Saxon Capital, Inc. Announces Agreement to Settle Litigation; Subsequent Event to be Reflected in Third Quarter Financial Results.Business Editors GLEN ALLEN Glen Allen is the name of several places in the United States of America:
Saxon Saxon Any member of a Germanic people who lived along the Baltic coast in ancient times and later migrated west as far as the British Isles. The Saxons became pirates in the North Sea during the decline of the Roman empire, and in the early 5th century they spread through Capital, Inc. ("Saxon") (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : SAXN), a residential mortgage lending and servicing company, announced today that it has reached an agreement, subject to conditions, to resolve the Fair Labor Standards Act Fair Labor Standards Act or Wages and Hours Act, passed by the U.S. Congress in 1938 to establish minimum living standards for workers engaged directly or indirectly in interstate commerce, including those involved in production of goods bound ("FLSA FLSA Fair Labor Standards Act FLSA Fedora Legacy Security Advisory ") litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. against its subsidiary, America's MoneyLine Moneyline may refer to:
pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charge to earnings for the period ended September September: see month. 30, 2003. The financial information Saxon previously reported in its third quarter earnings press release dated October October: see month. 23, 2003, before execution of the settlement agreement, did not reflect this charge. 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 FLSA collective action litigation alleges that loan officers who routinely worked more than 40 hours per week were denied overtime Overtime is the amount of time someone works beyond normal working hours. Normal hours may be determined in several ways:
contingent on, dependant on, dependant upon, dependent on, dependent upon, depending on, contingent entry of a stipulated dismissal A discharge of an individual or corporation from employment. The disposition of a civil or criminal proceeding or a claim or charge made therein by a court order without a trial or prior to its completion which, in effect, is a denial of the relief sought by the commencement of the by the Court and approval by all of the collective action members. If all of the collective action members do not accept the settlement by December December: see month. 1, 2003 America's MoneyLine, Inc. may, at its option, declare TO DECLARE. To make known or publish. By tho constitution of the United States, congress have power to declare war. In this sense the word, declare, signifies, not merely to make it known that war exists, but also to make war and to carry it on. 4 Dall. 37; 1 Story, Const. Sec. the proposed settlement to be void, in which case the litigation would resume. Execution of the November 3, 2003 settlement agreement is a subsequent event that Saxon has determined generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting require immediate reflection of the financial impact of this tentative tentative, adj not final or definite, such as an experimental or clinical finding that has not been validated. settlement agreement as a probable PROBABLE. That which has the appearance of truth; that which appears to be founded in reason. loss within the September 30, 2003 financial statements, as opposed op·pose v. op·posed, op·pos·ing, op·pos·es v.tr. 1. To be in contention or conflict with: oppose the enemy force. 2. to being a fourth quarter event. The case may ultimately be settled at a different amount, or not at all, due to the significant contingencies Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. contained in the settlement agreement. However, due to the execution of the settlement agreement on November 3, 2003 Saxon has judged that a loss is probable as defined within Statement of Financial Accounting Standard No. 5, Accounting for Contingencies. Accordingly, Saxon has adjusted its financial statements included in the previous press release to reflect the impact of the settlement agreement. Revised results for the period ended September 30, 2003 are attached. About Saxon Saxon is a residential mortgage 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 servicer that originates, purchases, securitizes and services real property secured mortgages. Saxon is headquartered in Glen Allen, Virginia Glen Allen is a census-designated place (CDP) in Henrico County, Virginia, United States. The population was 12,562 at the 2000 census. Geography Glen Allen is located at (37.660094, -77.485634)GR1. and has additional primary facilities in Fort Worth, Texas Fort Worth is the fifth-largest city in the state of Texas, 18th-largest city in the United States[1], and voted one of "America’s Most Livable Communities. and Foothill Ranch ranch, large farm devoted chiefly to raising and breeding cattle, horses, sheep, and goats. The cattle ranch was introduced from Latin America to Texas and the plains of the W United States and Canada. , 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). . Saxon's production subsidiaries, Saxon Mortgage, Inc., and America's MoneyLine, Inc. originate o·rig·i·nate v. 1. To bring into being; create. 2. To come into being; start. and purchase loans through wholesale, correspondent A bank, Securities firm, or other financial institution that regularly renders services for another in an area or market to which the other party lacks direct access. A bank that functions as an agent for another bank and carries a deposit balance for a bank in another city. and retail business channels Business channels are TV channels that concentrate on business news. List of channels
adj. 1. Almost exact or correct: the approximate time of the accident. 2. 4,000 brokers, 400 correspondents, and 27 retail branches. As of September 30, 2003, Saxon's servicing subsidiary, Saxon Mortgage Services, Inc., serviced a mortgage loan portfolio of $8.8 billion. For more information, visit www.saxoncapitalinc.com. Information Regarding Forward Looking Statements Statements in this news release reflecting our future expectations, plans and strategies, are "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. " and are based on current expectations and assumptions that are subject to risks and uncertainty. Our actual results and the timing of certain events could differ materially from those plans due to a number of factors, such as changes in overall economic conditions and interest rates, faster 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. than those we currently anticipate, declining consumer demand for mortgage refinancing Refinancing An extension and/or increase in amount of existing debt. , changes in capital market and competitive conditions applicable to our industry, and changes in the applicable legal 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. environment. You should also be aware that all information in this news release is as of November 7, 2003, or as of the date indicated. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the company's expectations.
Saxon Capital, Inc.
Consolidated Balance Sheets
(Dollars in thousands, except for share data)
(unaudited)
September 30, December 31,
2003 2002
--------------- ---------------
Assets
Cash $6,460 $8,098
Accrued interest receivable 51,410 38,630
Trustee receivable 76,739 44,128
Mortgage loan portfolio 4,617,299 3,612,473
Allowance for loan losses (46,070) (40,227)
--------------------- ---------------
Net mortgage loan portfolio 4,571,229 3,572,246
Restricted cash 214,719 301,435
Servicing related advances 95,697 102,558
Mortgage servicing rights, net 33,426 24,971
Deferred tax asset 13,183 17,588
Real estate owned 20,616 14,563
Other assets 58,689 38,945
--------------------- ---------------
Total assets $5,142,168 $4,163,162
===================== ===============
Liabilities and stockholders'
equity
Liabilities:
Accrued interest payable $9,713 $7,431
Warehouse financing 51,416 474,442
Securitization financing 4,709,762 3,347,251
Note payable 25,000 25,000
Other liabilities 21,678 22,692
--------------------- ---------------
Total liabilities 4,817,569 3,876,816
--------------------- ---------------
Stockholders' equity
Common stock, $0.01 par value per share,
100,000,000 shares authorized; 28,616,985
and 28,235,781 issued and outstanding,
respectively 286 282
Additional paid-in capital 263,289 259,267
Other comprehensive (loss)
income, net of tax of
$(3,013) and $3,649 (5,000) 5,707
Retained earnings 66,024 21,090
--------------------- ---------------
Total stockholders' equity 324,599 286,346
--------------------- ---------------
Total liabilities and
stockholders' equity $5,142,168 $4,163,162
===================== ===============
Saxon Capital, Inc.
Consolidated Statements of Operations
(Dollars in thousands, except for share data)
(unaudited)
Quarter Quarter Quarter Quarter Quarter
Ended Ended Ended Ended Ended
Sept.30, June 30, March 31, Dec.31, Sept.30,
2003 2003 2003 2002 2002
---------- -------- -------- -------- ---------
Revenues:
Interest income $76,923 $76,054 $70,188 $63,829 $59,145
Interest expense (31,143) (30,993) (26,661) (25,782) (24,665)
---------- -------- -------- -------- ---------
Net interest income 45,780 45,061 43,527 38,047 34,480
Provision for
mortgage loan losses (8,517) (9,677) (8,614) (6,912) (6,124)
---------- -------- -------- -------- ---------
Net interest income
after provision for
mortgage loan losses 37,263 35,384 34,913 31,135 28,356
Servicing income, net
of amortization 16,560 15,725 12,647 11,000 9,073
Gain on sale of
mortgage assets 924 45 6 - 133
---------- -------- -------- -------- ---------
Total net revenues $54,747 $51,154 $47,566 $42,135 $37,562
Expenses:
Payroll and related
expenses 14,839 13,382 14,278 12,918 13,366
General and
administrative
expenses 11,368 11,424 11,058 11,193 9,580
Other expense
(income) 1,053 1,261 1,325 (579) 531
---------- -------- -------- -------- ---------
Total expenses 27,260 26,067 26,661 23,532 23,477
Income before taxes 27,487 25,087 20,905 18,603 14,085
Income tax expense 10,859 9,656 8,021 6,792 5,561
---------- -------- -------- -------- ---------
Net income $16,628 $15,431 $12,884 $11,811 $8,524
Basic earnings per
share $0.58 $0.54 $0.46 $0.42 $0.30
========== ======== ======== ======== =========
Diluted earnings per
share $0.55 $0.51 $0.44 $0.41 $0.29
========== ======== ======== ======== =========
Saxon Capital, Inc.
Supplemental Data
Qtr Qtr Qtr
9/30/2003 6/30/2003 3/31/2003
----------------------------------------------------------------------
Production Statistics
Volume
-------------------------------
Wholesale $296,959 $282,460 $274,724
Retail 184,474 223,633 182,345
Correspondent Flow 185,406 200,441 142,460
Correspondent Bulk 37,387 34,774 114,574
Called loans (1) - - -
Net Cost to Produce (2)
-------------------------------
Wholesale 2.81% 2.97% 3.24%
Retail 3.33% 2.80% 3.17%
Correspondent Flow 3.24% 3.32% 3.52%
Correspondent Bulk 5.14% 5.25% 4.94%
Total Production 3.19% 3.12% 3.55%
Cost to Service 0.26% 0.26% 0.26%
Credit Quality
-------------------------------
Average Loan-To-Value 79.2% 79.9% 79.5%
Credit Score 623 617 612
Fixed Weighted Average Coupon 7.8% 7.7% 7.9%
ARM Weighted Average Coupon 7.5% 7.6% 8.0%
----------------------------------------------------------------------
Portfolio Statistics
Owned Portfolio Principal Balance
(at period end) $4,529,008 $4,319,424 $3,953,056
Owned Portfolio Seriously
Delinquent (3) 7.5% 6.6% 6.4%
Owned Net Losses on Liquidated
Loans - quarter ended trust basis
(4) (5) 7,609 6,668 5,860
Owned Net Losses on Liquidated
Loans - quarter ended GAAP basis
(4) (5) 7,431 8,029 6,282
Total Serviced Portfolio Principal
Balance (at period end) 8,778,290 8,318,228 8,394,916
Total Serviced Portfolio Seriously
Delinquent (3) 10.1% 10.0% 9.8%
Total Serviced Net Losses on
Liquidated Loans - quarter ended
trust basis 26,655 29,127 26,554
----------------------------------------------------------------------
Key Ratios
Average Earning Assets (6) $4,395,113 $4,115,044 $3,723,306
Average Assets 4,917,499 4,511,920 4,247,087
Average Equity 313,025 297,472 289,920
Return on Average Assets (ROA)(7) 1.4% 1.4% 1.2%
Return on Average Equity (ROE)(7) 21.2% 20.7% 17.8%
Average Equity/Average Assets(%) 6.4% 6.6% 6.8%
Interest Income/Average Earning
Assets 7.0% 7.4% 7.5%
Interest Expense/Average
Earning Assets (8) 2.8% 3.0% 2.8%
Interest Margin/Average Earning
Assets 4.2% 4.4% 4.7%
Operating expense/Servicing
Portfolio (7) 1.2% 1.2% 1.3%
Operating expenses/Average
Assets (7) 2.2% 2.3% 2.5%
Efficiency Ratio (9) 49.8% 51.0% 56.1%
----------------------------------------------------------------------
Common Stock Data
Basic earnings per share $0.58 $0.54 $0.46
Diluted earnings per share 0.55 0.51 0.44
Shares used to compute basic
EPS 28,600 28,522 28,284
Shares used to compute diluted
EPS 30,312 29,973 29,059
Shares outstanding (period end) 28,617 28,594 28,393
Common Stock Price
High $18.65 $19.01 $13.96
Low $15.30 $12.81 $10.76
Period End $17.14 $17.28 $13.31
Book value per share (period end) $11.34 $10.54 $10.34
----------------------------------------------------------------------
Saxon Capital, Inc.
Supplemental Data
Qtr Qtr
12/31/2002 9/30/2002
----------------------------------------------------------------------
Production Statistics
Volume
-------------------------------
Wholesale $288,729 $284,338
Retail 192,387 176,489
Correspondent Flow 105,847 102,234
Correspondent Bulk 60,616 74,604
Called loans (1) 58,839 -
Net Cost to Produce (2)
-------------------------------
Wholesale 3.03% 3.46%
Retail 2.43% 2.46%
Correspondent Flow 3.34% 3.25%
Correspondent Bulk 5.78% 5.80%
Total Production 3.16% 3.43%
Cost to Service 0.32% 0.29%
Credit Quality
-------------------------------
Average Loan-To-Value 79.1% 79.5%
Credit Score 613 606
Fixed Weighted Average Coupon 8.3% 8.6%
ARM Weighted Average Coupon 8.3% 8.6%
----------------------------------------------------------------------
Portfolio Statistics
Owned Portfolio Principal Balance (at period
end) $3,505,255 $3,042,971
Owned Portfolio Seriously
Delinquent (3) 7.1% 6.2%
Owned Net Losses on Liquidated Loans - quarter
ended trust basis (4) (5) 2,595 2,357
Owned Net Losses on Liquidated Loans - quarter
ended GAAP basis (4) (5) 5,638 3,396
Total Serviced Portfolio Principal Balance (at
period end) 7,575,560 6,914,663
Total Serviced Portfolio Seriously Delinquent(3) 11.3% 11.6%
Total Serviced Net Losses on Liquidated Loans
- quarter ended trust basis 25,857 27,000
----------------------------------------------------------------------
Key Ratios
Average Earning Assets (6) $3,256,898 $2,794,114
Average Assets 3,758,518 3,102,153
Average Equity 277,719 263,530
Return on Average Assets (ROA)(7) 1.3% 1.1%
Return on Average Equity (ROE)(7) 17.0% 12.9%
Average Equity/Average Assets(%) 7.4% 8.5%
Interest Income/Average Earning Assets 7.8% 8.5%
Interest Expense/Average
Earning Assets (8) 3.1% 3.4%
Interest Margin/Average Earning Assets 4.8% 5.1%
Operating expense/Servicing Portfolio (7) 1.2% 1.4%
Operating expenses/Average Assets (7) 2.5% 3.2%
Efficiency Ratio (9) 55.8% 62.5%
----------------------------------------------------------------------
Common Stock Data
Basic earnings per share $0.42 $0.30
Diluted earnings per share 0.41 0.29
Shares used to compute basic EPS 28,152 28,101
Shares used to compute diluted EPS 28,696 29,155
Shares outstanding (period end) 28,236 28,120
Common Stock Price
High $13.50 $16.15
Low $8.15 $10.27
Period End $12.51 $11.07
Book value per share (period
end) $10.14 $9.52
----------------------------------------------------------------------
(1) Called loans are mortgages purchased from the SASTA 96-2,
97-1, 97-2, and 97-3 securitizations pursuant to the clean-up call
provision of the trust.
(2) Net cost to produce is defined as general and administrative
costs and premium paid, net of fees collected, divided by loan
production.
(3) Seriously delinquent is defined as 60 plus days past due.
(4) 2002 net losses on liquidated loans exclude losses of $12.6
million relating to sale of delinquent called loans purchased at a
discount and certain recoveries.
(5) GAAP requires losses to be recognized immediately upon the
loan transferring to real estate owned. The trust does not recognize a
loss on real estate owned property until it is sold, which causes a
timing difference between GAAP and trust losses. In addition, trust
losses exclude losses resulting from a delinquent loan sale.
(6) Average Earning Assets is a daily average balance of loans in
warehouse and securitized portfolio.
(7) Ratios are annualized.
(8) Interest expense excludes loan buydown and legal fees
associated with the warehouse facilities.
(9) Efficiency ratio is calculated as total expenses divided by
net revenues.
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