $  2,185,849  $    689,748  $  4,733,349  $ (1,427,445)
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------

    -------------------------------------------------------------------------

    Deficit, beginning
     of period        $ (6,813,807) $ (9,490,937) $ (9,361,307) $ (5,483,698)
      Net earnings
       (loss)            2,185,849       689,748     4,733,349    (1,427,445)
      Cash
       distributions
       on fund unit
       equity             (700,017)            -      (700,017)   (1,890,046)
                      ------------- ------------- ------------- -------------
    Deficit, end of
      period          $ (5,327,975) $ (8,801,189) $ (5,327,975) $ (8,801,189)
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------

    -------------------------------------------------------------------------

    Earnings (loss)
     per fund unit
      Basic and
       diluted        $       0.09  $       0.03  $       0.20  $      (0.06)
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------

    -------------------------------------------------------------------------



    Carfinco Income Fund
    Consolidated Statements of Cash Flows
    -------------------------------------------------------------------------

                     Three months ended Sept. 30  Nine months ended Sept. 30
                     ---------------------------- ---------------------------
                           2009          2008          2009          2008
                        (unaudited)   (unaudited)   (unaudited)   (unaudited)
                      ------------- ------------- ------------- -------------

    Increase (decrease)
     in cash

    Operating
      Net earnings
      (loss)          $  2,185,849  $    689,748  $  4,733,349  $ (1,427,445)

      Adjustments to
       reconcile net
       earnings (loss)
       to net cash
       from operations:
        Provision for
         credit losses   3,073,993     3,824,534    10,075,004    14,161,226
        Amortization
         of equipment       49,366        33,534       138,685        91,938
        Accrued
         interest           42,614      (136,038)      242,181      (254,492)
        Deferred
         dealer
         obligation        450,000       400,000     1,350,000       925,000
        Derivatives       (195,777)      203,749      (705,675)      443,548
        Accounts
         payable and
         accrued
         liabilities       170,152       (18,562)      354,804    (1,024,747)
        Other assets      (138,805)      (74,126)       21,848       (34,722)
                      ------------- ------------- ------------- -------------
                         5,637,392     4,922,839    16,210,196    12,880,306
                      ------------- ------------- ------------- -------------

    Investing
      Funds advanced on
       finance
       receivables     (14,618,829) (15,483,653)   (40,180,097)  (52,597,899)
      Principal
       collections on
       finance
       receivables      10,962,560   11,088,423     31,701,296    32,438,042
      Change in
       finance
       receivable
       reserves and
       transaction
       costs            (1,237,022)  (1,439,053)    (4,354,758)   (4,434,363)
      Purchase of
       equipment           (20,609)     (90,535)       (73,388)     (171,429)
                      ------------- ------------- ------------- -------------
                        (4,913,900)  (5,924,818)   (12,906,947)  (24,765,649)
                      ------------- ------------- ------------- -------------

    Financing
      Advances on
       bank credit
       facility          1,821,994     2,934,146     3,775,641    18,317,654
      Repayments on
       bank credit
       facility         (1,300,000)   (2,500,000)   (5,600,000)   (6,700,000)
      Issuance of
       long term debt            -       500,000             -     2,300,000
      Repayments on
       long term debt            -             -      (157,000)            -
      Repayments on
       unit purchase
       financing                 -             -        51,666        51,666
      Fund unit cash
       distributions      (700,017)            -      (700,017)   (1,890,046)
                      ------------- ------------- ------------- -------------
                          (178,023)      934,146    (2,629,710)   12,079,274
                      ------------- ------------- ------------- -------------
    Net increase
     (decrease) in cash    545,469       (67,833)      673,539       193,931

    Cash
      Beginning of
       period              157,232        95,878        29,162      (165,886)
                      ------------- ------------- ------------- -------------

      End of period   $    702,701  $     28,045  $    702,701  $     28,045
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------

    -------------------------------------------------------------------------

    Supplemental cash
     flow information:
      Interest paid   $    950,021  $  1,176,778  $  2,999,943  $  3,304,049
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------

    -------------------------------------------------------------------------
    

%SEDAR: 00019164E

SOURCE Carfinco Financial Group Inc.

For further information: For further information: Mr. Tracy A. Graf, CEO & Trustee of Carfinco Income Fund, Telephone: 1-888-486-4356, Facsimile: 1-888-486-7456, E-mail: tgraf@carfinco.com; OR The Howard Group Inc., Jeff Walker, Bob Beaty, Investor Relations, Telephone: 1-888-221-0915, Telephone: (403) 221-0915, E-mail: Info@howardgroupinc.com, Website: www.howardgroupinc.com

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Carfinco Financial Group Inc.

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