RED DEER, Alberta — In a strong kick-off to the 2011 fiscal year, RIFCO pulled in almost 35 percent more net income during the first quarter than it did for all of fiscal 2010. And, company management is expecting they should hit full-year profits for the fifth straight time.

Specifically, the company took in net income of $416,370 for the quarter ending June 30, compared to the $308,962 posted during full-year fiscal 2010. Last year's first-quarter net income was $164,650.

"The company is pleased to report that RIFCO is on track for its fifth consecutive profitable year," officials noted.

Revenue for the quarter came in at approximately $3.7 million, a gain of 28.2 percent year-over-year and an 87-percent sequential hike.

Loan originations were at $9.19 million, up 28.7 percent year-over-year and up 34 percent from the prior quarter. Thanks to this lift in originations, managed finance receivables totaled $59.11 million, an increase of 12.9 percent year-over-year.

"Revenues are, in part, affected by the volume of loans originated and the loan securitization levels required to support this growth," officials noted, pointing out that the company saw its loan securitizations climb 11.4 percent year-over-year to $8.37 million.

"Due to the improved pricing on the securitization facilities, the company enjoyed a 27.2-percent increase in securitization revenue," they added. "Due to the improved discount rates (interest cost) now being received, the company experienced higher profit levels on securitized loans compared to those in prior quarters."

RIFCO said average cost of borrowing was 7.51 percent, compared with 7.95 percent in the year-ago period. Meanwhile, the company's average portfolio yield came in at 20.03 percent, versus 19.54 percent in the same period of fiscal 2010.

RIFCO's management — which has granted more than $152 million in non-traditional auto loans since 2002 — said it "had predicted that (the company's) underwriting and operational systems would hold up throughout all economic cycles."

Officials said, "The economic environment over the past 24 months has acted as a real-life stress test for these credit assumptions. While granting and collecting loans in this period has been more challenging than prior years, the credit adjudication model has proven to be sound."

The company indicated that its managed delinquent accounts over 30 days past was at 4.47 percent, an improvement from the year-ago period when that number stood at 5.58 percent.

The 12-month rolling average loan loss rate on managed receivables — which is composed by losses on assets held in securitization trusts at the end of the period — was 5.73 percent, up from 5.36 percent in the year-ago period, but down from 5.9 percent in the fourth quarter of fiscal 2010.

RIFCO's quarterly periodic annualized loss rate was 5.05 percent.

"This is a drop from 5.91 percent and 6.59 percent in the prior two quarters. This is the lowest quarterly loss rate in the previous five quarters," executives highlighted.

Continuing on, RIFCO noted that it taps into the borrowings under its senior credit facilities ($9.5 million) and subordinated debentures ($6.5 million) to purchase finance receivables, the majority of which end up being securitized via "one of three" loan securities RIFCO has at its disposal.

Officials said the limits on these are $70 million combined. RIFCO noted that 65 percent of the authorized capacity is left.  

"RIFCO is well-positioned to grow and has ample funding to meet this year's $50 million loan origination target," officials noted.

"It also remains RIFCO's strategy to pursue increased availability of senior credit facilities in order to grow the company's overall level of on-book loan receivables," they added. "The senior credit facility is currently the lowest cost funds for the company. Increased on-book (non-securitized) receivables will likely lead to increased consistency of revenue and less volatility of earnings."