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NICK just came out with its third-quarter earnings and I thought they were pretty good. Or rather, not nearly as horrible as they could have been. For the last three months of 2008, NICK earned $1,266,809 or 12 cents a share. That’s way down from the 22 cents the company made a year ago, but it’s an increase from the 8 cents it made in the second quarter. Bottom line, you’re not going out of business when you’re making money.

There are a few items to highlight. First, the company changed its financing option which altered how it accounts for its use of interest rate swaps. This means that swaps are now recorded on the income statement. For the third quarter, that’s about $1 million or 10 cents a share. As I see, this is merely an accounting issue and it doesn’t impact the company’s business.

Well, there is one important impact on NICK’s business and that is the company was able to cut its financing expenses in the third quarter. Interest expense dropped to $1.27 million from $1.43 million in the second quarter. Under the company’s line for “Average Cost of Borrowed Funds,” the decrease is from 5.45% to 4.87%. That’s good to see. Personally, I hate dealing in GAAP/ non-GAAP jazz, but I’ll do it if there’s a real benefit.

According to Peter L. Vosotas, Chairman and CEO, “the business climate remains challenging, auto sales are still well below historical levels and the employment outlook continues to weaken. We expect to see some seasonal improvement in our business during the fourth quarter but remain very cautious about the coming year, as we believe the recessionary pressures embedded in the economy will not subside in the near-term. During the last two quarters we have been tightening our credit underwriting guidelines in response to market conditions. We continue to evaluate markets in which we operate in and we do not anticipate any significant change from our branch-based methodology. Due to a combination of tighter underwriting guidelines and a significant slow down in auto sales during the three months ended December 31, 2008, we have reduced the size of our loan portfolio by approximately $2.6 million and also decreased our credit line outstanding by approximately $4.6 million.”

The key line to watch is provision for credit losses. That dropped from $5.1 million last quarter to 4.6 million this quarter. That’s high but moving in the right direction. As a percentage of “average finance receivables, net of unearned interest” credit losses dropped from 9.66% last quarter to 8.77% in the third quarter.

This was a decent quarter and if NICK keeps it up, they could be in great shape by next year.

Disclosure: Long NICK