Business Services Industry
Accredited Reports Record Full Year and Q4 2004 Results; Loans On-Balance Sheet up 94%; Originations up 56%; Net Income up 31% in 2004
Business Wire, Feb 10, 2005
Accredited Home Lenders: Financial Summary
Three Months Ended Year Ended
December 31, December 31,
-------- --------- --------- ---------
2003 2004 2003 2004
-------- --------- --------- ---------
(dollars in (dollars in
thousands) thousands)
Income Statement:
Interest Income $58,498 $114,290 $178,982 $357,081
Gain on sale of loans 69,798 82,108 241,115 292,451
Loan servicing income 1,856 1,484 7,645 6,689
Net gain on mortgage-related
securities and derivatives 1,259 273 6,698 2,356
Other income 199 1,680 782 2,093
-------- --------- --------- ---------
Total revenues 131,610 199,835 435,222 660,670
-------- --------- --------- ---------
Salaries, wages and benefits 32,716 43,047 112,239 160,822
General, administrative, and
other expenses 18,920 26,781 59,730 89,059
-------- --------- --------- ---------
Total operating expenses 51,636 69,828 171,969 249,881
-------- --------- --------- ---------
Interest Expense 19,934 48,074 63,562 134,211
Provision for losses 10,213 17,149 33,129 56,856
-------- --------- --------- ---------
Total expenses 81,783 135,051 268,660 440,948
-------- --------- --------- ---------
Income before income taxes 49,827 64,784 166,562 219,722
Income taxes 19,853 24,188 66,547 85,289
Minority interest - dividends
paid on preferred stock of
subsidiary - 2,495 - 3,655
-------- --------- --------- ---------
Net income $29,974 $38,101 $100,015 $130,778
======== ========= ========= =========
Basic earnings per share $1.51 $1.85 $5.61 $6.42
======== ========= ========= =========
Diluted earnings per share $1.41 $1.76 $4.97 $6.06
======== ========= ========= =========
Weighted average shares
outstanding:
Basic 19,833 20,639 17,825 20,356
======== ========= ========= =========
Diluted 21,232 21,699 20,108 21,564
======== ========= ========= =========
Three Months Ended Year Ended
December 31, December 31,
----------- ----------- ----------- ------------
2003 2004 2003 2004
----------- ----------- ----------- ------------
(dollars in thousands) (dollars in thousands)
Other Data:
Originations:
Wholesale $2,136,522 $3,106,377 $7,118,369 $11,217,528
Retail & Other $236,202 $359,978 $839,940 $1,204,662
----------- ----------- ----------- ------------
Total mortgage loan
originations $2,372,724 $3,466,355 $7,958,309 $12,422,190
Weighted average
coupon rate of
mortgage loan
originations 7.6% 7.3% 7.7% 7.3%
Weighted average
credit score(1) 635 637 632 639
Loan sales and
securitizations:
Whole loan
sales $1,841,427 $2,497,553 $6,061,019 $8,282,215
Mortgage loans
securitized $515,247 $1,046,675 $1,236,187 $3,269,832
----------- ----------- ----------- ------------
Total loan sales and
securitizations $2,356,674 $3,544,228 $7,297,206 $11,552,047
Net profit margin on
whole loan sales:
Gain on whole loan
sales(2)(3) 3.9% 3.6% 4.2% 3.7%
Net gain (loss) on
derivatives(2) 0.0% -0.1% -0.2% 0.0%
----------- ----------- ----------- ------------
Net premium
received on whole
loan sales(2)(4) 3.9% 3.5% 4.0% 3.7%
Net origination
points and fees 0.5% 0.4% 0.6% 0.4%
Loan origination
expenses -2.7% -2.3% -2.7% -2.3%
----------- ----------- ----------- ------------
Net cost to
originate(5) -2.2% -1.9% -2.1% -1.9%
----------- ----------- ----------- ------------
Net profit margin
on whole loan
sales 1.7% 1.6% 1.9% 1.8%
=========== =========== =========== ============
Annualized losses on
serviced portfolio
as a percentage of
average serviced
assets 0.5% 0.3% 0.6% 0.3%
Net interest margin
components(6)
Warehouse
Interest income 7.7% 7.4% 7.7% 7.3%
Interest expense -2.8% -3.7% -2.8% -3.1%
----------- ----------- ----------- ------------
Spread 4.9% 3.7% 4.9% 4.2%
=========== =========== =========== ============
Securitizations
Interest income 7.8% 7.5% 7.6% 7.5%
Interest expense -2.7% -3.0% -2.9% -2.8%
----------- ----------- ----------- ------------
Spread 5.1% 4.5% 4.7% 4.7%
=========== =========== =========== ============
Net Interest Margin 5.1% 4.3% 4.9% 4.6%
At December 31, At December 31,
--------------- ---------------
2003 2004
--------------- ---------------
(dollars in thousands)
Serviced Portfolio:
Loans held for sale $1,292,839 $1,811,429
Loans held for investment $2,095,398 $4,749,149
Sold servicing retained or
securitized/off balance
sheet $307,739 $171,531
--------------- ---------------
Total serviced portfolio at period
end $3,695,976 $6,732,109
=============== ===============
Total delinquent at period end(7) 1.8% 1.7%
Total number of leased locations at
period end 46 66
Total number of employees 2,055 2,694
(1) Represents borrowers' average credit score at origination
obtained from one or more of the three principal credit bureaus.
The twelve months ended December 31, 2004 FICO score reflects
corrected second quarter FICO scores.
(2) The percentages are calculated based upon the respective amounts
divided by total whole loans sales.
(3) Excludes the provision for premium recapture which is a component
of the total gain on sale of loans.
(4) The net premium received on whole loan sales is computed based on
the cash premiums received on whole loan sales, net of gain (loss)
on related derivatives.
(5) Net cost to originate is defined as total operating expenses,
less loan servicing related costs, plus yield spread premiums,
less points and fees collected, all prior to any deferrals of
origination costs for accounting purposes. See reconciliation
table below.
(6) Interest income and interest expense are shown as annualized
percentages of the average outstanding balances of mortgage loans
and debt, respectively. Net interest margin is interest income
less interest expense, expressed as an annualized percentage of
the outstanding balance of mortgage loans.
(7) Delinquent is defined as loans that are 30 or more days
delinquent, including loans in foreclosure and loans converted
into real estate owned (REO).
At December 31, At December 31,
--------------- ---------------
2003 2004
--------------- ---------------
(dollars in thousands)
Balance Sheet Data:
Mortgage loans held for sale, net $1,277,075 $1,790,134
Mortgage loans held for investment,
net 2,089,383 4,690,758
Mortgage-related securities, at
fair value 3,692 3,715
Mortgage servicing rights, net 1,119 185
Other Assets 130,148 203,585
--------------- ---------------
Total Assets $3,501,417 $6,688,377
=============== ===============
Total warehouse and residual
interest financing 1,515,195 2,204,860
Securitization bond financing 1,724,389 3,954,115
Other Liabilities 49,610 68,925
--------------- ---------------
Total Liabilities 3,289,194 6,227,900
Minority interest - preferred
securities of subsidiary 0 97,922
Total Stockholders' Equity 212,223 362,555
--------------- ---------------
Total Liabilities and
Stockholders' Equity $3,501,417 $6,688,377
=============== ===============
Regulation G Disclosures
Information on portfolio income, net cost to originate and
adjusted leverage appearing elsewhere in this release may fall under
the Securities and Exchange Commission's definition of "non-GAAP
financial measures." Management believes that these calculations,
taken in context with the other information reported in this release,
provide investors with a better understanding of the stability of the
company's earnings, the efficiency of its loan generating platform and
the relevant measurement of the company's debt level. A reconciliation
of how portfolio income, net cost to originate and adjusted leverage
are calculated is set forth below.
Regulation G Disclosure related to Portfolio Income
Three Months Ended December 31,
------------------------------------
2003 2004
----------------- ------------------
Amount % Net Amount % Net
Revenue Revenue
-------- -------- --------- --------
Interest Income $58,498 $114,290
Interest Expense (19,934) (48,074)
Provision for losses (10,213) (17,149)
-------- ---------
Portfolio income 28,351 27.9% 49,067 36.5%
Total revenues 131,610 199,835
Interest Expense (19,934) (48,074)
Provision for losses (10,213) (17,149)
-------- ---------
Net revenues 101,463 100.0% 134,612 100.0%
-------- ---------
Salaries, wages & benefits 32,716 43,047
General, administrative and
other expenses 18,920 26,781
-------- ---------
Income before income taxes $49,827 $64,784
-------- ---------
Year Ended December 31,
-------------------------------------
2003 2004
------------------ ------------------
Amount % Net Amount % Net
Revenue Revenue
--------- -------- --------- --------
Interest Income $178,982 $357,081
Interest Expense (63,562) (134,211)
Provision for losses (33,129) (56,856)
--------- ---------
Portfolio income 82,291 24.3% 166,014 35.4%
Total revenues 435,222 660,670
Interest Expense (63,562) (134,211)
Provision for losses (33,129) (56,856)
--------- ---------
Net revenues 338,531 100.0% 469,603 100.0%
--------- ---------
Salaries, wages & benefits 112,239 160,822
General, administrative and
other expenses 59,730 89,059
--------- ---------
Income before income taxes $166,562 $219,722
--------- ---------
Regulation G Disclosure related to Net Cost to Originate
Three Months Ended Year Ended
December 31, December 31,
--------------------- ----------------------
2003 2004 2003 2004
---------- ---------- ---------- -----------
(dollars in thousands)
Total mortgage loan
originations 2,372,724 3,466,355 7,958,309 12,422,190
Total expenses 81,783 135,051 268,660 440,948
Less interest expense (19,934) (48,074) (63,562) (134,211)
Less provision expense (10,213) (17,149) (33,129) (56,856)
---------- ---------- ---------- -----------
Total operating
expenses 51,636 69,828 171,969 249,881
Add deferred direct loan
origination expenses 14,590 14,329 48,754 57,113
Less servicing cost(1) (2,652) (5,336) (8,660) (15,344)
---------- ---------- ---------- -----------
Loan origination
expenses 63,574 78,821 212,063 291,650
as % of volume 2.7% 2.3% 2.7% 2.3%
Less deferred net
origination points and
fees (12,065) (13,463) (46,428) (52,819)
---------- ---------- ---------- -----------
Net cost to originate 51,509 65,358 165,635 238,831
as % of volume 2.2% 1.9% 2.1% 1.9%
(1) Servicing cost consists of direct expenses and allocated corporate
overhead.
Regulation G Disclosure related to Adjusted Leverage
At December 31, At December 31,
--------------- ---------------
2003 2004
--------------- ---------------
(dollars in thousands)
Total Liabilities 3,289,194 6,227,900
Minority interest - preferred
securities of subsidiary 0 97,922
Total Stockholders' Equity 212,223 362,555
Total Minority Interest and
Stockholders' Equity 212,223 460,477
Ratio of Total Liabilities
divided by Minority Interest
Stockholders' Equity 15.5 13.5
Ratio of Total Liabilities
divided by
Stockholders' Equity 15.5 17.2
COPYRIGHT 2005 Business Wire
COPYRIGHT 2008 Gale, Cengage Learning
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