Union Acceptance Corporation Announces Results for the Quarter Ended March 31, 2002.Business EditorsINDIANAPOLIS--(BUSINESS WIRE)--April 22, 2002 Union Acceptance Corporation (Nasdaq:UACA UACA Universidad Autónoma de Centro América (Costa Rica, Central America) UACA Uveal Autoantigen with Coiled-coil domains and Ankyrin UACA Union Aéronautique de la Côte d'Azur UACA Upper Arlington Civic Association ) ("UAC (User Account Control) The management of user accounts in Windows Vista. Because malware has greater control of the computer when it is running in administrator mode, UAC was designed to enable more users to run their computers as a standard user rather than as ") today announced financial and operational results for the quarter ended March 31, 2002. Results include ongoing strategic initiatives which consist of a comprehensive expense reduction plan, extensive technology upgrades focused on improving efficiencies in the collections area, and a significant fee income program. Results for the quarter ended March 31, 2002 include an $18.8 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta ($12.0 million or $0.39 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 after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. ) charge for the revaluation Revaluation A calculated adjustment to a country's official exchange rate relative to a chosen baseline. The baseline can be anything from wage rates to the price of gold to a foreign currency. In a fixed exchange rate regime, only a decision by a country's government (i.e. of retained interest Retained interest (also colloquially known as a payout penalty) is future, currently unpaid, interest that some lenders add to the remaining principal of a loan to determine a payout figure in the event that the loan is terminated before the completion of the original term. . The Company reported a net loss for the quarter of $6.9 million or $0.22 per diluted share compared with net earnings of $6.5 million or $0.49 per diluted share for the quarter ended March 31, 2001. Excluding the charge for the revaluation of retained interest this quarter, net earnings would have totaled $5.1 million or $0.16 per diluted share. Over the past year, the Company has put forth extensive effort to improve the accuracy of cash flow projections A Cash Flow Projection is an attempt to forecast the cash flows that will be generated by an asset, often a company, over a specified time frame. Methodology Projections can be made with varying levels of detail, but any cash flow projection for a business entails related to components of retained interest and to fully leverage its risk-based relational database relational database Database in which all data are represented in tabular form. The description of a particular entity is provided by the set of its attribute values, stored as one row or record of the table, called a tuple. . In 2001, the Company applied its risk-based pricing "Property type" redirects here. For other uses see Property (disambiguation). Risk-based pricing is a methodology adopted by many lenders in the mortgage and financial services industries. methodology to the development and refinement of the loss curves utilized in the valuation of retained interest. As a result of these predictive loss curves, UAC made significant progress in the estimation estimation In mathematics, use of a function or formula to derive a solution or make a prediction. Unlike approximation, it has precise connotations. In statistics, for example, it connotes the careful selection and testing of a function called an estimator. of future credit losses. The curves are based on an analysis of the Company's historical database which goes back to 1992 and incorporates over 670,000 consumers representing over $10.0 billion in acquired 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 . Management was aware, however, that the historical database upon which the loss curves are based does not include substantial data from recessionary periods as the ten year period it represents had little in the way of recessionary information embedded Inserted into. See embedded system. in it. Therefore, during the quarter ended March 31, 2002, management continued to assess the risk from recessionary trends and determined that, despite the recent significant improvement in 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. trends, expected losses had moved beyond what had been explained (and reserved for in 2001) by risk management's loss curves. Accordingly, management increased loss rate estimates for recessionary impact on 12 pools, representing a majority of the $18.8 million revaluation. All of these pools were originated prior to the Company's use of its risk-based pricing model that was finalized See finalization. in June June: see month. 2001 at which time the most predictive components of credit loss were incorporated into the model. Pools originated subsequent to June 2001 are performing in line with management's original expectations. "We believe that the bulk of the problems with credit loss estimates are behind us, particularly given the aging of the pools," stated Lee Ervin Er·vin , Samuel James, Jr. 1896-1985. American politician who as U.S. senator from North Carolina (1954-1974) led the committee that investigated the Watergate Scandal during the Nixon administration. , President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . "Based on the substantial improvement in our collection efforts, as evidenced by the $35 million or 24% decrease in dollars 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. this quarter, we expect 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. net credit losses to decline during the remainder of 2002. We are disappointed that the impact of the recession has resulted in a significant revaluation this quarter; however, we are determined to be thorough in our review of retained interest to ensure its fair valuation." Delinquency and Collections Management's commitment to operational excellence and the numerous technological and operational enhancements implemented over the past six months are proving effective as delinquency as a percentage of the total servicing portfolio decreased each month throughout the quarter ended March 31, 2002.
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Monthly Delinquency Experience
March 31, February 28, January 31, December 31,
2002 2002 2002 2001
----------- ------------ ---------- ------------
(Dollars in thousands)
Total Delinquencies
30 days or more $ 111,015 $ 120,681 $ 132,254 $ 145,969
Servicing Portfolio $2,838,139 $2,872,345 $2,905,414 $2,961,737
Delinquency as
a Percentage of
Servicing Portfolio 3.91% 4.20% 4.55% 4.93%
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Delinquency was 3.91% at March 31, 2002 compared with 4.93% at December December: see month. 31, 2001, an improvement of 102 basis points in one quarter. Delinquency totaled 3.10% at March 31, 2001. The Company attributes the improvement this quarter primarily to the addition of new senior collections and servicing management and to UAC's technology initiative including the recent implementation of software designed to increase the frequency of collectors
Misc This is a list of noted collectors.
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 and voice response payment programs, and a behavioral behavioral pertaining to behavior. behavioral disorders see vice. behavioral seizure see psychomotor seizure. scoring model. Annualized credit losses totaled 4.73% for the quarter ended March 31, 2002, due to high levels of delinquency in the fourth quarter of 2001 resulting from economic turmoil. This compares with 4.38% for the quarter ended December 31, 2001 and 2.61% for the quarter ended March 31, 2001. Management began to see the results of improved collection activities in credit loss statistics for the month of February February: see month. 2002. Due to the natural lag between delinquency and credit losses, management expects that the improvement in delinquency trends will be reflected in lower credit losses beginning in the second quarter of 2002. The Company's allowance for estimated credit losses on 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. receivables was 5.67% at March 31, 2002. This compares with 5.49% at December 31, 2001 and 4.44% at March 31, 2001. Recovery rates were 37.17% for the quarter ended March 31, 2002, a significant increase from 30.56% for the quarter ended December 31, 2001. Recovery rates were 42.24% for the quarter ended March 31, 2001. Management attributes the recent increase in recovery rates to an improvement in the used car market which began early in the quarter. "In the month of February, we began to see signs of decreasing credit losses," stated Mr. Ervin. "Coupled with the major improvements we have made in our collection efforts, the expected exit of our larger pools from their peak loss rate months this year, the strong rebound rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective in the used car resale resale n. selling again, particularly at retail. In many states a "resale license" or "resale number" is required so that the state can monitor the collection of sales tax on retail sales. RESALE. market and the initial signs of an economic recovery, the outlook going forward is very positive. The significant reduction in delinquency will translate (1) To change one language into another; for example, assemblers, compilers and interpreters translate source language into machine language. (2) In computer graphics, to move an image on screen without rotating it. into a reduction in credit losses. However, the improvement in credit losses is gradual The Gradual (Latin: graduale, sometimes called the Grail) is a chant in the extraordinary form of the Roman Catholic Mass, sung after the reading or singing of the Epistle and before the Alleluia, or, during penitential seasons, before the Tract. . We expect the impact of our efforts in collections will be evidenced by lower credit losses beginning in the second quarter of 2002 with a continual decline on a quarterly basis throughout the remainder of 2002." Receivable Acquisitions and Credit Quality For the quarter ended March 31, 2002, receivable acquisitions were $209.4 million. Acquisitions for the quarter ended March 31, 2001 totaled $336.6 million. The Company saw a positive trend in monthly volume as total acquisitions grew from $36.1 million in December 2001 to $55.1 million, $73.9 million, and $80.4 million in the months of January January: see month. 2002, February 2002, and March 2002, respectively. The Company's total servicing portfolio was $2.8 billion at March 31, 2002, compared with $3.4 billion at March 31, 2001. The Company continues to achieve pricing on new receivable acquisitions in excess of its risk-based pricing guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. which include an after-tax return on asset target of 1.5% or more. For the quarter ended March 31, 2002, the average net pricing spread over the hedge rate was 5.69%, a decrease from 6.66% for the quarter ended December 31, 2001. However, more importantly, risk-adjusted pricing remains ahead of budgeted levels. The weighted average credit bureau score on receivable acquisitions was 706 for the quarter ended March 31, 2002, compared with 699, 692, and 693 for the past three consecutive quarters. Credit bureau scores for receivables acquired at the time of the 1999-A through 2000-D securitizations (the old portfolio) averaged 661 for the 1999 pools and 672 for the 2000 pools. For receivables acquired in the quarter ended March 31, 2002, the weighted average loan to value ratio and the weighted average term were comparable to the past several quarters and in line with management's expectations. 2002-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. and Gain on Sale During the quarter, the Company securitized $300.0 million of receivables, compared with $573.0 million securitized and $430.0 million delivered in the quarter ended March 31, 2001. In connection with the securitization, the Company had a gain on sale of $6.3 million (net of a cost of $1.0 million for interest rate derivatives An interest rate derivative is a derivative where the underlying asset is the right to pay or receive a (usually notional) amount of money at a given interest rate. The interest rate derivatives market is the largest derivatives market in the world. used to hedge securitized receivables) for the quarter ended March 31, 2002. The Company reported a net loss on sale of receivables of $11.6 million (net of a $18.8 million pre-tax charge for revaluation of retained interest). This compares with a net gain on sale of receivables of $2.4 million (net of a $2.8 million pre-tax charge for revaluation of retained interest) in the quarter ended March 31, 2001. For this quarter's securitization, the net spread (gross spread less servicing fees, upfront costs, ongoing credit enhancement Credit Enhancement A method whereby a company attempts to improve its debt or credit worthiness. Notes: Credit enhancements take many different forms. An example of a credit enhancement would be conversion rights added on to a debt instrument in order to lower the issuing fees, trustee A user or group of users that has been given access rights to files on a network server. See also TRUSTe. fees, and 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. costs) was 5.29%. This compares with 5.12% for the securitization in the quarter ended March 31, 2001. Fee Income Fees for the quarter ended March 31, 2002 totaled $1.3 million and represented the highest level of fees in the Company's history. The increase in fees is consistent with management's recent initiative to enhance revenues and reduce the 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 of earnings through predictable and stable fee income. The newly implemented fee program for payments made over the phone generated $0.6 million in fee income during the quarter ended March 31, 2002. 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 and funding fees received on receivable acquisitions for the quarter ended March 31, 2002 totaled $0.7 million compared with $0.8 million for the quarter ended March 31, 2001. The decrease is due to a 38% reduction in receivables acquired compared with the March 2001 quarter. Origination and funding fees are deferred until the related receivables are sold in a securitization and will be recognized as a component of gain on sale when sold. Management expects amounts from origination and funding fees to increase as receivable acquisitions gradually grad·u·al adj. Advancing or progressing by regular or continuous degrees: gradual erosion; a gradual slope. n. Roman Catholic Church 1. increase over the next several quarters. It is the Company's intention to further augment aug·ment v. aug·ment·ed, aug·ment·ing, aug·ments v.tr. 1. To make (something already developed or well under way) greater, as in size, extent, or quantity: fee income through a third party servicing operation and the establishment of an insurance agency as previously announced. Management expects revenues generated through these ventures will have a positive impact beginning in the third quarter of 2002. 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. In line with its objective of reducing operating expenses, management continued to analyze an·a·lyze v. 1. To examine methodically by separating into parts and studying their interrelations. 2. To separate a chemical substance into its constituent elements to determine their nature or proportions. 3. operations for potential cost-saving improvements during the quarter. Specific expense reductions implemented during the past six months had a positive effect on total operating expenses which totaled $13.4 million or 1.86% of the $2.9 billion average servicing portfolio for the quarter ended March 31, 2002. This compares with $14.7 million or 1.94% (with an average servicing portfolio of $3.0 billion) for the quarter ended December 31, 2001, and $14.8 million or 1.76% (with an average servicing portfolio of $3.4 billion) for the quarter ended March 31, 2001. The reduction in total operating expenses of $1.4 million compared to the quarter ended March 31, 2001 was due to the expense reduction initiative undertaken by management in the fourth quarter of 2001. Management expects further reduction in operating expenses throughout 2002. Capital Resources In April 2002, UAC took an additional step in its recapitalization Recapitalization Restructuring a company's debt and equity mixture often with the aim of making a company's capital structure more stable. Notes: Companies often want to diversify their debt-to-equity ratio to improve liquidity. strategy by finalizing a $55 million residual Residual See:Residual value funding facility. This facility is a significant component of the Company's plan to meet its objective of making UAC highly profitable and one of the most soundly capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. companies in the independent auto finance industry. UAC is targeting an equity to managed assets ratio of 8.0%. At March 31, 2002, UAC's equity to managed assets ratio was 5.46%. During March 2002, the Company made a $22 million principal payment on its senior debt. At March 31, 2002, $42.1 million of warehouse capacity was utilized, and an additional $41.4 million was available to borrow Borrow To obtain or receive money on loan with the promise or understanding that it will be repaid. based on the outstanding principal balance of eligible receivables. The Company maintained cash on hand of $19.5 million at March 31, 2002 for total available cash of $60.9 million. Including net cash available through the residual funding facility, the Company maintained pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma total available cash of $110.9 million at March 31, 2002. Total available cash was $18.4 million at March 31, 2001. Credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities for 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. financing of receivable acquisitions provide a total of $750 million in available funding. Delinquency and Credit Loss Data The following tables set forth delinquency and credit loss experience related to the Company's servicing portfolio:
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Delinquency Experience
----------------------
At March 31, 2002 At December 31, 2001
------------------------ -----------------------
(Dollars in thousands)
Number of Number of
Receivables Amount Receivables Amount
----------- ---------- ----------- ----------
Servicing portfolio 231,676 $2,838,139 241,178 $2,961,737
Delinquencies
30-59 days 5,665 66,393 7,329 84,748
60-89 days 2,641 33,105 3,605 44,100
90 days or more 1,000 11,517 1,504 17,121
---------- ---------- ---------- ----------
Total delinquencies 9,306 $ 111,015 12,438 $ 145,969
========== ========== ========== ==========
Delinquency as a
percentage of
servicing portfolio 4.02% 3.91% 5.16% 4.93%
At March 31, 2001
------------------------
(Dollars in thousands)
Number of
Receivables Amount
----------- -----------
Servicing portfolio 267,436 $3,350,427
Delinquencies
30-59 days 4,868 56,187
60-89 days 2,639 33,254
90 days or more 1,223 14,493
---------- ----------
Total delinquencies 8,730 $ 103,934
========== ==========
Delinquency as a
percentage of
servicing portfolio 3.26% 3.10%
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Credit Loss Experience
----------------------
Three Months Ended
-----------------------------------------
(Dollars in thousands)
March 31, December 31, March 31,
2002 2001 2001
---------- ---------- ----------
Average servicing
portfolio $2,871,966 $3,027,302 $3,378,983
Gross charge-offs 54,075 47,776 38,204
Recoveries 20,101 14,600 16,137
---------- ---------- ----------
Net charge-offs $ 33,974 $ 33,176 $ 22,067
========== ========== ==========
Gross charge-offs
as a percentage
of average servicing
portfolio(1) 7.53% 6.31% 4.52%
Recoveries as a
percentage of
gross charge-offs 37.17% 30.56% 42.24%
Net charge-offs
as a percentage
of average servicing
portfolio(1) 4.73% 4.38% 2.61%
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(1) Annualized
Earnings Before the Impact of Derivative Instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with 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 , ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "), the Company marks to market derivative instruments. These instruments are only used to hedge receivable acquisitions prior to securitization. The Company is required to record adjustments to earnings every accounting period favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. or unfavorably, depending on changes in market interest rates, regardless of the offsetting effect that would normally only be recognized at the time the Company securitizes. Therefore, each quarter, in addition to GAAP earnings, the Company presents results of operations before giving effect to the earnings impact of the derivative instruments used to hedge held for sale receivables. Before giving effect to the earnings impact of derivative instruments on held for sale receivables, the Company reported a net loss for the quarter ended March 31, 2002 of $6.7 million or $0.22 per diluted share, compared with net earnings of $4.6 million or $0.34 per diluted share for the quarter ended March 31, 2001. Excluding the revaluation for retained interest, earnings before the impact of derivative instruments totaled $5.3 million or $0.17 per diluted share based on 30.9 million weighted average shares outstanding for the quarter ended March 31, 2002. This compares with $6.3 million or $0.48 per diluted share based on 13.3 million weighted average shares outstanding for the quarter ended March 31, 2001. Pro Forma Portfolio-Based Financial Statements In addition, the Company has elected e·lect v. e·lect·ed, e·lect·ing, e·lects v.tr. 1. To select by vote for an office or for membership. 2. To pick out; select: elect an art course. to present, below, pro forma portfolio-based statements of operations which account for securitization transactions as secured financings rather than sales of receivables. In its consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge prepared in accordance with GAAP, the Company records a gain on the sale of receivables in securitization transactions primarily representing the discounted estimated future servicing cash flows to be received by the Company related to the receivables sold. Future servicing cash flows are the projected cash flows resulting from the difference between the weighted average coupon Weighted average Coupon The weighted average of the gross interest rates of mortgages underlying a pool as of the pool issue date; the balance of each mortgage is used as the weighting factor. rate of the receivables sold and the weighted average note rate paid to investors in the securitized trusts, less an allowance for estimated credit losses, the Company's contractual servicing fee of 1.00% and ongoing trust and credit enhancement fees. The pro forma portfolio-based statements of earnings set forth below (following the presentation of the Company's historical selected financial data), present the Company's operating results under the assumption that securitization transactions are secured financings and no gain on sale, retained interest income, or servicing fee income is recognized. Instead, interest income, fee income, interest expense and other costs related to the asset-backed securities Asset-backed security A security that is collateralized by loans, leases, receivables, or installment contracts on personal property, not real estate. asset-backed security A debt security collateralized by specific assets. are recognized over the life of the securitized receivables. There is no provision or allowance for credit losses. Credit losses are recorded as incurred. The pro forma portfolio-based statements of operations and related data do not present the Company's operating results in accordance with GAAP. The pro forma portfolio-based data is presented solely for illustrative il·lus·tra·tive adj. Acting or serving as an illustration. il·lus  tra·tive·ly adv.Adj. 1. purposes to assist readers in their understanding of the Company's business and its financial performance. Such data is not intended to be an indication of any future results of operations of the Company and such data does not provide all information that would be provided with financial statements prepared in accordance with GAAP if the Company had accounted for its securitizations as secured financings. Conference Call Union Acceptance Corporation will host a conference call on April 23, 2002 at 12:00 p.m. Indianapolis Indianapolis (ĭn'dēənă`pəlĭs), city (1990 pop. 731,327), state capital and seat of Marion co., central Ind., on the White River; selected 1820 as the site of the state capital (which was moved there in 1825), inc. 1847. time (1:00 p.m. EDST EDST Eastern Daylight Savings Time EDST Extended Daylight Saving Time EDST Enterprise Desktop Support Technician EDST Edge-Disjoint Spanning Tree EDST Engineering Design System Technology (San Jose, California) ). The dial-in number for participation in this conference call is 800-273-2385. For a replay of the conference call, please go the Company's web site, www.unionacceptance.com. Corporate Description UAC is one of the nation's largest independent, indirect automobile automobile, self-propelled vehicle used for travel on land. The term is commonly applied to a four-wheeled vehicle designed to carry two to six passengers and a limited amount of cargo, as contrasted with a truck, which is designed primarily for the transportation of finance companies. The Company's primary business is purchasing and servicing prime automobile retail installment sales Installment sale The sale of an asset in exchange for a specified series of payments (the installments). installment sale A sale in which the buyer is scheduled to make a series of payments over a period of time. contracts. These contracts are originated by dealerships affiliated af·fil·i·ate v. af·fil·i·at·ed, af·fil·i·at·ing, af·fil·i·ates v.tr. 1. To adopt or accept as a member, subordinate associate, or branch: with major domestic and foreign manufacturers, nationally recognized rental RENTAL. A roll or list of the rents of an estate containing the description of the lands let, the names of the tenants, and other particulars connected with such estate. This is the same as rent roll, from which it is said to be corrupted. car outlets, and used car superstores This is a list of superstores by country. Multi-national
adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. credit profiles. Union Acceptance Corporation commenced business in 1986 and currently acquires receivables from over 5,800 manufacturer-franchised dealerships in 40 states. By using state-of-the-art technology in a highly centralized cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. 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. and servicing environment, Union Acceptance Corporation enjoys one of the lowest cost operating structures in the independent prime automobile finance industry. Forward Looking Information This news release contains 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. regarding matters such as profitability, delinquency and credit loss trends and estimates, recoveries of repossessed vehicles, receivable acquisitions, the impact of recent initiatives described on revenues and profits, and other issues. Readers are cautioned that actual results may differ materially from such forward-looking statements. Forward-looking statements involve risks and uncertainties including, but not limited to, the difficulty inherent in predicting changes in delinquency and credit loss rates, changes in acquisition volume, the ability of the Company to collect newly implemented fees, limited availability When customers of the PSTN make telephone calls, they commonly make use of a telecommunications network called a switched-circuit network. In a switched-circuit network, devices known as switches are used to connect the caller to the callee. of financing and other capital resources, general economic conditions that affect consumer loan performance and consumer borrowing practices and other important factors detailed in 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. for the six months ended December 31, 2001 which was filed with the Securities and Exchange Commission.
Union Acceptance Corporation
Selected Financial Data
(Unaudited)
(Dollars in thousands, except per share data)
Balance Sheet Data at: March 31, 2002 December 30, 2001
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Assets
Cash and cash equivalents $ 19,468 $ 14,244
Restricted cash 3,950 4,650
Receivables held for sale, net 90,196 176,511
Retained interest in securitized assets 199,481 198,251
Accrued interest receivable 612 1,323
Property, equipment, and
leasehold improvements, net 8,183 8,516
Other assets 33,642 33,661
-------- --------
Total Assets $355,532 $437,156
======== ========
Liabilities and Shareholders' Equity
Liabilities
Notes payable $ 47,011 $100,300
Term debt 111,333 133,000
Accrued interest payable 1,860 2,393
Amounts due to trusts 19,481 18,610
Other payables and accrued expenses 6,454 8,153
-------- --------
Total Liabilities 186,139 262,456
-------- --------
Shareholders' Equity
Common stock $145,374 $145,374
Accumulated other comprehensive
earnings, net of taxes 2,070 450
Retained earnings 21,949 28,876
-------- --------
Total Shareholders' Equity 169,393 174,700
-------- --------
Total Liabilities and
Shareholders' Equity $355,532 $437,156
======== ========
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30+ Delinquency at: March 31, December 31, March 31,
2002 2001 2001
---------- ---------- ----------
3.91% 4.93% 3.10%
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Allowance Data at:
Allowance for estimated
credit losses on
securitized receivables $ 155,773 $ 152,985 $ 143,270
Securitized receivables
serviced $2,748,399 $2,788,006 $3,228,640
Allowance as a percentage
of securitized receivables
serviced 5.67% 5.49% 4.44%
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Managed Receivable Data at:
Receivables held for sale $ 89,740 $ 173,731 $ 121,787
Other 77 79 81
Securitized 2,748,399 2,788,006 3,228,640
Receivables serviced
for others 224 259 389
---------- ---------- ----------
Total Servicing Portfolio $2,838,440 $2,962,075 $3,350,897
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Union Acceptance Corporation
Selected Financial Data
(Unaudited)
(Dollars in thousands, except per share data)
Three Months Ended
March 31,
------------------------
Income Statement Data for the Period: 2002 2001
---------------------------------------------------------------------
Interest on receivables held for sale $ 5,771 $ 10,727
Retained interest and other 5,856 8,379
----------- ------------
Total interest income 11,627 19,106
Interest expense 4,301 8,903
----------- ------------
Net interest margin 7,326 10,203
Provision for estimated credit losses 962 300
----------- ------------
Net interest margin after provision for
estimated credit losses 6,364 9,903
Gain (loss) on sales of receivables, net (11,553) 12,880
Gain (loss) on interest rate derivatives
on securitized receivables (976) (10,475)
Gain (loss) on interest rate derivatives
on held for sale receivables (404) 3,122
Servicing fee income 6,802 7,805
Late charges and other fees 2,262 1,924
----------- ------------
Other revenues (3,869) 15,256
----------- ------------
Salaries and benefits 7,407 8,814
Other expenses 5,972 6,017
----------- ------------
Total operating expenses 13,379 14,831
----------- ------------
Earnings (loss) before provision
for income taxes (10,884) 10,328
Provision (benefit) for income taxes (3,957) 3,794
----------- ------------
Net earnings (loss) $ (6,927) $ 6,534
============ ============
---------------------------------------------------------------------
Per Common Share Data:
Net earnings (loss) (basic and diluted) $ (0.22) $ 0.49
Book value $ 5.48 $ 9.29
Weighted average shares outstanding 30,926,606 13,298,482
---------------------------------------------------------------------
Receivable Acquisitions: $ 209,398 $ 336,630
Receivables Sold: $ 300,000 $ 430,003
---------------------------------------------------------------------
Ratios:
Return on average managed assets -0.88% 0.71%
Return on average shareholders' equity -16.09% 22.40%
Operating expenses as a percentage of
average servicing portfolio 1.86% 1.76%
---------------------------------------------------------------------
Portfolio Performance:
Net credit loss (annualized for
the period ended) 4.73% 2.61%
---------------------------------------------------------------------
Pro forma information for the earnings
impact of derivative instruments on
held for sale receivables related
to FAS 133:
Total revenues $ 7,758 $ 34,362
Pro forma adjustment 404 (3,122)
----------- ------------
Pro forma total revenues $ 8,162 $ 31,240
=========== ============
Pro forma net earnings (loss) $ (6,670) $ 4,552
Pro forma earnings (loss) per common
share (diluted and basic) $ (0.22) $ 0.34
Pro forma return on average managed assets -0.85% 0.49%
Pro forma return on average
shareholders' equity -15.54% 15.47%
---------------------------------------------------------------------
Union Acceptance Corporation
Pro Forma Portfolio-Based Financial Data(1)
(Dollars in thousands)
(Unaudited)
---------------------------------------------------------------------
The pro forma portfolio-based statements of earnings were as follows:
Three Months Ended
March 31
----------------------
2002 2001
--------- ---------
Interest income, fee and other income $ 89,482 $ 110,576
Funding costs (49,837) (65,670)
--------- ---------
Net margin 39,645 44,906
Operating expenses (13,381) (14,831)
Credit losses (33,974) (22,067)
--------- ---------
Pre-tax portfolio-based earnings (7,710) 8,008
Income taxes(2) 2,846 (2,955)
--------- ---------
Net portfolio-based earnings $ (4,864) $ 5,053
========= =========
Portfolio-based earnings per share $ (0.16) $ 0.38
========= =========
---------------------------------------------------------------------
The pro forma return on average managed receivables was as follows:
Three Months Ended
March 31
--------------------------
2002 2001
----------- -----------
Interest income, fee and other income 12.46% 13.09%
Funding costs -6.94% -7.77%
----------- -----------
Net margin 5.52% 5.32%
Operating expenses -1.86% -1.76%
Credit losses -4.73% -2.61%
----------- -----------
Pre-tax portfolio-based earnings -1.07% 0.95%
Income taxes 0.40% -0.35%
----------- -----------
Net portfolio-based earnings -0.67% 0.60%
=========== ===========
Average Managed Receivables $ 2,872,029 $ 3,379,047
---------------------------------------------------------------------
The following is a reconciliation of the pro forma portfolio-based net
earnings to GAAP net earnings:
Three Months Ended
March 31
---------------------
2002 2001
--------- ---------
GAAP Net income $ (6,927) $ 6,534
Gain on sales of receivables, net 11,656 (12,880)
Retained interest and other (5,109) (6,206)
Servicing fee (6,802) (7,805)
Net margin 35,064 38,985
Credit losses (33,974) (22,067)
Provision for estimated credit losses 962 300
Gain (loss) on interest rate derivatives 1,379 7,353
--------- ---------
Net adjustments 3,176 (2,320)
Tax effect of adjustments (1,113) 839
--------- ---------
Net portfolio-based earnings $ (4,864) $ 5,053
========= =========
(1) These portfolio-based financial statements do not present the
Company's results of operations in accordance with GAAP and are
provided for illustrative purposes only.
(2) Tax effect is based upon the Company's effective tax rate for the
respective period.
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