RIFCO Reports Record Results in Third Quarter

    Revenue Increase 145%, Net Profit Increases 288%, Originations up 73%

    RED DEER, AB, Feb. 18 /CNW/ - RIFCO Inc. (TSXV: RFC) is pleased to
announce solid financial results for the third quarter ending December 31,
2008. For the quarter, RIFCO is reporting record originations, record revenue,
record efficiency, and record profits.
    Net income for the quarter of $682,989, represents very strong earnings
growth of 288% over the $176,259 reported in Q3 of the prior year. It is
encouraging to report to shareholders that over the trailing 12 months, the
company has reported $0.10 in EPS and over $2.0M in profit. Shareholders'
equity has now increased to $8.69M from $6.55M just twelve months ago. RIFCO
experienced an increase in loan originations in the quarter to $10.54M up from
$6.10M in Q3 in the prior year, a 73% increase.
    In the context to the current economic environment and the results being
released by the financial sector as a whole, RIFCO's year to date results are
encouraging. The first nine months of this fiscal year continues to
demonstrate excellent progress in all key metrics including loan originations,
revenue, net income, EPS and Book value growth.

                           Nine months ending December 31
    $                                2008            2007     % Increase
    Loans Originated           30,406,176      16,894,111            80%
    Total Revenue              11,033,201       4,892,870           125%
    Net Income before tax       2,407,356         233,561           931%
    Net Income                  1,611,356         150,461           971%
    EPS                              0.08            0.01           700%
    Book Value per share             0.45            0.34            32%
    Some numbers may not reconcile due to rounding

    RIFCO has had no interruptions from any of its funding partners. RIFCO's
funding solutions remain as a $7.5M senior debt facility from BMO Bank of
Montreal, $30.0M in a securitization facility from Securcor Trust and $30.0M
in a securitization facility from Servus Credit Union (formerly Community
Credit Union). Securitization facilities have $24.4M utilized of the $60.0M in
total authorized facilities and the senior debt facility was not drawn other
than the $3.0M in letters of credit.
    While the Canadian economy has been deteriorating for some time, RIFCO's
credit performance remains very good and within its targets. RIFCO's frequency
of defaults has been comparatively low. Delinquency and loan loss rates are
both lower than a year ago. The Company is pleased to report an average loan
loss rate of 4.77%. This ratio is below the Company's target loss rate range
of 5-6%. RIFCO staff and management have redoubled their efforts in both the
credit adjudication and payment collections functions in order to maintain
their strong credit results.
    As previously reported, there has been a reduction in the number of auto
lending competitors in Canada. In the quarter, RIFCO has been able to
incrementally improve its risk adjusted loan pricing. The marketplace
continues to have multiple players, and RIFCO's pricing changes do impact its
loan volumes, closing rates, credit quality, and efficiency. The Company
continues to carefully monitor interest spreads in order to optimize
    Efficiency improvement is noteworthy. As the company continues to enjoy
benefits of increasing scale, its efficiency continues to improve. This
progress is detailed in improving efficiency ratios. In Q3, the operating
expense ratio improved to an all time quarterly low of 5.72% a significant
reduction from 6.42% in Q2 which was in itself improved from 7.45% in Q1.
Annual operating expense ratios for 2008, 2007, 2006, and 2005 were 9.49%,
12.12%, 18.13% and 22.25% respectively.


    -  Net Income in Q3 increased to $683K from net profit of $176K, a 288%
       increase (YOY)
    -  Revenue in Q3 increased to $4.32M from $1.76M an increase of 145%(YOY)
    -  Managed Loans up 80% to $47.29M (YOY)
    -  Loan Originations in Q3 up 73% to $10.54M (YOY)
    -  Loans Securitized increased to $12.55M from $3.08M a 307%
       increase (YOY)
    -  Q3 - EPS was $0.04 up from $0.01 (YOY)
    -  Book value per share has increased to $0.45 from $0.34 (YOY)
    -  Operating Expense Ratio reduced by 2.30% to 5.72% (YOY)
    -  Funding Costs decreased to 6.64% from 6.92% (YOY)
    -  Average Cost of Borrowing reduced to 7.53% from 8.18% (YOY)
    -  Delinquency Ratio decreased by 0.37% to 4.11% (YOY)
    -  Average Loan Loss Rate decreased from 5.33% to 4.77% (YOY)
    -  Managed Loans up 14% over the prior quarter
    -  Loan Originations up 2% over the prior quarter
    -  Operating Expense Ratio reduced to 5.72% from 6.42% in the prior
    -  Delinquency Ratio increased to 4.11% from 3.77% in the prior quarter
    -  Average Loan Loss Rate increased to 4.77% from 4.40% in the prior

    As is RIFCO's custom, please note the Q3 progress report against RIFCO's
specific objectives for 2009 as published in the 2008 annual report to the
shareholders. RIFCO is solidly on target for these annual objectives:

    1. Grow loan originations by 60% to over $40 million

       Loan originations in the first three quarters were $30.41M an increase
       of 80% over the $16.89M originated in the first three quarters of the
       prior year. 76% of target achieved.

    2. Grow managed assets by 50% to over $45 million

       Managed financed receivables in the third quarter grew to $47.29M an
       increase of 80% over the $26.33M in the third quarter of the prior
       year. Target exceeded.

    3. Grow revenue by 50% to over $11 million

       Revenue in the first three quarters reached $11.03M an increase of
       125% over the $4.89M in the first three quarters of the prior year.
       Target exceeded.

    4. Achieve managed finance receivables annualized write offs between 5%
       and 6%

       Year to date average loss rate achieved currently stands at 4.77% a
       decrease (improvement) from 5.33% reported in the third quarter of the
       prior year. On target.

    5. Achieve continued growth in EPS, ROE and book value per share

       -  EPS of $.08 is reported for the first three quarters. This is a
          167% increase over the EPS reported for all of the prior year of
          $0.03. On target.
       -  Based on the shareholders equity at the end of each prior quarter
          the ROE for the first three quarters is 21.49%. The first three
          quarters in the prior year reported ROE of 2.34%. The ROE reported
          in the prior year was 8.48%. On target.
       -  Book value per share has increased by $0.08 to $0.45. On target.

    Turbulent times in the automotive sectors have continued through the
quarter. Inevitably, the drop in vehicle sales that has been reported in the
United States has now been witnessed in Canada. Because of RIFCO's small but
growing market share position, it has the unique ability to increase the size
of its dealer network, and therefore maintain or grow loan volumes even with
overall market pressures. National auto sales volumes ought not to be the
restricting factor on the RIFCO's loan growth.
    The North American financial sector has shown no more stability than the
automotive sector. Specifically for RIFCO, the Company does not believe that
its very strong financial results are yet being appropriately rewarded by
improved cost of funds or in increased credit lines. In fact, and again in
contrast to steady declines in both the Bank of Canada target and charter bank
prime rates, RIFCO is seeing significant volatility in its funding costs.
Disparity between month to month pricing from RIFCO's various funders is also
increasing. RIFCO's strategy is to manage origination volumes and to utilize
particular funding solutions in order to minimize funding costs while
maintaining good liquidity opportunities. The company will continue to monitor
developments in the credit markets for opportunities to improve cost and
quantities of capital.
    Included in the federal government's January budget, was a $12 billion
Canadian Secured Credit Facility. Possible indirect access to this program by
RIFCO can not yet be determined based on the current absence of program
details. Should the Company be completely excluded from access to this
capital, it is possible that the bank owned auto lenders could see a
subsidized cost of capital to the disadvantage of RIFCO. Management is
actively reviewing program details as they become available.

    About RIFCO
    RIFCO is one of Canada's fastest growing automotive finance companies.
Non-prime auto loans are indirectly originated through a growing network of
selected new and used vehicle dealers 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". There are 19.23 million shares (basic) outstanding and
20.98 million (fully diluted) shares.

    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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