Aames Financial Corporation Reports Positive September Results From Operations.Business Editors LOS LOS Length of stay, see there ANGELES--(BUSINESS WIRE)--Oct. 31, 2000 Aames Financial Corporation (NYSE NYSE See: New York Stock Exchange :AAM n. 1. A Dutch and German measure of liquids, varying in different cities, being at Amsterdam about 41 wine gallons, at Antwerp 36½, at Hamburg 38¼. ), a leader in subprime home equity lending, today reported results of operations for the three months ended September 30, 2000, announcing net income of $693,000 compared to net income of $791,000 during the comparable period a year ago. After the accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. for 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 requirement of $3.2 million and $1.5 million for the three months ended September 30, 2000 and 1999, respectively, the net loss to common shareholders was $2.5 million and $750,000, respectively, or a net loss per common share of $0.40 and $0.12 for the three months ended September 30, 2000 and 1999, respectively. In making the announcement, A. Jay Meyerson, Aames' Chief Executive Officer, stated, "I believe the quarterly results reflect our efforts over the past year in executing our turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. plan resulting in increasing core retail and broker production, reducing noninterest expense, accessing the 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. markets and selling the residuals to increase our cash gain on sale. Meyerson added, "The company will continue to focus on core retail and broker loan originations 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. , including 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 originations, closely manage operating costs operating costs npl → gastos mpl operacionales and credit quality at all levels throughout the organization, and sell loans through both securitizations and whole loan sales to maximize cash flow and profitability." Summary of Financial Results Total revenues Total revenue during the three months ended September 30, 2000 declined $1.0 million to $59.9 million from $60.9 million during the comparable three month period a year ago. The decrease in total revenues during the three months ended September 30, 2000 from the comparable three month period a year ago is attributable primarily to decreased gain on sale and interest income partially offset by increases 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. 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. . Gain on sale for the three months ended September 30, 2000 was $19.9 million, a decline of $1.9 million compared to $21.8 million of gain on sale for the comparable quarter a year ago. Mr. Meyerson stated, "Although the total gain on sale decreased, the company realized substantially higher cash gains on sale during the September 2000 quarter over a year ago through the sale for cash of the residual asset created in the $460.0 million securitization under the company's residual forward sale facility." Total expenses Total expenses during the three months ended September 30, 2000 declined $400,000 to $59.2 million from $59.6 million reported during the three months ended September 30, 1999. The decrease in total expenses during the three months ended September 30, 2000 from the comparable three month period a year ago was primarily attributable to decreases in production and general and administrative expenses, partially offset by increases in compensation and interest expense. Mr. Meyerson noted, "The company is beginning to realize the benefits of expense management initiatives implemented in the later half of the fiscal year ended June 30, 2000. I believe these expense reduction initiatives will continue to benefit the company in the coming quarters." Loan production During the three months ended September 30, 2000 the company originated $518.1 million of mortgage loans, down $5.4 million from the $523.5 million of mortgage loans originated during the three months ended September 30, 1999. Mr. Meyerson remarked, "Although total loan production declined from last year's quarter, I'm pleased that the company's core retail and broker production increased $3.2 million to $514.0 million during the quarter, from $510.8 million during last year's quarter." Included in the company's core retail and broker production is $23.8 million of loans originated from the Internet, through affiliations with certain lending sites, and from other electronic sourcing. Correspondent production declined by $8.7 million, to $4.1 million during the September 2000 quarter from $12.8 million during the comparable period a year ago. This decline reflects the company's previously announced decision to reduce correspondent loan purchases and to focus its production efforts on its core retail and broker loan origination channels. Loans 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. and sold During the three months ended September 30, 2000, the company sold $667.9 million of mortgage loans, consisting of $460.0 million of loans pooled and sold in a securitization and $207.9 million of whole loan sales for cash. In comparison, during the three months ended September 30, 1999, the company sold an aggregate of $692.7 million of mortgage loans comprised of $400.0 million in a securitization and $292.6 million of whole loan sales for cash. Loan servicing At September 30, 2000, the company's servicing portfolio was $3.4 billion, of which $3.1 billion, or 91.2%, was 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. . At June 30, 2000, the company's servicing portfolio was $3.6 billion, of which $3.3 billion, or 91.7% was serviced in-house. Mr. Meyerson commented, "While the company's strategy is to generally retain the servicing on the loans in its securitizations, the company sold for cash its servicing rights and the rights to prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. fees in the recent securitization because of the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. cash price offered by the purchaser." Aames Financial Corporation is a leading home equity lender, and at September 30, 2000 operated 97 retail Aames Home Loan offices and 5 wholesale loan centers nationwide. 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 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; economic conditions; contingent 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, 2000, the quarterly reports on Form 10-Q Form 10-Q See 10-Q. filed by the company during the remainder of fiscal 2001, and any current reports on Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. and subsequent filings by the company.
Aames Financial Corporation and Subsidiaries
Condensed Consolidated Balance Sheet
(Dollars in Thousands)
September 30, June 30,
2000 2000
(Unaudited) (Audited)
ASSETS
Cash and cash equivalents $ 28,656 $ 10,179
Loans held for sale, at lower
of cost or market 249,444 398,921
Accounts receivable 69,066 52,713
Residual interests, at estimated
fair value 281,535 290,956
Mortgage servicing rights, net 10,605 12,346
Other assets 26,845 25,249
Total assets $ 666,151 $ 790,364
LIABILITIES AND STOCKHOLDERS' EQUITY
Borrowings $ 275,470 $ 275,470
Revolving warehouse and
repurchase facilities 236,300 375,015
Other liabilities 66,515 65,401
Total liabilities 578,285 715,886
Stockholders' equity 87,866 74,478
Total liabilities and
stockholders' equity $ 666,151 $ 790,364
-0-
AAMES FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS
(UNAUDITED)
(Dollars, except per share data, and shares in thousands)
Three Months Ended
September 30,
2000 1999
Revenue:
Gain on sale of loans $ 19,921 $ 21,797
Origination fees 12,332 11,388
Loan servicing 4,306 3,755
Interest 23,354 23,998
Total revenue 59,913 60,938
Expenses:
Compensation 26,072 23,112
Production 4,514 8,641
General and administrative 13,589 14,271
Interest 15,009 13,548
Total expenses 59,184 59,572
Income before income taxes 729 1,366
Provision for income taxes 36 575
Net income $ 693 $ 791
Net (loss) per common share:
Basic $ (0.40) $ (0.12)
Diluted $ (0.40) $ (0.12)
Weighted average number of shares
outstanding:
Basic 6,211 6,202
Diluted 6,211 6,202
-0-
AAMES FINANCIAL CORPORATION AND SUBSIDIARIES
Supplemental financial information
ORIGINATION VOLUMES:
Three Months Ended
September 30, September 30,
2000 1999
(In thousands)
Broker network(1) $ 281,814 $ 331,546
Retail(2) 232,201 179,216
Correspondent 4,123 12,762
Total $ 518,138 $ 523,524
(1) Includes $15.6 million of production from the Internet and other
electronic sourcing.
(2) Includes $8.2 million of production from the Internet.
LOAN SALES:
Three Months Ended
September 30, September 30,
2000 1999
(In thousands)
Loans pooled and sold
in securitizations $ 460,002 $ 400,065
Whole loan sales 207,939 292,601
$ 667,941 $ 692,666
SERVICING PORTFOLIO:
September 30, September 30, June 30,
2000 1999 2000
(In thousands)
Total servicing portfolio $ 3,399,000 $ 3,870,000 $ 3,560,000
Serviced in-house 3,132,000 3,495,000 3,296,000
|
|
|||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion