CONTIFINANCIAL ANNOUNCES FIRST QUARTER FISCAL 1999 EARNINGS.NEW YORK--(BUSINESS WIRE)--July 30, 1998-- Highlights for the Quarter: -- As previously estimated in an announcement earlier this month, net income was $6.0 million compared with $26.9 million for the first quarter of fiscal 1998. -- 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. earnings per common share were $0.13 compared with $0.59 for last year's first quarter. -- Sales and securitizations of home equity, home improvement and other residential mortgage loans increased 44.1% over last year's first quarter to $1.9 billion, including the $1.75 billion ContiMortgage 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. in June June: see month. . Originations increased 57.4% to $2.2 billion. -- ContiMortgage's servicing portfolio reached $11.2 billion, up 53.4% from June 30, 1997. -- Home equity delinquencies were 3.91% compared with an unusually low 2.36% at March 31, 1998 and 3.68% at June 30, 1997. Defaults were 5.36% versus 5.58% at March 31, 1998 and 5.05% at June 30, 1997. -- The Company originated $936.7 million of commercial real estate mortgage loans, an increase of 388.4% from last year's first quarter. -- During the quarter, the Company purchased 681,300 shares of its common stock. With another 125,000 shares purchased in July July: see month. , the previously announced one million share buyback Buyback The buying back of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies will buyback shares either to increase the value of shares still available (reducing supply), or to eliminate any threats by shareholders who may program was completed. ContiFinancial Corporation (NYSE NYSE See: New York Stock Exchange :CFN CFN Center for Functional Nanomaterials CFN Companhia Ferroviaria do Nordeste (Brazil) CFN Commercial Fueling Network CFN Conselho Federal de Nutricionistas (Brazil) ) today announced earnings for its first fiscal quarter of 1999, ended June 30, 1998. Net income for the quarter was $6.0 million compared with $26.9 million in the comparable quarter last year. Gross income for the quarter was $142.1 million compared with $134.0 million for the first quarter of fiscal 1998. Diluted earnings per common share were $0.13 compared with $0.59 a year ago. As the Company previously announced on July 2, 1998 the decrease in earnings was largely the result of fair value adjustments to Excess Spread Receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed ("ESR ESR - Eric S. Raymond ") from ContiMortgage/ContiWest securitizations to reflect higher projected prepayment speeds Prepayment speed Also called speed, the estimated rate at which mortgagors pay off their loans ahead of schedule, critical in assessing the value of mortgage pass-through securities. . In determining fair value of the ContiMortgage/ContiWest ESR portfolio, the Company increased its weighted average estimated future Conditional Subject to change; dependent upon or granted based on the occurrence of a future, uncertain event. A conditional payment is the payment of a debt or obligation contingent upon the performance of a certain specified act. 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. Rate from 27% as of March 31, 1998 to 28% as of June 30, 1998. The Company's assumption regarding future credit losses for the ContiMortgage/ContiWest ESR portfolio is equivalent to an annual loss rate of 0.63% compared with 0.62% as of March 31, 1998. Total home equity, home improvement and other residential mortgage 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 was $2.2 billion for the first quarter of fiscal 1999, a 57.4% increase from $1.4 billion for the comparable fiscal 1998 quarter. Originations from direct retail operations and brokers were $841.8 million for the three months ended June 30, 1998, representing 38.4% of total home equity originations during the quarter, up from 29.4% in the first quarter of 1998. With a servicing portfolio of $11.2 billion at June 30,. As previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). , the Company deferreduarter included $218.0 million by Keystone key·stone n. 1. Architecture The central wedge-shaped stone of an arch that locks its parts together. Also called headstone. 2. The central supporting element of a whole. Mortgage Partners L.L.C. The Company completed its acquisition of a 75% interest in Keystone in April. At quarter end, Keystone's servicing portfolio was $1.9 billion. In June, the Company announced that it had signed a non-binding letter of intent to acquire First Security Commercial Mortgage, L.P. and First Security Commercial 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. , L.L.C. This transaction will increase the Company's existing minority ownership to a 92% interest in the combined companies. First Security originated $144.2 million of loans during the quarter and had a servicing portfolio of $1.0 billion at quarter end. Additionally during June, the Company announced a 50.1% investment in American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Commercial Capital LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , a commercial finance company specializing in franchise lending to small and middle market retail companies. Triad, the Company's non-prime auto loan origination subsidiary, privately placed $57.7 million of asset-backed notes in June. Triad's originations were $70.5 million for the first quarter of fiscal 1999, an 85.4% increase from the comparable period last year. At quarter end, Triad's servicing portfolio was $272.1 million. Empire Funding, in which the Company has a 24% equity interest, originated $552.0 million and 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. or sold $566.0 million of high loan-to-value and F.H.A. Title I loans during the quarter ended June 30, 1998. The Company's equity in Empire's net income for the quarter was $2.4 million. As indicated in the following table, cash gross income, net of interest expense, for the twelve months ended June 30, 1998 improved significantly over the comparable twelve month period ended June 30, 1997. This was attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to several factors, including the acceleration acceleration, change in the velocity of a body with respect to time. Since velocity is a vector quantity, involving both magnitude and direction, acceleration is also a vector. In order to produce an acceleration, a force must be applied to the body. of ESR cash flows through NIMS NIMS National Incident Management System (US Department of Homeland Security) NIMS National Institute for Materials Science (Japan) NIMS Near-Infrared Mapping Spectrometer and IO sales, a higher level of cash servicing income, growth in points and fees earned through retail home equity loan origination and an increase in cash gain on sale from the Company's commercial real estate business, offset in part by an increase in premiums paid to acquire home equity loans from wholesale sources. The increase in cash operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the twelve months ended June 30, 1998 over the comparable prior year period was largely attributable to the expansion of the Company's retail loan origination platform. Although pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern earnings on a cash basis (i.e., cash gross income less cash expenses) was still negative for the twelve months ended June 30, 1998, it improved significantly year over year. -0-
Twelve months ended June 30,
1998 1997
---- ----
Cash component of pretax income:
Cash gross income, net of $251.5 $ 31.5
interest expense (a)
Cash operating expenses (b) 271.6 153.3
----- -----
Pretax income - cash basis ($ 20.1) ($121.8)
===== =====
(a) Cash gross income, net of interest expense, reflects gain on sale
of receivables on a cash basis. Consequently, it excludes ESR
retained in connection with securitizations and is reduced by
premiums paid to third-party originators. Cash gross income also
excludes accrued interest income on ESR, capitalized servicing
income net of related amortization, and undistributed earnings of
less than 50% owned subsidiaries. Cash gross income includes ESR
cash flows (i.e., distributions received from trusts and proceeds
from NIMS and IO sales.)
(b) Cash operating expenses exclude interest, depreciation,
amortization and deferred compensation.
ContiFinancial Corporation is a consumer and commercial finance company with headquarters in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. and approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 3,000 employees nationwide. The Company, through ContiMortgage Corporation and other subsidiaries, is a leading originator Originator A bank, savings and loan, or mortgage banker that initially made a mortgage loan that is part of a pool. Also, an investment bank that has worked with the issuer of a new securities offering from the beginning and is usually appointed manager of the underwriting , securitizer and servicer of home equity loans made to borrowers whose needs may not be met by traditional financial institutions. In addition, through ContiTrade Services L.L.C. and its ContiMAP(R) conduit conduit /con·du·it/ (kon´doo-it) channel. ileal conduit the surgical anastomosis of the ureters to one end of a detached segment of ileum, the other end being used to form a stoma on the , the Company finances a wide range of commercial real estate. Through ContiTrade Services L.L.C., the Company also provides financing and securitization services and, through ContiFinancial Services Corporation, bond placement services, to subsidiaries and other originators of a broad range of loans, leases and receivables, including loans for a variety of commercial real estate property types; home equity loans; home improvement loans; prime, non-prime and sub-prime auto loans; equipment leases; charged-off consumer debt; franchisee loans and time-share time-share v. time-shared, time-shar·ing, time-shares v.tr. 1. Computer Science To use (a computer) by time-sharing. 2. To occupy (a vacation property) by time-sharing. v. loans. Certain statements contained in this press release which are not historical fact, may be deemed to be 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. under the federal securities laws. There are many important factors that could cause ContiFinancial Corporation's actual results to differ materially from those indicated in the forward-looking statements. Such factors include, but are not limited to, general economic conditions, interest rate risk, prepayment speeds, 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 default rates, changes (legislative and otherwise) in the asset securitization industry, demand for ContiFinancial Corporation's services, the impact of certain covenants in loan agreements of ContiFinancial Corporation, the degree to which ContiFinancial Corporation is leveraged, its needs for financing, the net interest margin securities market and other risks identified in ContiFinancial Corporation's Securities and Exchange Commission filings. In addition, it should be noted that past financial and operational performance of the Company is not necessarily indicative indicative: see mood. of future financial and operational performance. -0-
FINANCIAL TABLES FOLLOW
ContiFinancial Corporation
Consolidated Statements of Income
(in thousands, except share data)
(unaudited)
Three months ended %
June 30, Incr.
1998 1997 (Decr.)
---------- ---------- ---------
Gross income:
Gain on sale of receivables.... $ 37,572 $ 64,340 (41.6)%
Interest....................... 71,980 49,679 44.9 %
Net servicing income........... 26,720 15,973 67.3 %
Other income................... 5,844 4,031 45.0 %
---------- ---------- ---------
Total gross income........... 142,116 134,023 6.0 %
---------- ---------- ---------
Expenses:
Compensation and benefits...... 43,324 30,234 43.3 %
Interest....................... 55,382 35,863 54.4 %
Provision for loan losses...... 722 1,311 (44.9)%
General and administrative..... 32,511 21,070 54.3 %
---------- ---------- ---------
Total expenses............... 131,939 88,478 49.1 %
---------- ---------- ---------
Income before income taxes and
minority interest................ 10,177 45,545 (77.7)%
Income taxes...................... 4,101 18,641 (78.0)%
---------- ---------- ---------
Income before minority interest... 6,076 26,904 (77.4)%
Minority interest in subsidiaries. 56 31 80.6 %
---------- ---------- ---------
Net income..................... $ 6,020 $26,873 (77.6)%
========== ========== =========
Basic earnings per common share... $ 0.13 $ 0.60 (78.3)%
========== ========== =========
Diluted earnings per common share. $ 0.13 $ 0.59 (78.0)%
========== ========== =========
Basic weighted average number of
shares outstanding...............46,685,863 44,757,322
========== ==========
Diluted weighted average number of
shares outstanding...............47,226,533 45,588,626
========== ==========
ContiFinancial Corporation
Cash Flow Summary
(dollars in millions)
(unaudited)
Twelve months ended June 30,
1998 1997
----- ------
Cash component of pretax income:
Cash gross income, net of
interest expense (a):
Gain on sale of receivables $ 87.5 ($71.9)
Interest income, net of
interest expense 15.1 8.0
Net servicing income 62.2 33.2
ESR cash distributions 69.7 49.9
Other income 17.0 12.3
------- -------
Total cash gross income,
net of interest expense 251.5 31.5
Cash operating expenses (b) 271.6 153.3
------- -------
Pretax income - cash basis (20.1) (121.8)
------- -------
Other cash requirements:
Growth in trade receivables,
net of warehouse financing (c) (273.8) (120.0)
Acquisitions and infrastructure
investments (82.9) (39.3)
Other cash inflows (outflows)(d) (103.4) (25.4)
------- -------
Other cash requirements (460.1) (184.7)
------- ------
Aggregate cash requirements (480.2) (306.5)
Proceeds from debt and equity issues 445.7 392.7
------- ------
Increase (decrease) in cash and
cash equivalents ($34.5) $ 86.2
======= ======
(a) Cash gross income, net of interest expense, reflects gain on sale
of receivables on a cash basis. Consequently, it excludes ESR
retained in connection with securitizations and is reduced by
premiums paid to third-party originators. Cash gross income also
excludes accrued interest income on ESR, capitalized servicing
income net of related amortization, and undistributed earnings of
less than 50% owned subsidiaries. Cash gross income includes ESR
cash flows (i.e., distributions received from trusts and proceeds
from NIMS and IO sales).
(b) Cash operating expenses exclude interest, depreciation,
amortization and deferred compensation.
(c) Trade receivables, net of warehouse financing, are higher at month
ends due to the concentration of loan originations in the latter
part of the month and the timing difference between the date of
origination and the date the loan is financed through the
Company's warehouse facilities (usually 1 to 4 days).
(d) Other cash inflows and outflows include, among other things, tax
payments, cash expended for common share repurchases, proceeds
from the exercise of employee stock options, payments of amounts
due to affiliates and changes in other receivables and
liabilities.
ContiFinancial Corporation
Loan Originations, Securitizations and Sales
(dollars in thousands)
(unaudited)
For the three months ended %
June 30, Incr.
1998 1997 (Decr.)
Originations
Home equity, home improvement and
other residential mortgage loans:
Wholesale:
Brokers....................... $ 308,188 $ 207,089 48.8%
Correspondents................ 1,349,429 983,264 37.2%
Direct retail..................... 533,632 201,878 164.3%
---------- ---------- --------
Total home equity, home
improvement and other
residential mortgage loans....... 2,191,249 1,392,231 57.4%
---------- ---------- --------
Commercial real estate
mortgage loans:
Conduit (ContiMAP and affiliates). 718,783 191,806 274.7%
Conforming........................ 217,952 -- --
---------- ---------- --------
Total commercial real estate
mortgage loans................... 936,735 191,806 388.4%
---------- ---------- --------
Triad auto loans.................. 70,546 38,056 85.4%
---------- ---------- --------
Total loan originations.........$3,198,530 $1,622,093 97.2%
========== ========== ========
Securitizations and sales
ContiMortgage/ContiWest
securitizations................$1,750,000 $1,265,000 38.3%
Other home equity,
home improvement and other
residential mortgage sales....... 196,183 85,879 128.4%
---------- ---------- --------
Total home equity, home
improvement and other
residential mortgage sales....... 1,946,183 1,350,879 44.1%
---------- ---------- --------
Commercial real estate mortgage...
loans:
Conduit (ContiMAP and affiliates). -- 158,816 --
Conforming........................ 217,952 -- --
---------- ---------- --------
Total commercial real estate
mortgage loans................... 217,952 158,816 37.2%
---------- ---------- --------
Triad auto loans.................. 57,667 45,881 25.7%
Strategic alliances............... 100,249 174,200 (42.5)%
---------- ---------- --------
Total securitizations and sales..$ 2,322,051 $1,729,776 34.2%
========== ========== ========
ContiFinancial Corporation
Gain on Sale of Receivables and ESR
(dollars in thousands)
(unaudited)
Gain on sale of receivables was
generated from the following sources:
Three months Three months
ended ended
June 30, 1998 June 30, 1997
------------- -------------
Home equity/home
improvement:
ContiMortgage/ContiWest
securitizations $ 11,493 $ 38,006
Other (including
whole loan sales & fees) 19,650 14,146
------------- -------------
Total home equity/home improvement 31,143 52,152
Commercial real estate 1,262 4,373
Auto 4,867 7,008
Other 300 807
------------- -------------
Total $ 37,572 $ 64,340
============= =============
As of June 30, 1998, the ESR portfolio
consisted of the following:
Percentage
Fair Value of Total
------------- -------------
Home Equity:
ContiMortgage/ContiWest $ 605,485 86.7%
Other Servicers 36,346 5.2
------------- -------------
Total Home Equity 641,831 91.9
Home Improvement 4,972 0.7
Commercial Real Estate 7,756 1.1
Auto 33,300 4.8
Leases 8,113 1.2
Franchise 2,216 0.3
------------- -------------
Total ESR Portfolio $ 698,188 100.0%
============= =============
ContiMortgage Corporation
Delinquencies, Defaults and Losses
(dollars in thousands)
(unaudited)
ContiMortgage June 30, March 31, June 30,
Servicing Portfolio 1998 1998 1997
-------------- ------------ -------------
Serviced loan portfolio
(at period end) $11,154,731 $10,135,785 $ 7,269,361
============== ============= =============
Delinquencies:
30 - 59 days............. 2.57% 1.50% 2.69%
60 - 89 days............ 0.85% 0.51% 0.69%
90 days and over......... 0.49% 0.35% 0.30%
-------------- ------------- -------------
Total delinquencies (%).. 3.91% 2.36% 3.68%
============== ============= =============
Total delinquencies ($).. $ 435,927 $ 239,015 $ 267,368
============== ============= =============
Defaults:
Foreclosures............. 2.14% 2.31% 3.24%
Bankruptcies............. 1.54% 1.70% 1.29%
Real estate owned........ 0.92% 0.83% 0.48%
Loss mitigation (1)...... 0.76% 0.74% 0.04%
-------------- ------------- -------------
Total defaults (%)....... 5.36% 5.58% 5.05%
============== ============= =============
Total defaults ($)....... $ 598,226 $ 565,238 $ 367,146
============== ============= =============
(1) This category includes non-performing accounts specifically
identified for accelerated resolution under the Company's loss
mitigation program. Resolution strategies include refinances,
reinstatements, and full payoffs; forbearance plans;
pre-foreclosure sales for less than full payoff; third party
foreclosure sales; deed-in-lieu (or "cash for keys"); and
charge-offs.
For the For the
three months twelve months
ended ended
ContiMortgage June 30, June 30,
Loan Loss experience 1998 1998
------------- -------------
Average serviced loan portfolio...........$ 10,742,598 $ 9,163,255
============= =============
Net losses :
REMICs and loans held
pending securitization $ 19,571 $ 52,187
Loans and properties
purchased out of REMICs................. 2,613 18,570
------------- -------------
Total net losses.......................$ 22,184 70,757
============= =============
Net losses as a percentage of
average amount outstanding (2):
REMICs and loans held
pending securitization.................. 0.73% 0.57%
Loans and properties
purchased out of REMICs................. 0.10% 0.20%
------------- -------------
Total net losses as a percentage of
average amount outstanding............... 0.83% 0.77%
============= =============
(2) Amounts for the three months ended June 30, 1998 are annualized.
CONTACT: Jerome Jerome St. Latin doctor of Church; preeminent biblical scholar. [Christian Hagiog.: Attwater, 185] See : Wisdom M. Perelson OR Allison
Allison, which may come from a medieval Norman nickname for Alice, meaning "noble type", or from the Irish name "Iseult", meaning "fair lady". H. Wey n. 1. Way; road; path. v. t. & i. 1. To weigh. n. 1. A certain measure of weight. Senior Vice President Senior Vice President ContiFinancial Corporation Edelman Ed·el·man , Gerald Maurice Born 1929. American biochemist. He shared a 1972 Nobel Prize for research on the chemical structure and nature of antibodies. Financial (212) 207-5402 (212) 704-4424 |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion