Carfinco Announces Third Quarter 2012 Results

Year-to-Date Loan Originations up 30.2% Over 2011 
TSX: CFN 
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. 
HIGHLIGHTS 


    --  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, December 31,  September 30,
                                   2012           2011           2011

Total revenue              $      18,206  $     16,514   $     15,188

Net earnings               $       5,558  $      4,393   $      4,320

Normalized earnings before $       7,136  $      6,263   $      5,911
taxes 

Earnings per share/unit -  $        0.23  $       0.18   $       0.18
basic and diluted 

Loan originations          $      40,387  $     32,217  $      31,706

Shareholders'/unitholders' $      43,165  $     34,960   $     34,016
equity 

Shares/units outstanding     24,645,230     24,645,230     24,611,896

Book value per share/unit  $        1.75  $       1.42   $       1.38

Cash dividend/distribution $       0.105  $      0.140   $      0.080
per share/unit (1) 

Financial leverage ratio         2.83:1         3.15:1         3.06:1

Return on
shareholders'/unitholders'        53.3%          51.0%          52.6%
equity  

Average portfolio                 43.1%          45.0%          43.6%
yield        

Annualized loss rate              12.8%          13.2%          13.3%
 

Return on portfolio               13.2%          12.0%          12.4%
assets        

Pre-tax return on                 17.6%          16.1%          17.1%
portfolio assets        

Average cost of                    5.3%           5.2%           5.3%
borrowing          

Operating and other
expense ratio on portfolio         8.5%          10.4%           8.7%
assets    

(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,
                                                 2012              2011
                                          (unaudited)         (audited)

Assets                                                                 

Finance receivables                     $   174,514,410  $  150,463,909

  Allowance for credit losses               (8,500,000)     (7,150,000)

Finance receivables - net                   166,014,410     143,313,909

Cash                                                  -         937,994

Inventories                                     215,684         239,453

Other assets                                  1,010,681       1,167,268

Equipment                                       569,164         344,736

Deferred tax assets                              30,462         264,702
                                              1,825,991       2,954,153
                                        $   167,840,401  $  146,268,062

Liabilities                                                            

Bank indebtedness                       $       360,294  $            -

Bank credit facility                        118,836,332     102,675,941

Accounts payable and accrued                  1,012,417       1,205,892
liabilities       

Taxes payable                                 1,475,301       5,106,667

Provision for deferred dealer                 2,133,456       2,068,762
obligation       

Derivative financial instruments                685,037         250,317

Deferred lease inducement                       171,770               -
                                            124,674,607     111,307,579

Shareholders'/Unitholders' Equity

Share capital/fund unit equity               35,119,425      35,119,425

Retained earnings (deficit)                   8,046,369       (158,942)
                                             43,165,794      34,960,483
                                        $   167,840,401  $  146,268,062
    Consolidated Statements of Earnings, and Comprehensive Income
                                                                             
                             Three months ended             Nine months ended
                   September 30,  September 30,  September 30,  September 30,

(unaudited)                 2012           2011           2012           2011

Financial revenue                                                            

  Interest         $  16,840,381 $   14,243,145 $   48,288,742 $   40,676,943
  revenue 

  Fee and
  servicing            1,365,780        944,961      4,343,433      2,392,565
  income  
                      18,206,161     15,188,106     52,632,175     43,069,508

Financial expenses                                                           

  Interest             1,520,994      1,293,706      4,334,555      3,738,255
  expense  

  Provision for        5,961,918      4,946,714     16,143,284     13,897,671
  credit losses  

  (Gain) loss on
  derivative           (275,512)       (43,914)        434,720      (184,640)
  financial
  instruments  
                       7,207,400      6,196,506     20,912,559     17,451,286

Net financial
income before
operating and         10,998,761      8,991,600     31,719,616     25,618,222
other expenses and
taxes  

Operating and                                                                
other expenses

  General and          3,551,090      2,989,748     10,599,235      8,212,501
  administrative  

  Depreciation of         36,316         47,023        135,147        149,209
  equipment  

  Conversion costs             -              -         35,789              -



  Loss on unit
  based payment                -          2,115              -         39,755
  obligation  
                   3,587,406      3,038,886     10,770,171      8,401,465 
                                                             
Earnings before        7,411,355      5,952,714     20,949,445     17,216,757
taxes   
Taxes                                                                         
Current              1,552,013      1,250,538      5,116,325      3,768,946 
Deferred               301,047        382,070        234,240        719,678 


                       1,853,060      1,632,608      5,350,565      4,488,624

Net earnings and
comprehensive      $   5,558,295 $    4,320,106 $   15,598,880 $   12,728,133
income 

Earnings per                                                                 
share/unit

  Basic and        $        0.23 $         0.18 $         0.63 $         0.52
  diluted 
    Consolidated Statements of Changes in Equity
                                                                       


                                           Retained
(unaudited)              Share capital/        earnings   


                       Fund unit equity       (deficit)           Total

Balance, December    $       35,119,425 $   (8,416,613) $    26,702,812
31, 2010    

  Net earnings                        -      17,121,620      17,121,620

  Cash distributions
  on fund unit                        -     (8,863,949)     (8,863,949)
  equity     

Balance, December            35,119,425       (158,942)      34,960,483
31, 2011     

  Net earnings                        -      15,598,880      15,598,880

  Cash dividends on                   -     (7,393,569)     (7,393,569)
  shares    

Balance, September   $       35,119,425 $     8,046,369 $    43,165,794
30, 2012    
    Consolidated Statements of Cash Flows
                                                         


                                    September 30,     September 30,
For the nine months ended                        2012              2011 
                                      (unaudited)       (unaudited) 
Increase (decrease) in cash                                             
Operating activities                                                    
Net earnings                   $         15,598,880 $      12,728,133 
Non-cash items included in net         (21,890,471)      (18,548,069)
  earnings 
Changes in operating assets            (24,144,721)      (19,264,006)
  and liabilities 
Interest received                        33,792,280        28,806,796 
Interest paid                           (4,210,267)       (3,613,333) 
Income taxes paid                       (8,747,689)                 - 
Net cash (used in) provided by            (9,601,988)           109,521
operating activities 
Investing activities                                                    
Purchase of equipment                     (359,575)         (118,843) 
Net cash used in investing                  (359,575)         (118,843)
activities 
Financing activities                                                    
Advances on bank credit                  21,631,844        10,740,314
  facility 
Repayments on bank credit               (5,550,000)       (5,400,000)
  facility 
Deferred transaction costs                 (25,000)         (138,293) 
Share/fund unit cash                    (7,393,569)       (5,414,617)
  dividend/distributions 
Net cash provided by (used in)              8,663,275         (212,596)
financing activities 
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 
Mr. Tracy A. Graf CEO & Director of Carfinco Financial Group Inc. 
Telephone:1-888-486-4356 Facsimile:1-888-486-7456 
E-mail:tracy.graf@carfinco.com Web site:www.carfinco.com 
The Howard Group Inc. Jeff Walker / Dave Burwell Investor Relations 
Telephone:1-888-221-0915 E-mail:Info@howardgroupinc.com Web site: 
www.howardgroupinc.com 
SOURCE: Carfinco Financial Group Inc. 
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CO: Carfinco Financial Group Inc.
ST: Alberta
NI: FIN AUT ERN  
-0- Nov/07/2012 23:16 GMT
 
 
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