Financial Federal Corp. (FIF), Tuesday reported a decline in profit for the first quarter of fiscal 2010, reflecting lower net finance income and higher provisions. Adjusted earnings, however, topped analysts' consensus by a penny.
The New York-based independent financial services company's net income for the first quarter declined 8% to $10.30 million or $0.41 per share from $11.08 million or $0.44 per share in the previous year. Results for the quarter include after-tax debt retirement gain of $1.50 million.
On an adjusted basis, net income was $8.80 million or $0.35 per share, compared to $11.68 million or $0.47 per share a year ago.
On average, four analysts polled by Thomson Reuters expected the company to report earnings of $0.34 per share for the quarter. Analysts' estimates typically exclude special items.
Net finance income before provision for credit losses for the quarter was $24.47 million, down from $26.71 million a year ago. Provision for credit losses increased to $2.50 million from $1.40 million last year due to higher levels of net charge-offs, delinquencies and non-performing assets.
Finance income for the quarter declined to $33.14 million from $42.99 million last year. Interest expense declined to $8.67 million from $16.29 million in the year-ago period.
Net interest margin improved to 6.56% in the first quarter from 5.52% a year earlier.
Salaries and other expenses increased 8% to $7.72 million from $7.17 million in the previous year.
Finance receivables originated during the quarter were $64 million, compared to $225 million in the previous year. Finance receivables outstanding decreased to $1.41 billion at October 31, 2009 from $1.54 billion at July 31, 2009.
Further, the company noted that it has entered into an agreement and plan of merger with People's United Financial, Inc., the holding company for People's United Bank, to be acquired by People's. The merger is expected to close in the third quarter of fiscal 2010 upon shareholders' approval and other customary closing conditions. The company added that its stockholders will receive $11.27 in cash and one share of People's common stock for each share under the terms of the merger agreement.
FIF closed Tuesday's regular trading at $26.98, down 0.01 or 0.04%, on a volume of 217K shares on the NYSE.
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