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Summary of Significant Accounting Policies | 12 Months Ended
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Mar. 31, 2014
Accounting Policies [Abstract] |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Consolidation The consolidated financial statements include the accounts of Nicholas Financial – Canada and its wholly owned subsidiaries, NDS and NFI, collectively referred to as (the “Company”). All intercompany transactions and balances have been eliminated. Dividends The following cash dividends were declared during fiscal years ended March 31, 2014, 2013 and 2012.
Fiscal Year |  | Date Declared |  | Record Date |  | Date Paid |  | Amount of Dividend
|  | May 7, 2013 |  | June 21, 2013 |  | June 28, 2013 |  | $0.12
|  | August 13, 2013 |  | September 20, 2013 |  | September 27, 2013 |  | 0.12
2014 |  |  |  |  |  |  |  | $0.24
|  | May 2, 2012 |  | May 30, 2012 |  | June 6, 2012 |  | $0.10
|  | August 8, 2012 |  | August 30, 2012 |  | September 6, 2012 |  | 0.12
|  | November 9, 2012 |  | November 30, 2012 |  | December 6, 2012 |  | 0.12
|  | December 11, 2012 |  | December 21, 2012 |  | December 28, 2012 |  | 2.00
|  | February 19, 2013 |  | March 22, 2013 |  | March 29, 2013 |  | 0.12
2013 |  |  |  |  |  |  |  | $2.46
|  | August 30, 2011 |  | September 13, 2011 |  | September 20, 2011 |  | $0.10
|  | October 27, 2011 |  | December 13, 2011 |  | December 20, 2011 |  | 0.10
|  | January 31, 2012 |  | March 13, 2012 |  | March 20, 2012 |  | 0.10
2012 |  |  |  |  |  |  |  | $0.30
Payment of cash dividends results in a 5% withholding tax payable by the Company under the Canada-United States Income Tax Convention which is included in earnings under the caption of dividend tax. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses on finance receivables and the fair value of interest rate swap agreements. Finance Receivables Finance receivables are recorded at cost, net of unearned interest, unearned dealer discounts and the allowance for credit losses. The amount of unearned interest, dealer discounts and allowance for credit losses as of March 31, 2014 and March 31, 2013 are approximately $155,001,000 and $145,896,000, respectively (See Note 3). Allowance for Credit Losses The allowance for credit losses is increased by charges against earnings and decreased by charge-offs (net of recoveries). The Company aggregates Contracts into static pools consisting of Contracts purchased during a three-month period for each branch location as management considers these pools to have similar risk characteristics. Management’s periodic evaluation of the adequacy of the allowance is based on the Company’s past loan experience, known and inherent risks in the portfolio, adverse situations that may affect the borrowers’ ability to repay, the estimated value of any underlying collateral, and current economic conditions. As conditions change, the Company’s level of provisioning and allowance may change as well. Assets Held for Resale Assets held for resale are stated at net realizable value and consist primarily of automobiles that have been repossessed by the Company and are awaiting final disposition. Costs associated with repossession, transport and auction preparation expenses are reported under operating expenses in the period in which they are incurred. Property and Equipment Property and equipment are recorded at cost, net of accumulated depreciation. Expenditures for repairs and maintenance are charged to expense as incurred. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the assets as follows:
Automobiles |  | 3 years
Equipment |  | 5 years
Furniture and fixtures |  | 7 years
Leasehold improvements |  | Lesser of lease term or useful life (generally 6 -7 years)
Drafts Payable Drafts payable represent checks disbursed for loan purchases which have not yet been funded. Amounts generally clear within two business days of period end and then increase the line of credit or reduce cash. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases along with operating loss and tax credit carryforwards, if any. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date. The Company recognizes tax benefits from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from any such position would be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. It is the Company’s policy to recognize interest and penalties accrued on any uncertain tax benefits as a component of income tax expense. The Company does not have any accrued interest or penalties associated with any unrecognized tax benefits, nor has the Company recognized any related interest or penalties during the three years ended March 31, 2014. The Company files income tax returns in the U.S. Federal jurisdiction and various State jurisdictions. The Company is no longer subject to U.S. Federal tax examinations for years before 2011. State jurisdictions that remain subject to examination range from 2009 to 2013. The Company does not believe there will be any material changes in our unrecognized tax positions over the next 12 months. Revenue Recognition Interest income on finance receivables is recognized using the interest method. Accrual of interest income on finance receivables is suspended when a loan is contractually delinquent for 60 days or more or the collateral is repossessed, whichever is earlier, or when the account is Chapter 13 bankrupt. Chapter 13 bankrupt accounts are accounted for under the cost-recovery method. Interest income on Chapter 13 bankrupt accounts does not resume until all principal amounts are recovered (see Note 3). A dealer discount represents the difference between the finance receivable, net of unearned interest, of a Contract, and the amount of money the Company actually pays for the Contract. The discount negotiated by the Company is a function of the lender, the wholesale value of the vehicle, and competition in any given market. In making decisions regarding the purchase of a particular Contract the Company considers the following factors related to the borrower: place and length of residence; current and prior job status; history in making installment payments for automobiles; current income; and credit history. In addition, the Company examines its prior experience with Contracts purchased from the dealer from which the Company is purchasing the Contract, and the value of the automobile in relation to the purchase price and the term of the Contract. The dealer discount is amortized as an adjustment to yield using the interest method over the life of the loan. The average dealer discount associated with new volume for the fiscal years ended March 31, 2014, 2013, and 2012 was 8.44%, 8.54%, and 9.23%, respectively. The amount of future unearned income is computed as the product of the Contract rate, the Contract term and the Contract amount. Deferred revenues consist primarily of commissions received from the sale of ancillary products. These products include automobile warranties, roadside assistance programs, accident and health insurance, credit life insurance and forced placed automobile insurance. These commissions are amortized over the life of the contract using the interest method. The Company’s net costs for originating direct loans are recognized as an adjustment to the yield and are amortized over the life of the loan using the interest method. Sales relate principally to telephone support agreements and the sale of business forms to the Company’s customer base. The aforementioned sales of NDS represent less than 1% of the Company’s consolidated revenues. Earnings Per Share Basic earnings per share is calculated by dividing the reported net income for the period by the weighted average number of shares of common stock outstanding. Diluted earnings per share includes the effect of dilutive options and other share awards. Basic and diluted earnings per share have been computed as follows:
|  | Fiscal Year ended March 31, |
|  | 2014 |  |  | 2013 |  |  | 2012 |
Numerator for earnings per share – net income |  | $ | 16,703,352 |  |  | $ | 19,940,946 |  |  | $ | 22,221,759 |
Denominator: |  |  |  |  |  |  |  |  |  |  |  |
Denominator for basic earnings per share – weighted average shares |  |  | 12,096,000 |  |  |  | 11,977,174 |  |  |  | 11,747,160 |
Effect of dilutive securities: |  |  |  |  |  |  |  |  |  |  |  |
Stock options and other share awards |  |  | 229,000 |  |  |  | 241,242 |  |  |  | 285,971 |
Denominator for diluted earnings per share |  |  | 12,325,000 |  |  |  | 12,218,416 |  |  |  | 12,033,131 |
Earnings per share – basic |  | $ | 1.38 |  |  | $ | 1.66 |  |  | $ | 1.89 |
Earnings per share – diluted |  | $ | 1.36 |  |  | $ | 1.63 |  |  | $ | 1.85 |
Diluted earnings per share does not include the effect of certain stock options as their impact would be anti-dilutive. Approximately 10,000, 120,200 and 53,500 stock options were not included in the computation of diluted earnings per share for the years ended March 31, 2014, 2013 and 2012 respectively, because their effect would have been anti-dilutive. Share-Based Payments The grant date fair value of share awards is recognized in earnings over the requisite service period (presumptively the vesting period). The Company estimates the fair value of option awards using the Black-Scholes option pricing model. The risk-free interest rate is based upon a U.S. Treasury instrument with a life that is similar to the expected term of the options. Expected volatility is based upon the historical volatility for the previous period equal to the expected term of the options. The expected term is based upon the average life of previously issued options. The expected dividend yield is based upon the current yield on date of grant. The fair value of non-vested restricted and performance shares are measured at the market price of a share on a grant date. The pool of excess tax benefits available to absorb future tax deficiencies is based on increases to shareholders’ equity related to tax benefits from share-based compensation, combined with the tax on the cumulative incremental compensation costs previously included in pro forma net income disclosures as if the Company had applied the fair-value method to all awards. Fair Value Measurements The Company measures specific assets and liabilities at fair value, which is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When applicable, the Company utilizes market data or assumptions that market participants would use in pricing the asset or liability under a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs about which little or no market data exists, therefore requiring an entity to develop its own assumptions. Financial Instruments and Concentrations The Company’s financial instruments consist of cash, finance receivables, accrued interest, line of credit, interest rate swap agreements and accounts payable. Financial instruments that are exposed to concentrations of credit risk are primarily finance receivables and cash. The Company operates in fifteen states through its sixty-five branch locations. Florida represents 31% of the finance receivables total as of March 31, 2014. Ohio represents 14%, Georgia represents 10% and North Carolina represents 9% of the finance receivables total as of March 31, 2014. Of the remaining eleven states, no one state represents more than 5% of the total finance receivables. The Company provides credit during the normal course of business and performs ongoing credit evaluations of its customers. The Company maintains reserves for potential credit losses which, when realized, have been within the range of management’s expectations. The Company perfects a primary security interest in all vehicles financed as a form of collateral. The combined account balances the Company maintains at financial institutions typically exceed federally insured limits, and there is a concentration of credit risk related to accounts on deposit in excess of federally insured limits. The Company has not experienced any losses in such accounts and believes this risk of loss is not significant. Interest Rate Swap Agreements Interest rate swap agreements were reported as either assets or liabilities in the consolidated balance sheet at fair value. Interest rate swap agreements were not designated as cash-flow hedges, and accordingly the changes in the fair value are recorded in earnings. The Company does not use interest rate swaps for speculative purposes. See Note 6. Statements of Cash Flows Cash paid for income taxes for the years ended March 31, 2014, 2013 and 2012 was approximately $10,837,000, $11,273,000 and $13,764,000, respectively. Cash paid for interest for the years ended March 31, 2014, 2013 and 2012 was approximately $5,673,000, $5,043,000 and $4,878,000, respectively. Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Summary and Amendments That Create Revenue from Contracts with Customers (Topic 660) and Other Assets and Deferred Costs-Contracts with Customer (Subtopic 340-40). ASU 2014-09 sets new guidance to clarify principles for recognizing revenue and develop a common revenue standard with the International Accounting Standards Board. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. The Company is currently evaluating the effect of adopting ASU No. 2014-09 on its consolidated financial statements. The Company does not believe there are any other recently issued accounting standards that have not yet been adopted that will have a material impact on the Company’s consolidated financial statements.

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