MINNEAPOLIS, April 23 /PRNewswire/ -- Arcadia Financial Ltd. (NYSE: AAC)
today reported net income of $4,197,000, or $.11 per diluted share, on total
revenues of $65,389,000 for the first quarter ended March 31, 1998. In the
comparable 1997 period, the company reported a net loss of $75,339,000, or
$1.96 per diluted share. Results for the 1997 period included special charges
totaling $79.7 million, net of tax, or $2.08 per diluted share.
Richard A. Greenawalt, Arcadia's president and chief executive officer,
said Arcadia's first quarter results reflect the company's continuing emphasis
on more selective loan purchases, its effective management of net interest
rate spreads and its ongoing investments in process improvements and
technology. "We continue to focus on improving underwriting, servicing and
collections by strengthening our processes and controls and investing in
technology that will help us make better loan buying, collections and
servicing decisions," said Greenawalt. He attributed first quarter declines
in loans delinquent more than 30 days and a stabilization in the company's
inventory of repossessed vehicles primarily to a concentrated focus on
improved performance in these areas during the quarter.
The company's 1998 first quarter loan purchases totaled $584.0 million,
compared to $781.9 million in the 1997 first quarter and $582.1 million in the
1997 fourth quarter. Greenawalt noted that the company's monthly loan
purchases have increased steadily since December 1997 as the flow of
applications at credit quality levels fitting the company's loan programs
began rebounding from a decline related to a slowdown in used car sales during
the fourth quarter of 1997.
Greenawalt added, however, that softness in the used car market continued
to adversely affect wholesale recovery rates on repossessed vehicles, which
were below 60 percent in the first quarter as in the fourth quarter. "We are
carefully monitoring the adequacy of our reserves for loan losses in light of
our recent recovery rate," said Greenawalt.
The company's cash flow from operations continues to benefit from the
slower rate of portfolio growth, the lower dealer participation fees paid on
the increasing percentage of loans purchased under the company's Classic
program and the release of cash from restricted spread accounts. Excess cash
releases from restricted cash spread accounts totaled $24.9 million through
March 31, 1998, compared to $30.1 million in the 1997 fourth quarter and
$15.1 million in the comparable 1997 period. Marginally higher loan losses
and lower recovery rates attributed to the slight decrease in excess cash
distributions during the quarter.
Portfolio Performance and Credit Quality
-- Loans delinquent more than 30 days were 3.53 percent of the company's
servicing portfolio at March 31, 1998, compared to 3.63 percent at
December 31, 1997 and 2.34 percent at March 31, 1997.
-- Annualized net losses as a percentage of the average servicing
portfolio were 3.91 percent for the three months ending March 31, 1998,
compared to 3.58 percent for the three months ending December 31, 1997 and
4.48 percent (after special charges) for the three months ending March 31,
1997.
-- Reserves for loan losses totaled $236.3 million, or 4.70 percent of the
servicing portfolio at March 31, 1998, compared to $235.6 million, or
4.75 percent of the servicing portfolio at December 31, 1997 and $197.1
million, or 4.70 percent of the loan servicing portfolio at March 31, 1997.
First Quarter Highlights
-- Loan purchases for the first quarter of 1998 totaled $584.0 million
compared to $582.1 million in the fourth quarter of 1997 and $781.9 million in
the first quarter of 1997. Classic loan purchases were 70.5 percent of total
loan purchases in the first quarter of 1998 compared to 63.1 percent in the
fourth quarter of 1997 and 48.4 percent in the first quarter of 1997.
-- The net interest rate spread on the $588.2 million of loans securitized
in the 1998 first quarter was 9.45 percent compared to 8.85 percent on the
$587.8 million of loans securitized in the 1997 fourth quarter and
7.83 percent on the $774.7 million of loans securitized in the 1997 first
quarter.
-- Operating expenses as a percentage of the servicing portfolio were
3.67 percent for the 1998 first quarter compared to 3.41 percent in the 1997
fourth quarter and 4.09 percent in the 1997 first quarter.
-- The company's servicing portfolio at March 31, 1998 totaled
$5.03 billion, compared to $4.96 billion at December 31, 1997 and
$4.19 billion at March 31, 1997.
Arcadia Financial Ltd. is a Minneapolis-based consumer financial services
company specializing in purchasing, selling and servicing retail installment
contracts for new and used automobiles originated in 45 states. The company,
founded in 1990, is the nation's largest independent provider of automobile
financing. Its 18 Regional Buying Centers are located in Arizona; northern
and southern California; Colorado; Florida; Georgia; Maryland; Massachusetts;
Minnesota; Missouri; New York; North Carolina; Ohio; Tennessee; north, south
and west Texas; and Washington.
This news release contains forward-looking statements that are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those projected. The most significant among these risks and
uncertainties are (1) the level of delinquencies, gross charge-offs and net
losses, (2) the company's ability to achieve adequate interest rate spreads,
and (3) the level of operating expenses. Earnings may also be affected by the
effects of economic factors on consumer debt and by competitive pressures.
Additional risks which may affect the company's future performance are
detailed under the caption "Cautionary Statements" in Exhibit 99.1 to the
Company's Annual Report on Form 10-K
(Selected financial information follows.)
Arcadia Financial LTD
Selected Financial and Other Operating Data
March 31, 1998
Three months ended
March 31, March 31,
Dollars in thousands, except per share data 1998 1997
REVENUES:
Net interest margin $14,669 $16,726
Gain on sale of loans 31,054 (77,887)
Servicing fee income 19,666 13,298
65,389 (47,863)
EXPENSES:
Operating expenses 45,834 40,643
Long term debt and other interest expense 12,785 7,591
Total expenses 58,619 48,234
Operating income (loss) before income taxes
and extraordinary item 6,770 (96,097)
Income tax expense (benefit) 2,573 (36,586)
Net income (loss) before extraordinary item 4,197 (59,511)
Extraordinary item -- (15,828)
Net income (loss) $4,197 $(75,339)
Basic Earnings per Share:
Income (loss) per common share before
extraordinary item $0.11 $(1.55)
Extraordinary item per common share -- (0.41)
Net income (loss) per common share $0.11 $(1.96)
Diluted Earnings per Share:
Income (loss) per share before extraordinary
item $0.11 $(1.55)
Extraordinary item per share -- (0.41)
Net Income (loss) per share $0.11 $(1.96)
Weighted average shares outstanding
Basic 38,988,885 38,358,743
Diluted 39,360,968 38,358,743
Number of buying centers 18 18
Servicing portfolio (in millions) $5,026.5 $4,194.6
Delinquencies as a percentage of
servicing portfolio 3.53% 2.34%
Book value per common share 9.06 8.52
Automobile loan purchases (in millions) $584.0 $781.9
Annualized net losses as a percentage of
average servicing portfolio 3.91% 4.48%
March 31, December 31,
Dollars in thousands 1998 1997
ASSETS
Cash and cash equivalents $6,387 $17,274
Due from securitization trust 122,223 107,207
Auto loans held for sale 20,582 49,133
Finance income receivable 410,583 371,985
Restricted cash in spread accounts 261,336 250,297
Other assets 48,514 49,854
Total assets $869,625 $845,750
LIABILITIES AND SHAREHOLDERS' EQUITY
Amounts due under warehouse facilities $53,919 $30,880
Senior term notes 365,894 365,640
Subordinated notes 49,845 50,772
Capital lease obligations 4,982 5,368
Deferred income taxes 21,418 18,846
Accounts payable and accrued liabilities 20,437 26,302
Total liabilities 516,495 497,808
Shareholders' equity 353,130 347,942
Total liabilities and
shareholders' equity $869,625 $845,750
SOURCE Arcadia Financial Ltd.
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fax, 800-758-5804, ext. 652638
CONTACT:
Scott Fjellman, Investor Relations of Arcadia
Financial, 612-944-4582
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