Aames Financial Corporation Reports Fiscal 2002 and Fourth Quarter Results; Release of Wholesale Web-Based Automated Underwriting Engine.Business Editors LOS LOS Length of stay, see there ANGELES--(BUSINESS WIRE)--Sept. 27, 2002 Aames Aames is a surname and may refer to:
This page or section lists people with the surname Aames. Financial Corporation (OTCBB OTCBB See OTC Bulletin Board (OTCBB). : AMSF AMSF Australian Motor Sport Foundation AMSF Area Maintenance and Supply Facility (US Army) AMSF Army Morale Support Fund AMSF Area Maintenance Support Facility AMSF Army Maintenance Supply Facilities AMSF Alkali Metal Storage Facility ), a leader in subprime home equity lending, today reported net income of $4.5 million for the year ended June June: see month. 30, 2002, compared to a net loss of $30.5 million during the year ended June 30, 2001. Results of operations during the year ended June 30, 2002 and 2001 included residual interest Residual Interest A type of interest payment received by investors in a real estate mortgage investment conduit (REMIC). Notes: Investors receive interest payments after all required regular interest has been paid to investors within higher priority tranches. write-downs of $27.0 million and $33.6 million, respectively. After the convertible preferred stock Convertible Preferred Stock Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as "convertible preferred shares". dividend accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. of $13.8 million and $13.9 million for the years ended June 30, 2002 and 2001, respectively, the net loss to common shareholders was $9.2 million and $44.4 million, respectively. Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. net loss per common share was $1.45 for the year ended June 30, 2002 compared to a net loss per common share of $7.11 a year ago. A. Jay Meyerson Meyerson can refer to:
The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. ." Meyerson continued, "Despite these results, the Company experienced write-downs to its residual interests during the fiscal year, which negatively impacted the Company's earnings and net worth." Results for the three months ended June 30, 2002 The Company reported net income of $186,000 for the three months ended June 30, 2002, compared to a net loss of $988,000 during the same quarter a year ago. During the three months ended June 30, 2002 and 2001, the net loss to common shareholders was $607,000 and $3.2 million, respectively. The net loss per common share during the three months ended June 30, 2002 and 2001 was $0.04 and $0.51, respectively. Summary of Financial Results for the Year Ended June 30, 2002 Total revenues During the year ended June 30, 2002 total revenue was $220.1 million, up $31.4 million from $188.7 million of total revenue reported a year ago. Total revenue during the year ended June 30, 2002 includes $27.0 million of previously announced write-downs to the Company's residual interests. The write-downs resulted from the changes made by the Company to its credit loss assumptions used in valuing its residual interests in light of the Company's assessment of higher than expected credit loss and delinquency delinquency Criminal behaviour carried out by a juvenile. Young males make up the bulk of the delinquent population (about 80% in the U.S.) in all countries in which the behaviour is reported. experience of certain loans in the Company's securitized securitized Of, related to, or being debt securities that are secured with assets. For example, mortgage purchase bonds are secured by mortgages that have been purchased with the bond issue's proceeds. trusts. Excluding the residual interest write-downs of $27.0 million and $33.6 million during the years ended June 30, 2002 and 2001, respectively, total revenue during the year ended June 30, 2002 was $247.1 million, an increase of $24.8 million, or 11.2% from total revenue of $222.3 million during the year ended June 30, 2001. The increase in total revenues was primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to a $22.1 million increase in gain on sale of loans during the year ended June 30, 2002 to $95.5 million over the $73.4 million in gain on sale of loans reported during the year ended June 30, 2001. The increase in gain on sale is attributable to the increase during the year ended June 30, 2002 in the total amount of loans sold of $861.1 million, or 36.9%, to $3.2 billion over the $2.3 billion of total loans sold during the year ended June 30, 2001. The increase in total revenues also resulted from a $8.6 million increase in origination fees A charge imposed by a lending institution or a bank for the service of processing a loan. For example, a bank might charge an individual who has applied for a student loan an origination fee of one percent for processing the application and granting the loan. to $56.0 million from $47.4 million a year ago resulting from the $870.9 million increase in loan production during the year ended June 30, 2002 over production levels a year earlier. Partially offsetting the increases in gain on sale and origination fees were declines in interest income and loan servicing Loan servicing is the process by which a mortgage bank or subservicing firm collects the timely payment of interest and principal from borrowers. The level of service varies depending on the type loan and the terms negotiated between the firm and the investor seeking their services. of $3.3 million and $2.5 million to $83.2 million and $12.5 million, respectively, from the $86.5 million and $15.0 million, respectively, reported during the year ended June 30, 2001. The decrease in interest income was due primarily to the decline in discount accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the earned on lower average residual interest balances during the year ended June 30, 2002 compared to the year ended June 30, 2001. To a lesser extent, the decline in interest income was due to the declines in the rates of interest earned on the Company's loans held for sale in light of the current mortgage interest rate environment despite having higher average balances of loans held for sale during fiscal 2002. The decline in loan servicing revenue during the year ended June 30, 2002 was driven by the decrease in the Company's portfolio of mortgage loans in securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. trusts serviced in-house In-house In the context of general equities, keeping an activity within the firm. For example, rather than go to the marketplace and sell a security for a client to anyone, an attempt is made to find a buyer to complete the transaction with the firm. during fiscal 2002 from a year ago. The Company reported total revenue of $54.8 million during the three months ended June 30, 2002 compared to total revenue of $53.1 million during the same quarter a year ago. Total expenses Total expenses during the year ended June 30, 2002 declined $4.9 million, or 2.3%, to $212.5 million from $217.4 million of total expenses reported during the year ended June 30, 2001. The decrease in total expenses was attributable to declines of $10.0 million and $13.5 million in general and administrative and interest expense, respectively, from levels reported during the year ended June 30, 2001. General and administrative expenses declined during the year ended June 30, 2002 from a year ago due primarily to decreases in occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy , communications, legal and professional expenses. Interest expense declined during the year ended June 30, 2002 from the year ended June 30, 2001 due to lower interest costs on the Company's revolving warehouse and repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. facilities despite increased average borrowings under the facilities during fiscal 2002 when compared to such rates and average borrowings outstanding during fiscal 2001. Partially offsetting these declines were increases in personnel expense and production expense of $16.4 million and $2.3 million, respectively, during the year ended June 30, 2002 over levels reported during the year ended June 30, 2001. The increases in personnel expense during the year ended June 30, 2002 from a year ago was due primarily to increased compensation expenses incurred as a consequence of the acquisition of the Company's second National Loan Center, coupled with incentive compensation relative to the increase in the Company's total loan production and, to a lesser extent, increases in medical and other benefit costs during fiscal 2002 over those incurred a year ago. The increase in production expense during the year ended June 30, 2002 over a year ago is attributable to the increase during fiscal 2002 in the Company's total loan production from loan origination The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. levels reported a year ago. Total expenses during the three months ended June 30, 2002 were $53.9 million compared to $51.7 million during the comparable three month period during 2001. Total loan production During the year ended June 30, 2002, the Company's total mortgage loan production increased $870.9 million, or 36.7%, to $3.2 billion over the $2.3 billion of mortgage loans originated during the year ended June 30, 2001. The increase in the Company's loan origination volumes during the year ended June 30, 2002 over those reported during the year ended June 30, 2001 were due, in part, to a generally more favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. interest rate environment in place during 2002 which has contributed to increased financing activities in markets where the Company operates. Retail Production The Company's total retail loan production was $1.6 billion, up $429.3 million, or 36.4%, over $1.2 billion of total retail loan production reported during the year ended June 30, 2001. Loan origination through the Company's traditional retail branch network increased $175.5 million or 15.9% to $1.3 billion, over $1.1 billion a year ago. Mortgage loan production through the National Loan Centers increased $253.8 million to $329.7 million during the year ended June 30, 2002 over $75.9 million a year ago. Broker Production The Company's total broker loan production during the year ended June 30, 2002 was $1.6 billion, an increase of $441.6 million, or 37.1%, over the $1.2 billion during the year ended June 30, 2001. Of the total broker loan production during the year ended June 30, 2002, mortgage loan origination volume through the Company's traditional regional broker office network was $1.5 billion, up $374.5 million, or 33.0% from the $1.1 billion of mortgage loans produced through the traditional broker network during the year ended June 30, 2001. Broker loan production originated through telemarketing telemarketing, the practice of selling goods or services to customers by means of the telephone or of surveying consumer preferences in telephone conversations. and the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the was $122.4 million during the year ended June 30, 2002 compared to $55.3 million a year ago. Loan dispositions and loan servicing During the year ended June 30, 2002, the Company sold and securitized a total of $3.2 billion of mortgage loans which includes loans pooled and sold in securitizations of $0.6 billion and whole loan sales for cash of $2.6 billion. In comparison, during the year ended June 30, 2001 the Company securitized and sold of an aggregate of $2.3 billion of mortgage loans comprised of loans pooled and sold in securitizations of $1.2 million and $1.1 billion of whole loan sales for cash. "As the result of higher valuations, the Company chose to sell most of its mortgage loans in whole loan sales, and completed only two securitizations during the fiscal year ended June 30, 2001," said Ronald J. Nicolas, Jr., Aames' Chief Financial Officer. Nicolas explained that, "The Company closely monitors market prices for its loan products and modifies its loan disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of strategy to capture these higher values." As a means to maximize profitability and cash flows during the year ended June 30, 2002, the Company sold all of the residual interests created in its securitizations for $16.4 million in cash to an affiliate Affiliate Relationship between two companies when one company owns substantial interest, but less than a majority of the voting stock of another company, or when two companies are both subsidiaries of a third company. See: Subsidiaries, parent company. . In addition, the Company sold for cash all of the servicing rights in its securitizations to unaffiliated loan servicing companies. All of the Company's whole loan sales were done on a servicing released basis. At June 30, 2002 and 2001, the Company's total servicing portfolio was $2.3 billion and $2.7 billion, respectively, of which $2.2 billion and $2.5 billion, respectively, or 94.6% and 93.2%, respectively, was serviced in-house. The Company's portfolio of mortgage loans in securitization trusts serviced in-house declined to $1.2 billion at June 30, 2002 from $1.8 billion at June 30, 2001. In-house servicing at June 30, 2002 and 2001 also includes $991.0 million and $722.0 million of loans serviced on an interim basis. Loans serviced on an interim basis includes loans sold where servicing has not yet been transferred and loans held for sale. The decline in the Company's portfolio of mortgage loans in securitization trusts serviced in-house at June 30, 2002 from a year ago is due to normal amortization and prepayments Prepayments Payments made in excess of scheduled mortgage principal repayments. , and the disposition of all loans during the year ended June 30, 2002 on a servicing released basis. Release of Web-Based Automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. Underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. Engine for the Company's Wholesale Division The Company successfully released a comprehensive web-based automated underwriting engine at www.aamesdirect.com, for wholesale subprime mortgage transactions. This new engine expands the web-based service for mortgage brokers to include all of the Company's loan products. Brokers utilizing the engine are able to receive timely automated approvals specifically for their loan requests, which approvals include conditions, fees and pricing. Neil J. Notkin, Executive Vice President, Wholesale Sales and Marketing explained that, "With the automated underwriting engine, brokers can now enjoy a sophisticated online decision that until recently was only available for their prime credit customers." Aames Financial Corporation is a leading home equity lender LENDER, contracts. He from whom a thing is borrowed. 2. The contract of loan confers rights, and imposes duties on the lender. 1. The lender has the right to revoke the loan at his mere pleasure; 9 Cowen, R. 687; 8 Johns. Rep. 432; 1 T. R. 480; 2 Campb. Rep. , and at June 30, 2002 operated 98 retail Aames Home Loan branches, four wholesale loan centers and two National Loan Centers throughout the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . For more information please contact Mr. Nicolas in the Company's Investor Relations Investor relations The process by which the corporation communicates with its investors. Department at (323) 210-5311 or at info@aamesfinancial.com via email. Additional information may also be obtained by visiting www.aames.net, the Company's website. From time to time the Company may publish forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc such matters as anticipated financial performance, business prospects and similar matters. The Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 provides a safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. for forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that a variety of factors could cause the Company's actual results and experience to differ materially from the anticipated results or other expectations expressed in the Company's forward-looking statements. The risks and uncertainties that may affect the operations, performance and results of the Company's business include the following: negative cash flow and continued access to outside sources of cash to fund operations; dependence on funding sources; third party rights to terminate Terminate (terminat.exe) was a shareware modem terminal and host program for MS-DOS and compatible operating systems developed from the early to the late 1990s by the Dane Bo Bendtsen. The last release (5. mortgage servicing Mortgage servicing The collection of monthly payments and penalties, record keeping, payment of insurance and taxes, and possible settlement of default , involved with a mortgage loan. ; high delinquencies and losses in the Company's securitization trusts; prepayment risk Prepayment Risk The uncertainty related to unscheduled prepayment in excess of scheduled principal repayment. Notes: This risk is generally associated with mortgage securities. ; changes in interest rates; basis risk; prolonged pro·long tr.v. pro·longed, pro·long·ing, pro·longs 1. To lengthen in duration; protract. 2. To lengthen in extent. interruptions or reductions in the secondary market for mortgage loans; timing of loan sales; dependence on broker network; competition; concentration of operations in California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). and Florida Florida, state, United States Florida (flôr`ĭdə, flŏr`–), state in the extreme SE United States. A long, low peninsula between the Atlantic Ocean (E) and the Gulf of Mexico (W), Florida is bordered by Georgia and ; economic conditions; contingent Fortuitous; dependent upon the possible occurrence of a future event, the existence of which is not assured. The word contingent denotes that there is no present interest or right but only a conditional one which will become effective upon the happening of the risks on loans sold; government regulation; changes in federal income tax laws; ability to pay dividends and the concentrated ownership of the Company's controlling stockholder. For a more complete discussion of these risks and uncertainties, see "Item 7. Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Financial Condition and Results of Operations - Risk Factors" in the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended June 30, 2002 and subsequent filings by the Company with the United States Securities and Exchange Commission.
AAMES FINANCIAL CORPORATION and SUBSIDIARIES
Financial tables
(In thousands, except per share data)
CONDENSED CONSOLIDATED BALANCE SHEETS Year Ended June 30,
2002 2001
--------- ----------
Cash and cash equivalents $17,391 $27,583
Loans held for sale, at lower of cost or market 462,068 417,164
Accounts receivable 61,276 71,052
Residual interests, at estimated fair value 197,297 237,838
Mortgage servicing rights, net 2,920 6,545
Other assets 25,646 25,215
--------- ----------
Total assets $766,598 $785,397
========= ==========
Borrowings $263,970 $269,720
Revolving warehouse and repurchase facilities 383,119 393,301
Accrued dividend on convertible preferred stock 37,763 23,975
Other liabilities 44,561 52,516
--------- ----------
729,413 739,512
Stockholders' equity 37,185 45,885
--------- ----------
Total liabilities and stockholders'
equity $766,598 $785,397
========= ==========
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended June 30,
2002 2001 2000
-------- --------- ----------
Revenue:
Gain on sale of loans $95,530 $73,435 $48,098
Write-down of residual interests and
mortgage servicing rights (27,000) (33,600) (82,490)
Origination fees 55,986 47,430 37,951
Loan servicing 12,462 14,989 15,654
Interest 83,161 86,477 94,569
Total revenue, including write-down
of residual interests and -------- --------- ----------
mortgage servicing rights 220,139 188,731 113,782
-------- --------- ----------
Expenses:
Personnel 114,800 98,404 93,239
Production 21,322 19,034 26,718
General and administrative 38,995 49,044 58,489
Interest 37,389 50,884 52,339
Provision for uncollectible receivables - - 2,000
-------- --------- ----------
212,506 217,366 232,785
-------- --------- ----------
Income (loss) before income taxes 7,633 (28,635) (119,003)
Provision for income taxes 3,087 1,889 3,369
-------- --------- ----------
Net income (loss) $4,546 $(30,524) $(122,372)
======== ========= ==========
Net loss to common shareholders $(9,242) $(44,445) $(130,498)
======== ========= ==========
Net loss per common share:
Basic $(1.45) $(7.11) $(21.02)
======== ========= ==========
Diluted $(1.45) $(7.11) $(21.02)
======== ========= ==========
Weighted average number of common
shares:
Basic 6,394 6,251 6,210
======== ========= ==========
Diluted 6,394 6,251 6,210
======== ========= ==========
AAMES FINANCIAL CORPORATION and SUBSIDIARIES
Supplemental Information
(In thousands)
ORIGINATION VOLUMES:
--------------------
Year ended June 30,
2002 2001
----------- -----------
Broker:
Traditional regional office
network $1,510,254 $1,135,754
Internet and Telemarketing 122,380 55,325
----------- -----------
Total broker 1,632,634 1,191,079
----------- -----------
Retail:
Traditional branch office network 1,280,225 1,104,676
Internet 329,650 75,875
----------- -----------
Total retail 1,609,875 1,180,551
----------- -----------
----------- -----------
Total originations $3,242,509 $2,371,630
=========== ===========
SECURITIZATIONS AND WHOLE LOAN SALES:
-------------------------------------
Year ended June 30,
2002 2001
----------- -----------
Loan securitizations $584,964 $1,231,464
Whole loan sales 2,610,041 1,102,465
----------- -----------
$3,195,005 $2,333,929
=========== ===========
LOAN SERVICING:
---------------
June 30,
---------------------------------
2002 2001 2000
----------- ----------- ---------
Mortgage loans serviced:
Loans in securitization trusts $1,192.0 $1,811.0 $3,015.0
Loans serviced on an interim
basis 991.0 722.0 281.0
----------- ----------- ---------
Serviced in-house 2,183.0 2,533.0 3,296.0
Loans serviced by others 125.0 184.0 264.0
----------- ----------- ---------
Total servicing portfolio $2,308.0 $2,717.0 $3,560.0
----------- ----------- ---------
Percentage serviced in-house 94.6% 93.2% 92.6%
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