RED DEER, AB,
Net income for the quarter of
Loan originations in the second quarter decreased to
As the Canadian economy weakened and as unemployment levels increased, RIFCO's credit performance decreased while remaining within stated targets. The Company is reporting an average loan loss rate of 5.68% which is within the target loan loss range of 5.5% - 6.5% for the year. Delinquent loans are now at 5.76% of managed assets. While operating within this challenging environment, RIFCO has continued diligent efforts in both the credit adjudication and payment collections functions in order to maintain targeted credit results. The higher loan losses and securitized loan prepayment losses seen in the quarter have eroded our net income to the marginally profitable level reported. We believe that loan losses have peaked and we have indications that improvement will be seen in coming quarters.
The Company has endeavoured to ensure secure stable reasonably priced capital through the crisis of credit availability. In the first half of the fiscal year, securitization costs were the highest the Company had ever seen. However, in this quarter, and to be reflected in future financial results, RIFCO has seen an improvement in the availability of credit with improved pricing. The Company expects to enjoy improved rates for at least the coming 12 months.
In July, RIFCO announced the renewal of its
On
RIFCO is now well positioned to regain its growth trajectory and fund an increasing amount of new loans. As funding market conditions continue to improve, increasingly profitable growth opportunities will be restored for the Company. RIFCO expects to see strong quarter over quarter loan origination growth moving forward with greatly improved profitability.
RIFCO remains steadfast in originating only loans that it believes can achieve acceptable profit margins. As margins are affected by funding rates and by expected credit performance, RIFCO adjusts targeted origination levels, credit requirements, and lending rates while maintaining market continuity.
Highlights: - Net Income in Q2 decreased to $35K from net profit of $321K (YOY) - Revenue in Q2 decreased to $2.76M from $2.94M (YOY) - Managed Loans increased 28.1% to $53.18M (YOY) - Loan Originations in Q2 reduced 38.7% to $6.34M (YOY) - Loans Securitized decreased to $6.47M from $8.94M (YOY) - Q2 - EPS was zero down from $0.02 (YOY) - Book value per share has increased to $0.46 from $0.42 (YOY) - Operating Expense Ratio reduced by 1.21% to 5.21% (YOY) - Funding Costs increased to 7.26% from 6.81% (YOY) - Average Cost of Borrowing increased to 7.87% from 7.76% (YOY) - Delinquency Ratio increased by 1.99% to 5.76% (YOY) - Average Loan Loss Rate increased from 4.40% to 5.68% (YOY) - Managed Loans down 10.3% over the prior quarter - Loan Originations down 11.2% over the prior quarter - Operating Expense Ratio increased to 5.21% from 5.02% in the prior quarter - Delinquency Ratio increased to 5.76% from 5.58% in the prior quarter - Average Loan Loss Rate increased to 5.68% from 5.36% in the prior quarter As is RIFCO's custom, please note the Q2 progress report against RIFCO's specific objectives for 2010 as published in the 2009 annual report to the shareholders. 1. Maintain loan originations of over $40 million Loan originations in the first two quarters were $13.47M. 2. Grow managed assets by 40% to over $70 million Managed financed receivables in the first two quarters grew to $53.18M. 3. Maintain revenue of over $12 million Revenue in the first two quarters reached $5.64M. 4. Achieve managed finance receivables annualized write offs between 5.5% and 6.5% Year-to-date average loss rate currently stands at 5.68%. About RIFCO RIFCO is one of Canada's fastest growing automotive finance companies. Non-traditional 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. Neither TSX Venture Exchange nor its Regulation Services Provider accepts responsibility for the adequacy or accuracy of this release.
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: [email protected], Website: www.rifco.net
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