Coming off of what the president and chief executive officer described as a “transitional year,” Nicholas Financial opened its 2020 fiscal year with positive net income after finishing its 2019 fiscal year with a loss.

The publicly-traded specialty consumer finance company operating branch locations in both the Southeast and Midwest, recently announced its net income for the three months that ended June 30 came in at $0.6 million. Nicholas Financial generated that figure even though revenue decreased 11.3% to $16.6 million.

Still, the metrics are an improvement from the close of its 2019 fiscal year that included a net loss for the entire reporting period of $3.6 million.

“We are pleased to be able to report positive earnings in our first quarter,” Nicholas Financial president and CEO Doug Marohn said in a news release. “Although it is only one quarter, the results indicate that the strategy and tactics deployed during fiscal 2019 are starting to pay dividends in fiscal 2020.

“Our core operations were profitable independent of the Metrolina acquisition, and that acquisition definitely helped to increase our realized net earnings for the quarter,” Marohn continued.

Back at the end of April, Nicholas Financial announced that the company acquired substantially all of the assets of ML Credit Group, which does business as Metrolina Credit Co. and provides financing to consumers by direct loans and through purchases of retail installment sales contracts originated by dealers in North Carolina and South Carolina.

“We are very pleased to announce the company’s acquisition of Metrolina. Metrolina’s local focus in North Carolina and South Carolina nicely complements our existing automobile financing program,” Marohn said at the time of the acquisition.

“Having been the CEO of Metrolina Credit Company for four years from 2014 through 2017, I am very versed in their operations, personnel and culture. We are excited to be consolidating our two companies that are so well aligned in many aspects,” continued Marohn, who noted that the transaction brought scale to its existing operations in the Carolinas by adding more than 3,000 accounts and more than $22 million in net receivables.

Turning back to the Q1 results, Marohn emphasized the strategy changes Nicholas Financial has implemented. Marohn previously explained that the company returned to a 120-day charge off policy that includes Chapter 13 bankrupt accounts, “which is more in line with industry standard.” The company also trimmed its market footprint by closing branch locations in Texas and Virginia.

And the results?

“More importantly, our portfolio metrics continue to improve and will be the driving force behind future earnings,” Marohn said. “We continue to book loans with higher rate, increased discount, lesser advance and shortened term. Our return to disciplined underwriting has had a positive impact on our portfolio yield as our gross portfolio yield has increased to 28.3% compared to 25.3% in the prior year first quarter.

“The return to a 120-day charge-off policy along with adjustments to our servicing approach has resulted in improved performance, too,” he continued. “Our 30-day delinquency is down approximately 100 basis points with most of that coming from a reduction in the 60 days past due category.”

Furthermore, Nicholas Financial reported that it’s gaining traction beyond the paper its buying from its network of dealerships.

“We are also starting to see our direct loan product contributing to our top and bottom lines. Our direct loan portfolio has now grown to over $8 million and performs better than our indirect portfolio in terms of delinquency and losses,” Marohn said.

Currently Nicholas Financial offers direct loans in Florida, Georgia, North Carolina and Ohio, and the company is in the process of obtaining licenses in the remaining states where it operates.

“As of July, we obtained licensing in Tennessee, and we intend to initiate direct consumer lending there during the second quarter of fiscal 2020. Several other states are in the final stages of licensing and we intend to have all states licensed and operational this calendar year,” Marohn added.