Accredited Reports Record $1.66 EPS; On Balance Sheet Portfolio Grows 101% over Q3 2003; Originations up 46%; Net Income up 22%; Revenues rise 53%.SAN DIEGO San Diego (săn dēā`gō), city (1990 pop. 1,110,549), seat of San Diego co., S Calif., on San Diego Bay; inc. 1850. San Diego includes the unincorporated communities of La Jolla and Spring Valley. Coronado is across the bay. -- Accredited accredited recognition by an appropriate authority that the performance of a particular institution has satisfied a prestated set of criteria. accredited herds cattle herds which have achieved a low level of reactors to, e.g. Home Lenders Holding Co. (Nasdaq:LEND Lend To provide money temporarily on the condition that it or its equivalent will be returned, often with an interest fee. ), a nationwide mortgage company specializing in non-prime residential mortgage loans, today announced record third quarter results for the period ended September September: see month. 30, 2004. Net income for the quarter ended September 30, 2004 was $35.9 million, or $1.66 per share on a fully-diluted basis, an increase of 21.8% over net income of $29.4 million for the comparable period in 2003. Total revenues for the quarter increased by 53.2% to $178.1 million from $116.2 million for the comparable period in 2003. Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. Konrath said, "Just as we forecast, Accredited's third quarter results were strong. Origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real volume was up substantially from the same period last year; and we continued to grow the portfolio and earn an increasing share of our revenue and profitability from the portfolio. To that end, the most important event of our quarter was raising $84.1 million in net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). from an over-subscribed initial offering of preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. out of our REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). subsidiary. The proceeds raised in the offering will be used to further bolster This article is about the pillow called a bolster. For other meanings of the word "bolster", see bolster (disambiguation). A bolster (etymology: Middle English, derived from Old English, and before that the Germanic word bulgstraz our strategy of portfolio growth and improved consistency Consistency can refer to:
Mr. Konrath added, "Importantly, we maintained the high quality of our portfolio as measured by our 30+ day 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. and annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. loss results at 1.5% and 0.3%, respectively. Overall, we remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about delivering portfolio and earnings growth for the balance of 2004 and into 2005." Third Quarter Operational Highlights --Mortgage origination volume of $3.2 billion, compared to $2.2 billion in 2003, an increase of 45.6%. --Loans on-balance sheet with a record principal balance of $5.9 billion at September 30, 2004, an increase of $3.0 billion, or 101.0%, from September 30, 2003, and an increase of $2.6 billion, or 75.3%, from December December: see month. 31, 2003. --Whole loan sales of $2.3 billion, compared to $1.6 billion during the same period in 2003, an increase of 45.8%. --Portfolio income (interest income less interest expense and provision for losses) of $46.0 million, compared to $24.7 million in the third quarter of 2003, an increase of 86.0%. As a percentage of net revenues (total revenue less interest expense and provision for losses), portfolio income increased from 26.6% in the third quarter of 2003, to 36.3% in 2004. We estimate that this ratio is representative of the portfolio's contribution to profitability. This trend is monitored to illustrate the company's profits produced by its portfolio, a more stable, predictable earnings source.
Financial Summary ($000)
% Change % Change
Q3 2004 from Q3 03 YTD 2004 from YTD 03
------- ---------- -------- -----------
Total Revenues $178,074 53.2% $460,835 51.8%
Total Expenses 117,803 75.4% 305,897 63.7%
Income before Taxes $60,271 22.8% $154,938 32.7%
Net Income $35,877 21.8% $92,677 32.3%
The 53% increase in total revenues from third quarter 2003 to 2004 resulted primarily from increases in interest income and gain on sale of loans. Interest income increased 104% from $47.9 million in 2003 to $97.5 million in 2004, primarily due to the increased loan portfolio, partially offset by a decrease in the weighted average interest rate. The increase in the size of the loan portfolio resulted from additional securitizations structured as financings and higher 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. volume held in warehouse lines. The gain on sale of loans increased 20% from $65.2 million in 2003 to $78.0 million in 2004 owing primarily to higher volume of whole loan sales for cash. The company's average whole loan premiums, net of hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. , decreased from 4.1% in the third quarter of 2003 to 3.5% in the comparable period of 2004. These lower gains resulted primarily from lower interest rate margins reflecting stiff Stiff may refer to:
Total expenses increased 75% from $67.2 million in the third quarter of 2003 to $117.8 million in the same period in 2004, due primarily to the increase in interest expense resulting from the larger loan portfolio, as well as an increase in loan volume, and an increase in the number of employees related to that growth. --Portfolio Growth Related Expenses --Interest expenses increased by 123% from $16.6 million in the third quarter of 2003 to $37.1 million in the same period of 2004, due primarily to an increase in the average outstanding borrowings and an increase in the average borrowing rate. The increase in the average outstanding borrowings is consistent with the larger loan portfolio. --Provision for losses increased by 121% from $6.5 million in the third quarter of 2003 to $14.4 million in 2004, reflecting primarily the growth and aging of the company's portfolio, and higher forecasted severity rates. --Business Operations Related Expenses --Compensation expenses increased by 49% from $28.7 million in the third quarter of 2003 to $42.7 million in the third quarter of 2004 due to the growth in the number of employees and increased commission and bonus costs related to higher loan originations and profits. --General, administrative, and other expenses increased by 54% from $15.3 million in the third quarter of 2003 to $23.6 million in the third quarter of 2004 due to increases in loan volume, number of staff and number of locations. --Total business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets related expenses increased by 51% from $44.0 million in the third quarter of 2003 to $66.3 million in the third quarter of 2004. --Net Income --Net Income increased 22% from the comparable period in the prior year to $35.9 million for the quarter. Loan Originations The company originated $3.2 billion of mortgage loans for the quarter ended September 30, 2004, compared to $2.2 billion of mortgage loan originations in the comparable period for 2003, an increase of 45.6%. Wholesale and retail originations for the quarter represented 90% and 10%, respectively, of total loan production, generally consistent with prior periods. The company's net cost to originate o·rig·i·nate v. 1. To bring into being; create. 2. To come into being; start. mortgage loans was 1.9% for the quarter. Loan Dispositions During the third quarter of 2004, $2.3 billion of mortgage loans were sold in whole loan sales for cash, and $1.0 billion of mortgage loans went into a 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. structured as a financing. In addition, at quarter end, $681.5 million of net mortgage loans were held for a fourth quarter securitization, and $1.8 billion of net mortgage loans were held for sale. Portfolio Performance 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. The company's servicing portfolio, including $200.4 million of liquidating off-balance sheet securitizations, totaled $6.1 billion at September 30, 2004. The portfolio increased 85.0% from $3.3 billion at September 30, 2003. This was primarily due to the company's quarterly securitization program and an increase in the loans held for 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 . Delinquent delinquent 1) adj. not paid in full amount or on time. 2) n. short for an underage violator of the law as in juvenile delinquent. DELINQUENT, civil law. He who has been guilty of some crime, offence or failure of duty. loans (30 or more days past due, including foreclosures and real estate owned Real Estate Owned Property owned by a lender - usually a bank - after an unsuccessful sale at a foreclosure auction. This is common because most of the properties up for sale at these auctions are worth less than the total amount owed to the bank: the minimum bid in most ) were 1.5% of the serviced portfolio at September 30, 2004, compared to 1.9% at September 30, 2003. The company attributes this improvement in delinquency to the recent increase in the size of the servicing portfolio, better portfolio performance by more recent vintages, and prudent collection practices. Liquidity The company had approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $3.3 billion in warehouse credit capacity at September 30, 2004 and a record $160.6 million in available cash and additional liquidity. The company's warehouse line usage totaled $2.4 billion at September 30, 2004. Adjusted Leverage The company's REIT subsidiary completed a preferred offering in the third quarter. In managing its capital structure for purposes of analyzing its operating borrowing capabilities, the company adds its REIT subsidiary preferred stock, which is reflected as minority interest on the consolidated balance sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. , to stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. to determine an adjusted leverage ratio. At September 30, 2004, liabilities were 14.4 times its minority interest plus stockholders' equity. Other leverage measures can be found in the attached Financial Summary. Business Outlook The following statements are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. and actual results may differ materially. Please see the Forward Looking Statements section of this news release for a description of certain risk factors and 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. filed with the Securities and Exchange Commission ("SEC") on March 26, 2004 and its reports on Form 10-Q Form 10-Q See 10-Q. filed with the SEC on May 17, 2004 and August 16, 2004 for a more complete description of risks. Earnings Guidance for Full Year 2004 and Fourth Quarter 2004 The company has revised its total year 2004 earnings per 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. share guidance from the previous range of $5.75 to $6.00 to a range of $5.90 to $6.00, based on an estimated weighted average of approximately 21.5 million shares outstanding. The forecast assumes origination volume consistent with, or slightly higher than, the previous two quarters, and continued growth in the on-balance sheet portfolio. Consistent with this forecast for 2004, the company estimates fourth quarter earnings to be in a range of $1.60 to $1.70 per diluted share based on an estimated weighted average of approximately 21.7 million shares outstanding. Conference Call Accredited will host a conference call for analysts and investors on October October: see month. 28, 2004 at 8:00 a.m. (Pacific Daylight For other uses, see Daylight (disambiguation). Daylight or the light of day is the combination of all direct and indirect sunlight outdoors during the daytime (and perhaps twilight). Time) to discuss the company's financial results for the third quarter. Those individuals who would like to participate on the conference call should contact Mitzi Gimenez, investor relations Investor relations The process by which the corporation communicates with its investors. manager, at 858-676-2155 to receive details regarding the call. The call is being web cast by CCBN CCBN Central Coast Bancorp CCBN Charles County Business Network and can be accessed live at Accredited's web site -- www.accredhome.com. A replay of the conference will be archived on the web site. About Accredited Accredited Home Lenders Holding Co. is a nationwide mortgage banking company that originates, finances, securitizes, sells, and services non-prime mortgage loans secured by residential real estate. The company is headquartered in San Diego. Additional information may be found at www.accredhome.com. Forward Looking Statements Certain matters discussed in this news release constitute 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. within the meaning of the federal securities laws. Forward-looking statements include statements regarding the company's planned capital raising and revenue generating strategies, corporate restructurings, projected growth, anticipated securitizations, expected net earnings for 2004; the company's liquidity; the company's outlook on the competitive and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. environments and the company's intended loan disposition strategy. Actual results and the timing of certain events could differ materially from those projected in or contemplated by these forward-looking statements due to a number of factors, including but not limited to: interest rate volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the and the level of interest rates generally; general political and economic conditions; the sustainability of loan origination volumes; the availability of financing for the origination of mortgage loans; the ability of the company to sell or securitize Securitize The practice of a company selling accounts receivables or other debts owed to it. The third party that buys the debt assumes ownership of it and the responsibility for collecting the debts, and keeps the repayments when made. mortgage loans; the company's ability to access the capital markets and successfully complete a financing; and other risk factors outlined in Accredited Home Lenders Holding Co.'s annual report on Form 10-K filed with the SEC on March 26, 2004, its reports on Form 10-Q filed with the SEC on May 17, 2004 and August 16, 2004 and other SEC filings.
Accredited Home Lenders: Financial Summary
Three Months Nine Months
Ended Sept. 30, Ended Sept. 30,
2003 2004 2003 2004
---- ---- ---- ----
(dollars in (dollars in
thousands) thousands)
Income Statement:
Interest Income $47,870 $97,493 $120,484 $242,792
Gain on sale of loans 65,237 77,993 171,317 210,342
Loan servicing income 1,979 1,996 5,789 5,205
Net gain on mortgage-related
securities and derivatives 1,051 309 5,439 2,083
Other income 98 283 583 413
Total revenues 116,235 178,074 303,612 460,835
Salaries, wages and benefits 28,700 42,674 79,523 117,775
General, administrative, and
other expenses 15,299 23,599 40,810 62,277
Total operating expenses 43,999 66,273 120,333 180,052
Interest Expense 16,616 37,114 43,628 86,137
Provision for losses 6,537 14,416 22,916 39,708
Total expenses 67,152 117,803 186,877 305,897
Income before income taxes 49,083 60,271 116,735 154,938
Income taxes 19,634 23,234 46,694 61,101
Minority interest - dividends paid
on preferred stock of subsidiary - 1,160 - 1,160
Net income $29,449 $35,877 $70,041 $92,677
Basic earnings per share $1.50 $1.75 $4.09 $4.57
Diluted earnings per share $1.40 $1.66 $3.56 $4.31
Weighted average shares
outstanding:
Basic 19,651 20,470 17,139 20,287
Diluted 21,046 21,580 19,687 21,516
Regulation G Disclosure related to Portfolio Income
Three Months Ended September 30,
2003 2004
----------------- ---------------
Amount % Net Amount % Net
Revenue Revenue
----------------- ---------------
Interest Income $47,870 $97,493
Interest Expense (16,616) (37,114)
Provision for losses (6,537) (14,416)
Portfolio income 24,717 26.6% 45,963 36.3%
Total revenues 116,235 178,074
Interest Expense (16,616) (37,114)
Provision for losses (6,537) (14,416)
Net revenues 93,082 100.0% 126,544 100.0%
Salaries, wages & benefits 28,700 42,674
General, administrative and other
expenses 15,299 23,599
Income before income taxes $49,083 $60,271
Regulation G Disclosure related to Portfolio Income
Nine Months Ended September 30,
2003 2004
----------------- ---------------
Amount % Net Amount % Net
Revenue Revenue
----------------- ---------------
Interest Income $120,484 $242,792
Interest Expense (43,628) (86,137)
Provision for losses (22,916) (39,708)
Portfolio income 53,940 22.8% 116,947 34.9%
Total revenues 303,612 460,835
Interest Expense (43,628) (86,137)
Provision for losses (22,916) (39,708)
Net revenues 237,068 100.0% 334,990 100.0%
Salaries, wages & benefits 79,523 117,775
General, administrative and other
expenses 40,810 62,277
Income before income taxes $116,735 $154,938
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2004 2003 2004
---- ---- ---- ----
(dollars in thousands) (dollars in thousands)
Other Data:
Originations:
Wholesale $1,980,667 $2,890,791 $4,981,847 $8,111,151
Retail & Other $229,489 $326,168 $603,738 $844,684
Total mortgage loan
originations $2,210,156 $3,216,959 $5,585,585 $8,955,835
Weighted average coupon
rate of mortgage loan
originations 7.5% 7.5% 7.7% 7.3%
Weighted average credit
score (1) 632 639 630 640
Loan sales and
securitizations:
Whole loan sales $1,578,665 $2,300,907 $4,219,592 $5,784,663
Mortgage loans
securitized $417,891 $1,011,032 $720,940 $2,223,157
Total loan sales and
securitizations $1,996,556 $3,311,939 $4,940,532 $8,007,820
Net profit margin on
whole loan sales:
Gain on whole loan
sales (2) (3) 4.1% 3.5% 4.3% 3.8%
Net gain (loss) on
derivatives (2) 0.1% 0.0% -0.2% 0.0%
Net premium received on
whole loan sales (2) (4) 4.2% 3.5% 4.1% 3.8%
Net origination points
and fees 0.6% 0.5% 0.6% 0.4%
Loan origination
expenses -2.5% -2.4% -2.7% -2.4%
Net cost to originate (5) -1.9% -1.9% -2.1% -2.0%
Net profit margin on
whole loan sales 2.3% 1.6% 2.0% 1.8%
Annualized losses on
serviced portfolio as a
percentage of average
serviced assets 0.5% 0.3% 0.6% 0.3%
Mortgage loan net
interest margin:
Mortgage loan yield 7.7% 7.4% 7.7% 7.4%
Mortgage loan cost
of funds -2.7% -2.8% -2.8% -2.6%
Mortgage loan net
interest margin 5.0% 4.6% 4.9% 4.8%
At Sept. 30, At Dec. 31, At Sept. 30,
2003 2003 2004
---- ---- ----
(dollars in thousands)
Serviced Portfolio:
Loans held for sale and real
estate owned $1,376,198 $1,292,839 $1,856,053
Loans held for investment $1,579,261 $2,095,398 $4,083,986
Sold servicing retained or
securitized/off
balance sheet $362,759 $307,739 $200,361
Total serviced portfolio
at period end $3,318,218 $3,695,976 $6,140,400
Total delinquent at period end (6) 1.9% 1.8% 1.5%
Total number of leased locations
at period end 41 46 54
Total number of employees 1,890 2,056 2,455
(1) Represents borrowers' average credit score at origination
obtained from one or more of the three principal credit bureaus.
The nine months ended September 30, 2004 FICO score reflects
corrected second quarter FICO scores.
(2) The percentages are calculated based upon the respective
amounts divided by total whole loans sales.
(3) Excludes the provision for premium recapture which is a
component of the total gain on sale of loans.
(4) The net premium received on whole loan sales is computed based
on the cash premiums received on whole loan sales, net of gain
(loss) on related derivatives.
(5) Net cost to originate is defined as total operating expenses,
less loan servicing related costs, plus yield spread premiums,
less points and fees collected, all prior to any deferrals of
origination costs for accounting purposes.
(6) Delinquent is defined as loans that are 30 or more days
delinquent, including loans in foreclosure and loans converted
into real estate owned (REO).
At Sept. 30, At Dec. 31, At Sept. 30,
2003 2003 2004
---- ---- ----
(dollars in thousands)
Balance Sheet Data:
Mortgage loans held for sale, net $1,366,744 $1,277,075 $1,848,376
Mortgage loans held for
securitization, net 240,621 338,919 681,489
Securitized loans, net 1,334,662 1,751,318 3,365,557
Mortgage-related securities,
at fair value 4,335 3,692 3,754
Mortgage servicing rights, net 1,518 1,119 331
Other Assets 123,574 129,294 237,167
Total Assets $3,071,454 $3,501,417 $6,136,674
Total warehouse and residual
interest financing 1,524,999 1,515,195 2,411,415
Securitization bond financing 1,311,381 1,724,389 3,275,886
Other Liabilities 57,791 49,610 50,976
Total Liabilities 2,894,171 3,289,194 5,738,277
Minority interest - preferred
securities of subsidiary - - 84,094
Total Stockholders' Equity 177,283 212,223 314,303
Total Liabilities and
Stockholders' Equity $3,071,454 $3,501,417 $6,136,674
Regulation G Disclosure related to Adjusted Leverage
Total Liabilities 2,894,171 3,289,194 5,738,277
Minority interest - preferred
securities of subsidiary - - 84,094
Total Stockholders' Equity 177,283 212,223 314,303
Total Minority Interest and
Stockholders' Equity 177,283 212,223 398,397
Ratio of Total Liabilities
divided by Minority
Interest + Stockholders' Equity 16.3 15.5 14.4
Ratio of Total Liabilities
divided by Stockholders' Equity 16.3 15.5 18.3
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