RED DEER, Alberta — Canadian auto lender RIFCO said its fiscal year that ended March 31 marked the fourth straight time the company has enjoyed annual profits, though this net income was down from the prior-year period. 

More specifically, the company reported net income of $308,962 for the fiscal year, which is 78.2 percent softer compared with $1.42 million in net income the prior year. 

RIFCO saw a 24.9-percent year-over-year dip in loan originations, which totaled $28.79 million. The company posted an 11.5-percent increase in total managed assets, which climbed to $56.38 million. 

Revenue was $11.29 million, down 17 percent year-over-year. 

Moving along, RIFCO saw $3.03 million in net financial income prior to operating expenses, which is down from $4.75 million in the year-ago period. 

The company incurred $2.63 million in operating expenses, versus $2.58 million the previous year. 

And despite the continued sluggishness in Canada's economy, RIFCO said it remained within its published targets regarding credit performance. 

The company's frequency of defaults was 8.9 percent, a slight uptick compared with 8.04 percent a year ago. 

When the fiscal year concluded, loan delinquency stood at 4.55 percent, a 0.49-percentage-point dip from the beginning of the year, when it was 5.04 percent. 

At its highest point of the fiscal year, the delinquency rate was 5.76 percent. 

Next up, RIFCO talked about its average loan loss rate, which was 5.9 percent. A year ago, it was 5.12 percent. 

"The company is pleased that the loss ratio was kept below the midpoint of the year's target loss range of 5.5-6.5 percent. Over the last year RIFCO staff and management redoubled their efforts in both the credit adjudication and payment collections functions in order to maintain these credit results in light of the challenging economic circumstances," officials noted. 

"Over the past few years, there has been a reduction in the number of auto lending competitors in Canada. RIFCO has been able to incrementally improve its risk adjusted loan pricing," they continued. "This has resulted in increasing the average portfolio yield on all managed finance receivables in the year to 19.86 percent from 19.31 percent in the prior year. 

"RIFCO's pricing changes do impact its loan volumes, closing rates, credit quality and efficiency. We continue to carefully weigh our desired loan originations volumes in light of cost of funds in order to optimize profitability," the company added. 

Continuing on, officials examined the state of the company in further detail. They noted that more than $144 million in loans has been granted by RIFCO, which has been granting non-traditional loans for the last eight years. 

"The economic environment over the past 24 months has acted as a real life 'stress test' for these credit assumptions," they pointed out. "While granting and collecting loans in this year has been more challenging than prior years, the credit model has proved to be sound." 

Next up, RIFCO talked about the funding initiatives it undertook in the last year that it believes will give the company a boost in upcoming quarters. 

On the list RIFCO provided were the following: 

—RIFCO said it has no funding interruptions in its most recent fiscal year.

—RIFCO renewed the existing $30 million securitization facility it had with Securcor Trust in August.

—Then the company's available securitization facilities were boosted to $60 million in September when it signed a $30 million securitization facility with a schedule 1 Canadian Chartered Bank.

—And during the next month when it completed the annual renewal of its senior credit facility with BMO, the limit of this facility was bumped up $9.5 million, a $2 million boost. RIFCO said the terms, rates, limits and security through the renewal were similar to what was in the prior facility. 

"RIFCO is well positioned to embrace a period of high growth. The company is now seeing improved funding costs, improved access to capital, and improving credit performance from existing loans," officials argued.

"This is being combined with a marketplace that has seen half of the direct competitors cease operations over the past few years. The result is a unique growth opportunity for RIFCO," they added. 

Continuing on, the company indicated that among its goals for upcoming years are "aggressive" loan origination expansion between 50 percent and 100 percent. And with greater demand for financing from dealers, RIFCO also boosted its sales staff. 

"Aggressive loan origination growth rates of 50 to 100 percent are targeted for the coming years," executives shared. "The company has just completed doubling its sales force in order to respond to requests, by dealers, for RIFCO financing. 

"RIFCO's employees in all departments will be required to continue their exceptional performance in order to support the rapid growth in assets under management. Recruitment and training of new staff and premise renovations are currently underway," they continued.  

"As RIFCO grows its loan origination volumes and servicing capabilities, the intrinsic value of the company's lending platform is being magnified. We believe that the value of the lending platform will be unlocked as increasing amounts of reasonably priced capital is deployed to generate high yielding auto loans with very predictable performance," the company stated. 

RIFCO Announces New Facility 

On the subject of its funding initiatives, RIFCO discussed earlier this week its new annual facility with an Alberta Regional Credit Union. The facility is for $10 million and it is meant for securitizing non-traditional auto loan receivables. 

This funding is top of what RIFCO receives from two aforementioned securitization sources (Securcor Trust and a schedule 1 Canadian Chartered Bank). 

"A third funding source improves the company's overall access to funds. It is expected that multiple sources will ultimately provide for a lower cost of funds and stronger value creation for shareholders. Access to increasing amounts of low cost capital is important in fueling the company's aggressive growth aspirations," officials explained. 

"This ARCU has indicated its intent to seek a syndicate with other Alberta Credit Unions," they added. "The ARCU has been granted limited rights to pursue such a syndicate with the goal of achieving a larger facility for RIFCO."