ContiFinancial announces second fiscal quarter 1997 financial results.NEW YORK--(BUSINESS WIRE)--Oct. 31, 1996-- Highlights for the quarter: - Net income increased 27% to $25.5 million. - Earnings per common share were $0.58. - 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. volume increased 81% to $814.4 million. ContiFinancial Corporation (NYSE-CFN) today announced earnings results for the second quarter ended Sept. 30, 1996. Gross income for the second quarter of fiscal 1997 increased 26.6% to $89.7 million from $70.8 million for the second quarter of fiscal 1996. The Company reported net income of $25.5 million for the second quarter, compared to net income of $20.0 million for the comparable period last year, an increase of 27.4%. Earnings per common share were $0.58 for the quarter ended Sept. 30, 1996. The weighted average number of common shares outstanding during the second quarter of fiscal 1997 was 44 million. Gross income for the six months ended Sept. 30, 1996 increased 36.3% to $159.4 million from $117.0 million during the first six months of fiscal 1996. The Company reported net income of $44.9 million for the first half of fiscal 1997, compared to net income of $28.7 million for the comparable period last year, an increase of 56.4%. Earnings per common share for the Company were $1.02 for the six months ended Sept. 30, 1996. The weighted average number of common shares outstanding during the six months ended Sept. 30, 1996 was 44 million. The strong financial results were driven by expanding securitization volume from ContiMortgage and continued strong performance from strategic alliance clients. 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. volume rose 30% to $2,119.8 million from $1,633.2 million in the six months ended Sept. 30, 1995. The six month fiscal 1997 volume included $1,507.4 million of securitizations for ContiMortgage, a 101% increase from the corresponding period in fiscal 1996. Volume for the second quarter of fiscal 1997 included $814.4 million of securitizations for ContiMortgage, an 81% increase from the second quarter of fiscal 1996. Securitizations, totaling $612.4 million, of home equity loans, franchisee loans, equipment leases, commercial real estate and sub-prime auto loans were closed on behalf of strategic allies during the first six months of fiscal 1997. During the second quarter of fiscal 1997, the Company completed one franchisee, one commercial real estate, one home equity and one sub-prime auto securitization on behalf of strategic allies, totaling $311.9 million, as compared with a total of $692.0 million during the second quarter of fiscal 1996. There was greater volume in the second quarter of fiscal 1996 due primarily to the purchase and securitization of a $265 million home equity ARMS portfolio, resulting from an attractive market opportunity. ContiMortgage, the Company's largest operating unit operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon , increased its 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 to $885.4 million for the second quarter of fiscal 1997, a 58% increase from $559.5 million for the corresponding period of fiscal 1996. Loan origination volume was $1,563.5 million for the six months ended Sept. 30, 1996, a 55% increase from $1,006.8 million for the corresponding period of fiscal 1996. 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 on ContiMortgage's servicing portfolio at Sept. 30, 1996 were 3.26%, and 4.33%, respectively, well below comparable industry averages. Delinquencies declined from ContiMortgage's June June: see month. 30, 1996 experience of 4.05% while defaults increased slightly from 3.98%. The decline in delinquencies reflects the implementation of new collection technology in the first quarter of fiscal 1997. Net losses as a percentage of average serviced loans outstanding was 0.044% for the second quarter of fiscal 1997, as compared to 0.039% for the second quarter of fiscal 1996. In its valuation of 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 from ContiMortgage originated and serviced loans, the Company continued to reserve 0.0875% per quarter for estimated credit losses, or 199% of actual losses for the current quarter. Jim Moore Moore, city (1990 pop. 40,761), Cleveland co., central Okla., a suburb of Oklahoma City; inc. 1887. Its manufactures include lightning- and surge-protection equipment, packaging for foods, and auto parts. , President and Chief Executive Officer of ContiFinancial Corporation, said, "We are quite pleased with our strong financial results for the first half of fiscal 1997, and we are proud of the fact that Forbes Forbes , B(ertie) C(harles) 1880-1954. American publisher and businessman who founded and edited (1916-1954) Forbes magazine. His son Malcolm Stevenson Forbes magazine has ranked ContiFinancial among the best 50 small companies in 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. , based on average return on equity over the past five years. "ContiMortgage, one of the largest and fastest-growing home equity lenders in the country, continues to benefit from its large and diverse network of more than 120 mortgage banks and 500 small broker loan origination sources, as well as its continued expansion into the western half of the United States. Our correspondent mortgage banking network originated approximately 76% of the loan volume and the small broker group the remaining 24%. In the second quarter of fiscal 1997, 19.4% of our loans were originated in the western states vs. 6.5% for the year ended March 31, 1996. We have managed our 55% increase in year-over-year six month mortgage 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 while maintaining our commitment to credit quality. In fact, October October: see month. was ContiMortgage's largest origination month ever, enabling its serviced portfolio to exceed the $5 billion level. In addition, ContiMortgage is expanding its 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. presence into the west with a new underwriting office in Orange County, Calif. "We are also pleased to report that on Aug. 14, 1996, ContiFinancial sold $300 million of unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. senior notes maturing Aug. 15, 2003, with a coupon of 8.375%. The 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). provided additional long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. capital for new growth opportunities and permitted a reduction of $125 million of debt due to Continental Grain Company. The Company received BB+ and Ba1 ratings from Standard & Poor's and Moody's Moody's Corporation (NYSE: MCO) is the holding company for Moody's Investors Service which performs financial research and analysis on commercial and government entities. The company also ranks the credit-worthiness of borrowers using a standardized ratings scale. , respectively, which generated significant crossover Crossover The point on a stock chart when a security and an indicator intersect. Crossovers are used by technical analysts to aid in forecasting the future movements in the price of a stock. In most technical analysis models, a crossover is a signal to either buy or sell. buying interest from investment grade investors, resulting in a lower-than-anticipated coupon. The market price of the bonds has continued to improve subsequent to the issuance." Mr. Moore also commented that the Company's strategic alliance strategy continues to be successfully implemented as evidenced by the following transactions that ContiFinancial has announced since Sept. 30, 1996: - A definitive agreement was signed to purchase 100% of United Lending Group, a west coast-based home equity lender specializing in retail originations via direct mail and telemarketing telemarketing, the practice of selling goods or services to customers by means of the telephone or of surveying consumer preferences in telephone conversations. throughout the United States. With anticipated annual origination volumes in fiscal 1998 in excess of $400 million, this acquisition will expand ContiFinancial's origination methods to include retail home equity and home improvement loans in addition to ContiMortgage's wholesale loan originations. ContiMortgage will service the product originated by United Lending Group and retained by the Company for securitization. - Together with SouthTrust SouthTrust Corporation was a banking company headquartered in Birmingham, Alabama. In 2004, SouthTrust reached an agreement to merge with Wachovia in a stock-for-stock deal. At the time of the merger with Wachovia was completed, SouthTrust had $53 Billion in assets. Corporation and Health Care Capital Finance, PRN (PRiNter) The DOS name for the first connected parallel port. See DOS device names. Mortgage Capital LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control was formed. PRN is a full-service full-ser·vice adj. Associated with or offering complete service: full-service gasoline pumps; full-service banks. commercial mortgage company specializing in servicing the needs of the long-term care long-term care (LTC), n the provision of medical, social, and personal care services on a recurring or continuing basis to persons with chronic physical or mental disorders. and senior citizens housing industry nationally. - A new strategic alliance was formed with North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. Mortgage Company, in which ContiMortgage will provide the underwriting and servicing expertise to facilitate B and C mortgage loan origination through North American Mortgage's 108 production offices in 31 states. North American loan origination teams are undergoing training at ContiMortgage during November and December and the program is expected to be rolled out nationally early in the fourth quarter of fiscal 1997. - On Oct. 30, 1996, ContiFinancial's commercial real estate mortgage securitization of $243 million was priced, the Company's largest transaction ever in this market. Following a similar transaction in July, the Company is pleased to report that it expects the ContiFinancial commercial real estate mortgage 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 to bring similar or larger sized portfolios to the market on a regular quarterly basis. ContiFinancial's alliances with South Trust/PRN Mortgage Capital, First Security Commercial Mortgage, Parallel Capital and Love Funding have been the critical factor in achieving the goal of becoming a major factor in the commercial loan conduit market. ContiFinancial 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. . Through its subsidiary, ContiMortgage Corporation, the Company 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 , purchaser, seller and servicer of home equity loans made to borrowers whose borrowing needs may not be met by traditional financial institutions. In addition, ContiFinancial provides financing, securitization and bond placement services to originators of a broad range of loans, leases and receivables, including multi-family and other commercial mortgage loans, sub-prime auto loans, home improvement loans, equipment leases, and franchisee 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, including interest rate risk, 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. , delinquency and default rates, changes (legislative and otherwise) in the asset securitization industry, demand for ContiFinancial Corporation's services, the degree to which ContiFinancial Corporation is leveraged, its needs for financing, and other risks identified in ContiFinancial Corporation's Securities and Exchange Commission filings. -0-
ContiFinancial Corporation
Selected Financial Information
(dollars in thousands, except per share data)
(unaudited)
Consolidated Statements of Income
Three months % Six months %
ended Incr ended Incr
Sept.30, (Decr) Sept. 30 (Decr)
1996 1995 1996 1995
Gross income
Gain on sale of
receivables $44,203 $37,589 17.6 $75,369 $60,144 25.3
Interest 33,179 25,082 32.3 61,694 42,965 43.6
Net servicing income 10,893 7,320 48.8 19,966 12,086 65.2
Other income 1,408 840 67.6 2,417 1,808 33.7
------- ------ ---- ------- ------- ----
Total gross income 89,683 70,831 26.6 159,446 117,003 36.3
------- ------ ---- ------- ------- ----
Expenses
Compensation and
benefits 15,788 12,112 30.4 28,196 19,952 41.3
Interest 24,326 22,273 9.2 43,988 37,518 17.2
Provision for
loan losses 89 109 (18.4) 308 257 19.8
General and
administrative 6,978 3,557 96.2 11,757 6,814 72.5
------- ------ ---- ------- ------- ----
Total expenses 47,181 38,051 24.0 84,249 64,541 30.5
------- ------ ---- ------- ------- ----
Income before income
taxes and minority
interest 42,502 32,780 29.7 75,197 52,462 43.3
Income taxes 16,986 12,752 33.2 30,248 20,408 48.2
------- ------ ---- ------- ------- ----
Income before
minority interest 25,516 20,028 27.4 44,949 32,054 40.2
Minority interest
of subsidiary -- -- -- -- 3,310 (100.0)
------- ------ ---- ------- ------- ----
Net income $25,516 $20,028 27.4 $44,949 $28,744 56.4
======= ====== ==== ======= ======= ====
Primary and fully
diluted earnings
per common share $0.58 $1.02
Fully diluted weighted
average number of
shares outstanding 43,949,105 43,996,236
Primary weighted
average number of
shares outstanding 43,914,518 43,906,400
-0-
Sept. 30, March 31, Sept. 30,
1996 1996 1995
Balance Sheet Data
Interest-only and residual
certificates $270,012 $293,218 $203,813
Trade receivables, net 572,005 352,325 184,647
Total assets 1,337,054 892,540 639,849
Total liabilities 993,380 597,721 533,190
Total stockholders' equity 343,674 294,819 106,659
-0-
Note: Certain reclassifications of 1995 amounts have been made
to conform to the current year presentation.
-0-
Three months % Six months %
ended Incr ended Incr
Sept.30, (Decr) Sept. 30 (Decr)
1996 1995 1996 1995
Loan Portfolio Data
ContiMortgage
serviced
loan portfolio $4,852,045 $2,954,808 64.2 $4,852,045 $2,954,808 64.2
ContiMortgage
loan
originations $885,407 $559,532 58.2 $1,563,535 $1,006,812 55.3
Securitizations
and sales:
ContiMortgage $814,420 $450,184 80.9 $1,507,374 $750,184 100.9
Strategic
alliances 311,924 692,000 (54.9) 612,399 883,000 (30.6)
------- -------- ---- --------- ------- ----
Total securitizations
and sales $1,126,344 $1,142,184 (1.4) $2,119,773 $1,633,184 29.8
========== ========== ===== ========== ========== ====
CONTACT: ContiFinancial Corporation Jerome Perelson, 212/207-5402 or 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 Joseph Kist kist n. Variant of cist2. kist Noun Scot & S African a large wooden chest Kist a chest of money, hence, a store or cache of money, 1619. , 212/704-8239 or 212/704-8172 |
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