Saxon Capital, Inc. Reports Third Quarter 2003 Operating Results; EPS Increased To $0.58 Diluted For The Quarter; Owned Portfolio Increased 5%.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, today announced third quarter 2003 net income of $17.5 million or $0.58 per share 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. , as compared to $8.5 million or $0.29 per share diluted, for the third quarter 2002. Compared to net income of $15.4 million or $0.51 per share diluted for second quarter 2003, third quarter earnings increased 13%. Operational Highlights for the Third Quarter -- Net mortgage loan portfolio, ("owned portfolio"), increased by 5% to $4.6 billion at September September: see month. 30, 2003 from $4.4 billion at June June: see month. 30, 2003. -- Mortgage loan production for third quarter 2003 increased by 10% over third quarter 2002 production and decreased 5% over second quarter 2003. -- Servicing rights for approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $800 million of mortgage loans were purchased. Loan Production Total mortgage loan production volume was $704.2 million for third quarter 2003, an increase of 10% compared to third quarter 2002 and a decrease of 5% compared to second quarter 2003. Total cost to produce was 3.19% of total loan production for third quarter 2003 as compared to 3.43% for third quarter 2002 and 3.12% for second quarter 2003. Saxon's retail mortgage loan production was $184.5 million during third quarter 2003, an increase of 5% over third quarter 2002, and a decrease of 18% compared to second quarter 2003. At September 30, 2003, total retail branches totaled 27 as compared to 20 at September 30, 2002. Same branch retail production for branches open greater than 12 months decreased 7% for third quarter 2003 from third quarter 2002, and decreased 18% for third quarter 2003 from second quarter 2003. Saxon's wholesale mortgage loan production was $297.0 million during third quarter 2003, an increase of 4% over third quarter 2002, and an increase of 5% compared to second quarter 2003. Saxon's 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. flow mortgage loan production was $185.4 million during third quarter 2003, an increase of 81% over third quarter 2002, and a decrease of 8% over second quarter 2003. Correspondent bulk mortgage loan production was $37.4 million during third quarter 2003, a decrease of 50% from third quarter 2002, and an increase of 8% from second quarter 2003. This year-over-year change in the correspondent flow and bulk production reflects Saxon's continued focus on growing the flow business, while pursuing the bulk business when market conditions are advantageous. Portfolio Performance At September 30, 2003, Saxon's owned portfolio totaled $4.6 billion, an increase of 47% from September 30, 2002 and an increase of 5% from June 30, 2003. Seriously 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. (60+ days past due) loans were 7.5% of owned portfolio at September 30, 2003, compared to 6.2% at September 30, 2002 and 6.6% at June 30, 2003. Primarily reflecting the growth of the owned portfolio, net of charge-offs, Saxon increased its reserve for loan losses to $46.1 million at September 30, 2003 from $44.6 million at June 30, 2003. Purchase of Servicing Rights During the quarter, Saxon purchased third party servicing rights to approximately $800 million of mortgage loans. Saxon paid approximately 65 basis points for servicing rights to each of two loan pools, which have annual servicing fees of approximately 50 basis points. Financial Highlights For third quarter 2003, Saxon's net interest income was $45.8 million, as compared to $34.5 million for third quarter 2002 and $45.1 million for second quarter 2003. For third quarter 2003, Saxon's net interest margin was 4.2%, as compared to 5.1% for third quarter 2002 and 4.4% for second quarter 2003. Total net revenues for third quarter 2003 were $54.7 million, as compared to $37.6 million for third quarter 2002 and $51.2 million for second quarter 2003. Saxon's increase in net revenues is due to the continued growth of the owned portfolio and an increase in servicing income. 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. , which include general and administrative expenses and depreciation, were $25.9 million for third quarter 2003, as compared to $23.5 million for third quarter 2002 and $26.1 million for second quarter 2003. Liquidity At September 30, 2003, Saxon had $1.5 billion in committed facilities Committed Facility A credit facility whereby terms and conditions are clearly defined by the lending institution and imposed upon the borrowing company. Notes: In committed facilities, the borrowing companies must meet specific requirements set forth by the lending and $137.1 million in short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. liquidity. During the quarter, Saxon priced and closed a $980.5 million asset-backed 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. , Saxon Asset Securities Trust 2003-3. Conference Call Saxon will host a conference call for analysts and investors at 11 a.m. Eastern Time on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , October October: see month. 24, 2003. For a live 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 broadcast of this conference call, please visit Saxon's investor relations Investor relations The process by which the corporation communicates with its investors. website at www.saxoncapitalinc.com. To participate in the call, contact Ms. Bobbi Roberts, Vice President Investor Relations (804.967.7879 or robertsb@saxonmtg.com). A replay will be available shortly after the call and will remain available until 5 p.m. Eastern Time, October 31, 2003. The replay will be available on Saxon's website or at 800.252.6030 using the ID number 19620497. 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 Moneyline may refer to:
v. 1. To bring into being; create. 2. To come into being; start. and purchase loans through wholesale, correspondent and retail business channels Business channels are TV channels that concentrate on business news. List of channels
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 October 23, 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)
Sept. 30, Dec. 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 20,822 22,692
----------- -----------
Total liabilities 4,816,713 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 66,880 21,090
----------- -----------
Total stockholders' equity 325,455 286,346
----------- -----------
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 13,439 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 25,860 26,067 26,661 23,532 23,477
Income before taxes 28,887 25,087 20,905 18,603 14,085
Income tax expense 11,412 9,656 8,021 6,792 5,561
--------- -------- -------- -------- ---------
Net income $17,475 $15,431 $12,884 $11,811 $8,524
Basic earnings per
share $0.61 $0.54 $0.46 $0.42 $0.30
========= ======== ======== ======== =========
Diluted earnings per
share $0.58 $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 313,453 297,472 289,920
Return on Average Assets (ROA)(7) 1.4% 1.4% 1.2%
Return on Average Equity (ROE)(7) 22.3% 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) 2.1% 2.3% 2.5%
Efficiency Ratio (9) 47.2% 51.0% 56.1%
----------------------------------------------------------------------
Common Stock Data
Basic earnings per share $0.61 $0.54 $0.46
Diluted earnings per share 0.58 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) $11.37 $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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