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Nicholas Financial Inc. Message Board

  • smaycs4 smaycs4 Nov 12, 2012 8:19 PM Flag


    It wouldnt let me reply to your post below for some reason.

    Im not sure how you determined that deliquincies translated into losses over time.

    30 day late payers are not my primary concern, its the 60-90+ ones that are bigger concerns and of course it follows that any increase in the longer ones will result in repos & loss on sale.

    And of course, WHY is there such an increase ? Job Losses ? Gas costs ? (Which are now coming down again) Other ?

    Subprime borrowers are often one sick kids Dr visit away from being late on their car note.

    And then of course there are ways to manipulate the #s. Not to mislead the market or anything but just to re-write the loan to keep a 30 day behind borrower from being a chronic 30 days behind.

    If someone missed a payment and then cant make up the late one but continues to make a monthly payment for the next 6 months, do you re-write them so that they stop showing up as late or do you just continue to carry them at 30 days late ?

    Its important for NICK to work with their customers as much as possible to avoid repos and the resulting losses.

    But, without comments from Peter or the CFO in the PR, we are left to wonder what the deal is.

    But, I think its safe to say that after they looked into strategic alternatives folllowed by the insider selling that they didnt sell because they think the shares are a shoe in to be $16-17 anytime soon.

    And Im not sure how much downside protection the dividend will provide if late payers continue to increase.

    Ive got big gains on my remaining shares so Im inclined to defer selling them for as long as possible.

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    • The way I reach that conclusion is that every quarter in the Q's, they disclose a "realized loss" number for that quarter, a recovery number (which together, seem to be used to calculate their net charge off rates as disclosed in the Q's) and the delinquency statistics. I basically take sum of rolling 4 quarter realized losses, pre recovery, and divide that by the rolling sum of amount they show as in delinquency (30, 60, 90+) over 4 quarters, except predated by 1 quarter. It's intended to ask the question of how much of delinquency's translate into realized losses on a one quarter lagged basis. I fully appreciate this number might be meaningless depending on how things are accounted for. You can do that calculation for just the 60-90+ delinquency as well, that percentage has declined pretty consistently as well, since where I can track down Q's.

      That percentage by the way is quite consistent for neighboring quarters, so you can sort of use it to try to predict the next quarter charge off based on the previous 4 quarter's delinquency amount.

      The delinquency numbers, by the way show quite a consistent seasonal trend. They are the lowest in the March quarter, corresponding to fiscal year end, and gradually move up, peaking in the December quarter every year. So it seem to me they try to clean up their delinquency every year around their fiscal year end. (Maybe corresponding to the way they set compensation every year). I may be seeing trend where there is none. But curious if those trends reveal something about their operations on the ground.

      • 2 Replies to hjiang_72
      • If you haven't already ready, 'Analysis of Credit Losses' on pp18 of the Q, focusing on expected liquidation losses and impact of 'Aggressive' competition on future delinquencies and recovery rates may interest you.

        Write-off to liquidation is guided to be 8-12% Q3. You can use that as another approach to your charge-off estimate. You don't wan't 12%.

        "Consequently, if these trends continue, the Company would expect the provision for credit losses to increase for recent and future static pools."

        g/l NICKers!


      • You do a lot more work than me ! LOL

        But, as for the #s being down in the quarter ending in March, the simple explanation is people get a large tax refund and take care of their past due car notes.

        The december highs reflect the obvious Christmas season & the extra spending that time of year for gifts, travel & so forth.

        Not many people are going to give their kids nothing for X-mas so they can remain current on their car note.

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