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Press release from CNW Group

Carfinco Announces Record Year End Results

Monday, March 18, 2013

Carfinco Announces Record Year End Results19:36 EDT Monday, March 18, 2013TSX: CFNEDMONTON, March 18, 2013 /CNW/ - Carfinco Financial Group Inc. ("Carfinco" or the "Company") announces financial results for the fourth quarter and year ended December 31, 2012.2012 was another strong year for Carfinco. Net earnings for 2012 were $20.6 million, an increase of $3.5 million from $17.1 million for 2011.  The change in net earnings is mainly due to the increase in the finance receivables balance of $32.4 million in 2012 versus an increase of $25.2 million in 2011. Carfinco achieved its growth objectives with finance receivables increasing 21.5% during the year.Return on shareholders' equity for 2012 was 52.2%, compared to return on fund unit equity of 55.5% in 2011.HIGHLIGHTSEarnings per share for 2012 of 84 cents;Dividends to shareholders of 47 cents per share during 2012;Return on shareholder's equity for the year of 52.2%;Record loan originations of $149.6 million for 2012;Record principal balance of finance receivables at the end of 2012 of $201.5 million;31+ day delinquent accounts for the fourth quarter of 2012 were 3.2%.Revenues of $71.8 million for 2012, increased 20.5% from the revenues of $59.6 million for 2011.  Revenues of $19.2 million for the fourth quarter of 2012 represent an increase of 5.3% from the $18.2 million for the third quarter of 2012 and a 16.1% increase from the $16.5 million for the fourth quarter of 2011.Loan originations for 2012 were $149.6 million, a 28.6% increase from $116.3 million in 2011.  Loan originations of $40.1 million for the fourth quarter of 2012 was a 0.8% decrease from the $40.4 million in loan originations for the third quarter of 2012 and an increase of 24.4% from the $32.2 million in the fourth quarter of 2011.Finance receivables at the end of 2012 were $182.8 million, an increase of 21.5% from $150.5 million for 2011.For the fourth quarter of 2012 earnings were $5.0 million, versus $5.6 million in the third quarter of 2012 and $4.4 million in the fourth quarter of 2011.  Loan originations remained steady at $40.1 million in the fourth quarter, with the decline in vehicles being financed during the holiday season, versus $40.4 million in the third quarter. The annualized loss rate on the finance receivables increased 2.3% from 12.8% to 15.1% during the fourth quarter. Management continues to evaluate loan losses on a geographical basis and program level and has implemented modifications to our credit and collection policies where required.31+ days delinquent accounts for the fourth quarter of 2012 were 3.2% versus 2.7% for the third quarter of 2012 and 2.9% for the fourth quarter of 2011.On January 1, 2012, Carfinco Income Fund converted from an income fund to a public corporation with the name changed to Carfinco Financial Group Inc.  The shares were listed on the TSX on January 3, 2012 under the symbol "CFN."During 2012, Carfinco distributed $11.6 million to shareholders, or 47 cents per share, this represents 51.5% of distributable cash. Carfinco continues to maintain a dividend to its shareholders, currently set at 4.0 cents per share per month.Management continues to target growth of the finance receivables while focusing on maintaining acceptable levels of delinquencies and credit losses.About Carfinco Financial Group Inc.Carfinco focuses on providing consumer vehicle loans to borrowers unable to obtain financing through traditional lending sources.  A network of select independent and franchise dealerships offer Carfinco's payment plan to their customers who must, along with the vehicle, meet Carfinco's underwriting guidelines. The shares of the company trade on The Toronto Stock Exchange under the symbol "CFN".Caution Regarding Forward-Looking Statements - This news release contains certain forward-looking statements, including statements regarding the business and anticipated financial performance of the company.  These statements are subject to a number of risks and uncertainties.  Actual results may differ materially from results contemplated by the forward-looking statements.  When relying on forward-looking statements to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and should not place undue reliance on such forward-looking statements.Selected Annual Information and Key Financial Ratios ($000's for stated value, except percentages, shares (fund units) outstanding and per share (fund unit) amounts)  December 31, 2012 December 31, 2011     Total revenue $71,809$59,584Net earnings and comprehensive income $20,591$17,122Normalized earnings before taxes $27,883$23,335Earnings per share (fund unit) - basic and diluted $0.84$0.70Loan originations $149,613$116,322Shareholders' equity (Unitholders' equity) $43,968$34,960Shares (fund units) outstanding   24,645,230 24,645,230Book value per share (fund unit) $1.78$1.42Dividends per share (fund unit) $0.470$0.360Financial leverage ratio   2.97:1 3.15:1Return on shareholders' equity (unitholders' equity)   52.2% 55.5%Average portfolio yield   43.1% 43.2%Annualized loss rate   12.9% 12.9%Return on portfolio assets   12.4% 12.4%Pre-tax return on portfolio assets   16.6% 16.8%Average cost of borrowing   5.2% 5.2%Operating and other expense ratio on portfolio assets   8.6% 8.9%Consolidated Statements of Financial Position            December 31, December 31,       2012 2011          Assets        Finance receivable   $182,842,663$150,463,909 Allowance for credit losses   (9,250,000) (7,150,000)Finance receivables - net    173,592,663 143,313,909          Cash     459,498 937,994Inventories     313,014 239,453Other assets     1,172,998 1,167,268Equipment     550,261 344,736Deferred tax assets    453,340 264,702       2,949,111 2,954,153      $176,541,774$146,268,062          Liabilities        Bank credit facility   $126,787,937$102,675,941Accounts payable and accrued liabilities  697,672 1,205,892Taxes payable     2,363,670 5,106,667Deferred dealer obligation    2,076,396 2,068,762Interest rate swaps    484,665 250,317Deferred lease inducement    163,590 -       132,573,930 111,307,579          Shareholders' / Unitholders' Equity      Share capital     35,119,425 -Fund unit equity    - 35,119,425Retained earnings (deficit)    8,848,419 (158,942)       43,967,844 34,960,483      $176,541,774$146,268,062 Consolidated Statements of Earnings, and Comprehensive Income             December 31, December 31,For the years ended 2012 2011      Financial revenue     Interest revenue$66,193,874$55,663,538 Fee and servicing income 5,614,878 3,920,297 Total revenue 71,808,752 59,583,835      Financial expenses     Interest expense 5,917,276 5,052,664 Provision for credit losses 23,651,197 19,486,096 Loss (gain) on interest rate swaps 234,348 (298,279) Total financial expense 29,802,821 24,240,481Net financial income before operating and other expenses and taxes 42,005,931 35,343,354      Operating and other expenses     General and administrative 14,182,284 11,506,221 Depreciation of equipment 175,451 203,954 Conversion costs 35,789 652,845 Gain on unit based payment obligation - (143,604) Total operating and other expenses 14,393,524 12,219,416      Earnings before taxes 27,612,407 23,123,938      Taxes     Current 7,210,426 5,106,667 Deferred (recovery) (188,638) 895,651 Total taxes 7,021,788 6,002,318      Net earnings and comprehensive income$20,590,619$17,121,620      Earnings per share / fund unit     Basic and diluted$0.84$0.70 Consolidated Statements of Changes in Equity       Retained          earnings     Fund unit equity Share capital (deficit) Total          Balance, January 1, 2011$35,119,425$-$(8,416,613)$26,702,812 Net earnings - - 17,121,620 17,121,620 Cash distributions on fund unit equity - - (8,863,949) (8,863,949)Balance, December 31, 2011 35,119,425 - (158,942) 34,960,483 Conversion under plan of            arrangement  (35,119,425) 35,119,425 - - Net earnings - - 20,590,619 20,590,619 Cash dividends on shares - -   (11,583,258)   (11,583,258)Balance, December 31, 2012$-$35,119,425$8,848,419$43,967,844 Consolidated Statements of Cash Flows                 December 31, December 31,For the years ended  2012 2011          Increase (decrease) in cash                 Operating activities         Net earnings   $20,590,619$17,121,620 Non-cash items included in net earnings  (29,193,814) (25,360,389) Changes in operating assets and liabilities  (34,327,000) (26,164,461) Interest received    46,147,154 38,989,139 Interest paid    (5,729,732) (4,887,279) Income taxes paid    (9,953,422) -Net cash used in operating activities   (12,466,195) (301,370)          Investing activities         Purchase of equipment   (380,976) (196,283)Net cash used in investing activities   (380,976) (196,283)          Financing activities         Advances on bank credit facility   32,290,954 14,956,601 Repayments on bank credit facility  (8,050,000) (5,400,000) Deferred transaction costs   (289,021) (163,293) Cash dividends to shareholders   (11,583,258) - Fund unit cash distributions   - (8,863,949) Proceeds on exercise of fund unit options  - 66,668Net cash provided by financing activities   12,368,675 596,027          Net (decrease) increase in cash    (478,496) 98,374Cash, beginning of year    937,994 839,620Cash, end of year    $459,498$937,994  SOURCE: Carfinco Financial Group Inc.For further information: Mr. Tracy A. Graf CEO & Director of Carfinco Financial Group Inc. Telephone: 1-888-486-4356 Facsimile: 1-888-486-7456 E-mail: tracy.graf@carfinco.com Web site: www.carfinco.com The Howard Group Inc. Jeff Walker Investor Relations Telephone: 1-888-221-0915 E-mail: Info@howardgroupinc.com Web site:  www.howardgroupinc.com