NAL Financial Group Inc. blamed negative trends in subprime auto finance for lower first-quarter earnings, which narrowed to only 2 cents per share, or $158,000, compared with 24 cents, or $1.8 million, a year ago.
'The industry is experiencing difficult times. We remain, however, optimistic about the prospects of our business,' said Robert Bartolini in the quarterly earnings report. Bartolini is chairman and CEO of the Fort Lauderdale, Fla., company, as well as the largest shareholder.
Like some other subprime lenders, NAL said it recently:
Raised the interest rate it had to pay investors who bought its asset-backed securities.
Investors are said to be jittery because of several high-profile disasters, such as Dallas-based Jayhawk Acceptance Corp., which filed for Chapter 11 protection under the U.S. Bankruptcy Code in February.
Tightened its policies on new contracts and increased provisions for losses.
Bartolini said NAL would deliberately slow down its acquisitions of new contracts in the second quarter.
The company bought $99.7 million worth of contracts in the quarter ended March 31, compared with $57.2 million in the year-ago quarter.
Sped up repossessions.
To cut losses when repossessed units are resold, the company also intends to have cars repossessed more quickly - possibly as soon as 30 days after a loan is past due, which would be a month earlier than current practice in the industry.