Year-to-Date Loan Originations up 30.2% Over 2011
EDMONTON, Nov. 7, 2012 /CNW/ - Carfinco Financial Group Inc. ("Carfinco" or the "Company") announces financial results for the third quarter ended September 30, 2012.
We are pleased to report net earnings of $5.6 million for the quarter, up from $5.4 million in the second quarter of 2012, an increase of 2.7%. Year-to-date net earnings are $15.6 million, an increase of 22.6% over the net earnings for the first three quarters of 2011 of $12.7 million. Record loan originations of $40.4 million were achieved in the quarter, a 9.8% increase from $36.8 million in the second quarter of 2012 and, on a year-to-date basis, were $109.5 million, a 30.2% increase, from $84.1 million recorded in the comparable 2011 period.
Normalized earnings before taxes for the quarter were $7.1 million as compared to $7.7 million recorded for the second quarter of 2012 and $6.6 million recorded for the first quarter of 2012. The decrease from the second quarter to the third quarter can be attributed to below average charge offs during the second quarter of 2012. The annualized loss rate for the second quarter was 11.2% while the annualized loss rates for both the first and third quarter of 2012 were 12.8%. The annualized loss rate of 12.8% for the third quarter of 2012 is down from the 13.3% annualized loss rate for the third quarter of 2011. Please see the section entitled Summary of Quarterly Information contained in the Management's Discussion and Analysis for the third quarter of 2012 for further information.
- During the third quarter of 2012 Carfinco distributed 10.5 cents per share to its shareholders equating to a payout ratio of 43.1% of distributable cash;
- Revenues of $18.2 million for the third quarter of 2012 represent an increase of 3.1% from the $17.7 million for the second quarter of 2012 and an increase of 19.9% from the $15.2 million for the third quarter of 2011;
- Earnings before taxes for the quarter were $7.4 million, up 2.6% from $7.2 million for the second quarter of 2012 and up 24.5% from $6.0 million for the third quarter of 2011;
- Normalized earnings before taxes for the quarter were $7.1 million, down 7.0% from the $7.7 million in the second quarter of 2012 and up 20.7% from the $5.9 million for the third quarter of 2011;
- Earnings per share for the quarter were 23 cents, up 4.5% from the 22 cents per share recorded for the second quarter of 2012 and up 27.8% from the 18 cents per unit recorded for the third quarter of 2011;
- Return on shareholder's equity (ROE) for the quarter on an annualized, after tax, basis was 53.3% versus 55.8% for the second quarter of 2012 and 52.6% for the third quarter of 2011;
- Shareholder's equity increased 7.4% to $43.2 million during the quarter;
- Loan originations for the quarter were $40.4 million, a 9.8% increase from the $36.8 million for the second quarter of 2012 and an increase of 27.4% from the $31.7 million for the third quarter of 2011;
- Principal balance of finance receivables was $193.0 million, increasing 6.6% in the quarter;
- 31+ days delinquent accounts remain under 3%, recording 2.7% at the end of the quarter, in comparison to 2.2% at the end of the second quarter of 2012 and 2.5% at the end of the first quarter of 2012.
On October 9, 2012, the Board of Directors of Carfinco announced an increase in the monthly dividend of 0.5 cents, bringing the monthly cash dividend to 4.0 cents per share, effective October 2012. The increase of the dividend reflects the Company's strong financial results for the year, and our confidence in achieving our objective of approximately 20% annual growth in the finance receivable portfolio. For the third quarter, the payout ratio was 43.1% of distributable cash.
On November 5, 2012 the Board of Directors of Carfinco announced that its lending syndicate approved an increase of $50 million to Carfinco's senior credit facility, bringing the total available facility to $180 million. The interest rate and financial covenants remain unchanged. The increase in the facility provides the Company with the access to capital needed to achieve our objective of approximately 20% growth in the finance receivable portfolio per annum. Current growth in loan originations comes from the Company's pre-existing underwriting programs that have been in place for a number of years. Carfinco has also developed tiered, risk-based pricing programs that constitute a small portion of the portfolio, but provide significant areas for development and future growth opportunities. We have seen positive results in loan originations with the addition of new dealer representatives in strategic areas, and we continue to focus on cultivating our existing dealership relationships and adding new dealerships to provide Carfinco's finance programs.
About Carfinco Financial Group Inc.
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 shares of the company trade on The Toronto Stock Exchange under the symbol "CFN".
Caution Regarding Forward-Looking Statements - This news release contains certain forward-looking statements, including statements regarding the business and anticipated financial performance of the company. 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.
Selected Quarterly Information and Key Financial Ratios (unaudited)
($000's for stated values, except percentages, shares/units outstanding and per share/unit amounts)
|September 30, 2012||December 31, 2011||September 30, 2011|
|Normalized earnings before taxes||$||7,136||$||6,263||$||5,911|
|Earnings per share/unit - basic and diluted||$||0.23||$||0.18||$||0.18|
|Book value per share/unit||$||1.75||$||1.42||$||1.38|
|Cash dividend/distribution per share/unit 1||$||0.105||$||0.140||$||0.080|
|Financial leverage ratio||2.83:1||3.15:1||3.06:1|
|Return on shareholders'/unitholders' equity||53.3%||51.0%||52.6%|
|Average portfolio yield||43.1%||45.0%||43.6%|
|Annualized loss rate||12.8%||13.2%||13.3%|
|Return on portfolio assets||13.2%||12.0%||12.4%|
|Pre-tax return on portfolio assets||17.6%||16.1%||17.1%|
|Average cost of borrowing||5.3%||5.2%||5.3%|
|Operating and other expense ratio on portfolio assets||8.5%||10.4%||8.7%|
(1) Cash distributions for the period ended December 31, 2011 include a special cash distribution of $0.05 per unit.
Consolidated Statements of Financial Position
|September 30,||December 31,|
|Allowance for credit losses||(8,500,000)||(7,150,000)|
|Finance receivables - net||166,014,410||143,313,909|
|Deferred tax assets||30,462||264,702|
|Bank credit facility||118,836,332||102,675,941|
|Accounts payable and accrued liabilities||1,012,417||1,205,892|
|Provision for deferred dealer obligation||2,133,456||2,068,762|
|Derivative financial instruments||685,037||250,317|
|Deferred lease inducement||171,770||-|
|Share capital/fund unit equity||35,119,425||35,119,425|
|Retained earnings (deficit)||8,046,369||(158,942)|
Consolidated Statements of Earnings, and Comprehensive Income
|Three months ended||Nine months ended|
|September 30,||September 30,||September 30,||September 30,|
|Fee and servicing income||1,365,780||944,961||4,343,433||2,392,565|
|Provision for credit losses||5,961,918||4,946,714||16,143,284||13,897,671|
|(Gain) loss on derivative financial instruments||(275,512)||(43,914)||434,720||(184,640)|
|Net financial income before operating and other expenses and taxes||10,998,761||8,991,600||31,719,616||25,618,222|
|Operating and other expenses|
|General and administrative||3,551,090||2,989,748||10,599,235||8,212,501|
|Depreciation of equipment||36,316||47,023||135,147||149,209|
|Loss on unit based payment obligation||-||2,115||-||39,755|
|Earnings before taxes||7,411,355||5,952,714||20,949,445||17,216,757|
|Net earnings and comprehensive income||$||5,558,295||$||4,320,106||$||15,598,880||$||12,728,133|
|Earnings per share/unit|
|Basic and diluted||$||0.23||$||0.18||$||0.63||$|| 0.52
Consolidated Statements of Changes in Equity
Fund unit equity
|Balance, December 31, 2010||$||35,119,425||$||(8,416,613)||$||26,702,812|
|Cash distributions on fund unit equity||-||(8,863,949)||(8,863,949)|
|Balance, December 31, 2011||35,119,425||(158,942)||34,960,483|
|Cash dividends on shares||-||(7,393,569)||(7,393,569)|
|Balance, September 30, 2012||$||35,119,425||$||8,046,369||$||43,165,794|
Consolidated Statements of Cash Flows
For the nine months ended
|| September 30,
|| September 30,
|Increase (decrease) in cash|
|Non-cash items included in net earnings||(21,890,471)||(18,548,069)|
|Changes in operating assets and liabilities||(24,144,721)||(19,264,006)|
|Income taxes paid||(8,747,689)||-|
|Net cash (used in) provided by operating activities||(9,601,988)||109,521|
|Purchase of equipment||(359,575)||(118,843)|
|Net cash used in investing activities||(359,575)||(118,843)|
|Advances on bank credit facility||21,631,844||10,740,314|
|Repayments on bank credit facility||(5,550,000)||(5,400,000)|
|Deferred transaction costs||(25,000)||(138,293)|
|Share/fund unit cash dividend/distributions||(7,393,569)||(5,414,617)|
|Net cash provided by (used in) financing activities||8,663,275||(212,596)|
|Net increase (decrease) in cash||(1,298,288)||(221,918)|
|Cash, beginning of period||937,994||839,620|
|Cash, end of period||$||(360,294)||$||617,702|
SOURCE: Carfinco Financial Group Inc.
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