Union Acceptance Corporation Announces Fiscal 2001 Results
INDIANAPOLIS--July 23, 2001--Union Acceptance Corporation ("UAC") today announced financial and operational results for the fourth quarter and fiscal year ended June 30, 2001.Financial Results for the Year Ended June 30, 2001
For the 2001 fiscal year, net earnings totaled $4.2 million, or $0.30 per diluted share, compared with $17.0 million, or $1.28 per diluted share, in fiscal 2000. Fiscal 2001 results include a $23.7 million pre-tax ($15.0 million after-tax, or $0.91 per diluted share) charge for other than temporary impairment of Retained Interest in Securitized Assets that was recognized in the recently completed fourth quarter. (This impairment charge is discussed in greater detail below.) Excluding all impairment charges taken in the fiscal year, net earnings totaled $23.3 million, or $1.65 per diluted share in fiscal 2001, compared to $20.3 million, or $1.52 per diluted share in fiscal 2000.
In addition, management took a significant step toward its goal of increasing shareholders' equity to 8% of managed assets. During the fourth quarter, the Company issued 17.6 million shares of common stock via a rights offering, raising $88.0 million before offering costs. The offering enabled the Company to increase the ratio of equity to managed assets to 5.6% at June 30, 2001, compared with 3.5% at June 30, 2000. The issuance of common stock via the rights offering increased UAC's total number of shares outstanding to 30.9 million at June 30, 2001. Weighted average shares outstanding totaled 16,591,364 for the quarter ended, and 14,127,848 for the year ended, June 30, 2001.
Financial Results for the Quarter Ended June 30, 2001
For the quarter ended June 30, 2001, UAC's net loss totaled $9.2 million, or $0.55 per diluted share, compared with net earnings of $6.2 million, or $0.46 per diluted share for quarter ended June 30, 2000. Excluding impairment charges, net earnings totaled $6.9 million, or $0.41 per diluted share, for the quarter ended June 30, 2001, compared to $6.8 million, or $0.51 per diluted share for the quarter ended June 30, 2000.
Fourth Quarter Impairment Charge and New Risk-Based Pricing Model
As noted above, fourth quarter 2001 and fiscal 2001 results reflect a $23.7 million pre-tax ($15.0 million after-tax) charge for impairment of Retained Interest in Securitized Assets taken in the fourth quarter. This charge, recorded for 15 pools relating largely to receivables acquired prior to September 2000, was taken after extensive analysis of the existing retained interest in securitized assets. In addition to considering delinquency and credit loss rates, management utilized new proprietary analytical tools in this analysis which was completed in early July. This analysis indicated that expected losses for several securitized pools were higher than previously expected and that the current loss reserve levels were insufficient.
The process that led to this analysis, which resulted in the impairment of the retained interest asset, was actually initiated as a major effort to advance the sophistication of the risk-based pricing model during fiscal 2001. In recent quarters, management utilized the Company's proprietary database to identify factors that correlate most strongly with receivable performance. In recent weeks, the Company has applied the insights gained from the analysis of this database into its receivable pricing. Consequently, management believes the profitability of future securitized pools should improve as the Company continues to integrate additional factors that correlate most strongly with receivable performance into receivable pricing.
More recently, the Company has applied the information gained from these efforts to its predictive loss curves used for analyzing the fair value of retained interest in securitized assets at year-end and the determination of other than temporary impairment. Although UAC has always used quantitative techniques in predicting the performance of its securitized pools, management believes the predictive power of the Company's analysis improved significantly through the recent enhancements. As such, the Company now believes that it has more accurately determined the value of its retained interest assets.
"We are always seeking to assure that the forward-looking aspects of our financial reporting are as accurate as possible," commented John Stainbrook, CEO and President of the Company. "Clearly, we are very disappointed by both the quarter's charge and its magnitude. While a rise in bankruptcy filings may have contributed to an increase in losses this quarter, we emphasize that our decision to record this impairment charge is primarily due to the application of new risk-based data to our valuation analysis at year-end.
"On a positive note, this recently developed data has provided us with the ability to incorporate several new, highly predictive risk factors into the pricing of each receivable we purchase. We believe that this is the most important refinement we have made in our pricing model in several years, and we believe that it will allow us to project losses with greater accuracy. Projecting losses is always a challenge in this industry, but we expect significant improvements going forward as a result of our new risk-based pricing model. Importantly, the new pricing model was developed largely through our new analysis of UAC's unique database consisting of nine years of data encompassing $9.4 billion in receivables, and over 600,000 consumers strictly in UAC's chosen credit grades."
Selected Key Results for the Quarter Ended June 30, 2001
| -- | After the impairment charge and before giving effect to the earnings impact of derivative financial instruments on held for sale receivables, the Company reported a net loss of $10.2 million, or $0.62 per diluted share, compared with net earnings of $6.2 million, or $0.46 per diluted share for the quarter ended June 30, 2000. |
| -- | In lieu of a public securitization, UAC Securitization Corporation ("UACSC"), a subsidiary of UAC, sold $150 million in receivables to Special Purpose Accounts Receivable Corporation ("SPARC"), a commercial paper conduit facility. |
| -- | Receivables sold totaled $293.0 million, including $150.0 million sold to SPARC and $143.0 delivered to the 2001-A securitization. This compares with $534.3 million receivables sold in the quarter ended June 30, 2000. |
| -- | The Company reported a net loss on sale of receivables of $16.3 million (net of a $2.4 million loss on interest rate derivatives on securitized receivables and a $23.7 million charge for other than temporary impairment of Retained Interest). This compares with a net gain of $6.3 million (including a $0.3 million gain on interest rate derivatives on securitized receivables and a $1.0 million charge for other than temporary impairment of Retained Interest) for the quarter ended June 30, 2000. |
| -- | On April 1, 2001, the Company implemented Emerging Issues Task Force ("EITF") Issue No. 99-20, "Recognition of Interest Income and Impairment of Purchased and Retained Beneficial Interests in Securitized Financial Assets", and recorded a charge for the cumulative effect of a change in accounting principle of $989,000, net of taxes. |
| -- | In June 2001, the Company received an extension of its $15 million working capital line of credit. In July, 2001, the line of credit was renewed for a term of one year. |
Selected Key Results for the Year Ended June 30, 2001
-- Before giving effect to the earnings impact of derivative
financial instruments on held for sale receivables (due to the
adoption of SFAS No. 133 during fiscal 2001), net earnings
totaled $4.2 million, or $0.29 per diluted share, compared
with $17.0 million, or $1.28 per diluted share in fiscal 2000.
-- The Company's total servicing portfolio grew 11.4% to $3.2
billion, compared with $2.9 billion at June 30, 2000.
-- Receivable acquisitions increased 11.2% to $1.6 billion,
compared with $1.4 billion in fiscal 2000 despite management's
decision to slow the acquisition of receivables in the fourth
quarter while it revised the Company's risk-based pricing
model and in an effort to conserve capital while the rights
offering was underway.
-- Receivables sold totaled $1.7 billion, compared with $1.5
billion in fiscal 2000.
-- Total revenues prior to impairment charges increased 13.5% to
$131.1 million, compared with $115.5 million in fiscal 2000.
-- The Company's retail network of dealerships grew 13.8% to
5,631, compared with 4,946 at June 30, 2000.
-- Operating expenses totaled $57.2 million or 1.76% of the
average servicing portfolio. This compares with $49.9 million
or 1.88% in fiscal 2000.
-- The Company reported a net loss on sale of receivables of $7.1
million (net of a $21.7 million loss on interest rate
derivatives on securitized receivables and a $28.6 million
charge for other than temporary impairment of Retained
Interest). This compares with a net gain of $16.9 million
(including a $5.3 million gain on interest rate derivatives on
securitized receivables and a $5.3 million charge for other
than temporary impairment of Retained Interest) in fiscal
2000.
-- The Company's pre-tax unrealized net gain included in Retained
Interest was $4.3 million at June 30, 2001, compared with $5.8
million at June 30, 2000. Net of taxes, the unrealized gain
included in Retained Interest totaled $2.6 million at June 30,
2001 and is reported as Accumulated Other Comprehensive
Income.
-- Delinquency on the Tier I automobile portfolio was 3.52% at
June 30, 2001, compared with 2.82% at June 30, 2000.
-- Tier I credit losses totaled 2.48%, compared with 2.18% in
fiscal 2000.
-- The Company's allowance for estimated credit losses on
securitized receivables was 5.37% at June 30, 2001, compared
with 4.45% at June 30, 2000.
-- Recovery rates on the Tier I automobile portfolio decreased to
39.56%, compared with 40.56% in fiscal 2000.
-- At June 30, 2001, $5.2 million of warehouse capacity was
utilized, and an additional $32.5 million was available to be
borrowed based on the outstanding principal balance of
eligible receivables. In addition, the Company maintained cash
on hand of $70.9 million and a working capital line of credit
with capacity of $15.0 million, for total available cash of
$118.4 million at June 30, 2001. Total available cash was
$76.9 million at June 30, 2000. Primarily responsible for this
increase was the $86.5 million, net of offering costs, raised
through the rights offering.
The following tables set forth delinquency and credit loss experience related to the Tier I (prime) servicing portfolio:
----------------------------------------------------------------------
Delinquency Experience
----------------------
At June 30, 2001 At March 31, 2001
----------------------- -----------------------
(Dollars in thousands)
Number of Number of
Receivables Amount Receivables Amount
----------- ------------ ----------- ------------
Servicing portfolio 256,252 $ 3,192,472 264,539 $ 3,329,473
Delinquencies
30-59 days 5,247 61,316 4,625 54,280
60-89 days 2,841 36,194 2,548 32,609
90 days or more 1,219 14,805 1,211 14,424
----------- ------------ ----------- ------------
Total delinquencies 9,307 $ 112,315 8,384 $ 101,313
=========== ============ =========== ============
Delinquency as a
percentage of
servicing portfolio 3.63% 3.52% 3.17% 3.04%
At June 30, 2000
------------------------
(Dollars in thousands)
Number of
Receivables Amount
----------- -----------
Servicing portfolio 235,732 $2,848,150
Delinquencies
30-59 days 4,204 45,442
60-89 days 2,176 25,250
90 days or more 886 9,710
----------- -----------
Total delinquencies 7,266 $ 80,402
=========== ===========
Delinquency as a
percentage of
servicing portfolio 3.08% 2.82%
----------------------------------------------------------------------
Credit Loss Experience
---------------------------
Three Months Ended Fiscal Year Ended
-------------------------- ------------------------
(Dollars in thousands)
June 30, March 31, June 30, June 30, June 30,
2001 2001 2000 2001 2000
---------- ---------- ---------- ---------- ---------
Average
servicing
portfolio $3,232,911 $3,356,833 $2,771,197 $3,223,966 $2,610,803
Gross
charge-offs 36,147 37,526 24,311 132,415 95,815
Recoveries 13,096 15,800 10,076 52,381 38,863
---------- ---------- ---------- ---------- ---------
Net
charge-offs $ 23,051 $ 21,726 $ 14,235 $ 80,034 $ 56,952
========== ========== ========== ========== =========
Gross charge-
offs as a
percentage
of average
servicing
portfolio(a) 4.47% 4.47% 3.51% 4.11% 3.67%
Recoveries as
a percentage
of gross
charge-offs 36.23% 42.10% 41.45% 39.56% 40.56%
Net charge-offs
as a percentage
of average
servicing
portfolio(a) 2.85% 2.59% 2.05% 2.48% 2.18%
(a) Annualized
----------------------------------------------------------------------
In addition to reporting results of operations in accordance with generally accepted accounting principles ("GAAP"), the Company has elected to present, below, pro forma portfolio-based statements of earnings which account for securitization transactions as secured financings rather than sales of receivables. In its consolidated financial statements 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 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 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 earnings 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 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.
Union Acceptance Corporation will host a conference call on Tuesday, June 24, 2001, at 11:00 a.m. Eastern Time (10:00 a.m. Indianapolis, Indiana time). The dial-in number for participation in this conference call is 800-273-2385. For an Internet replay of the conference call or additional information on the Company, please go the Company's web site, www.unionacceptance.com.
Corporate Description
UAC is one of the nation's largest independent, indirect automobile finance companies. The Company's primary business is acquiring, securitizing and servicing prime retail installment sales contracts. These contracts are originated by dealerships affiliated with major domestic and foreign automobile manufacturers. The Company is focused on the upper-end of the credit quality spectrum. Union Acceptance Corporation commenced business in 1986 and currently acquires receivables from over 5,600 manufacturer-franchised dealerships in 40 states. By using state-of-the-art technology in a highly centralized underwriting 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 regarding matters such as profitability, delinquency and credit loss trends and estimates, recoveries of repossessed vehicles, receivable acquisitions 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, general economic conditions that affect consumer loan performance and consumer borrowing practices and other important factors detailed in the Company's April 6, 2001 registration statement on Form S-2 and the Company's annual report on Form 10-K for the fiscal year ended June 30, 2000, both of which were 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: June 30, June 30,
2001 2000
---------------------------------------------------------------------
Cash and cash
equivalents $ 70,939 $ 14,792
Restricted cash 4,331 13,010
Receivables
held for sale,net 42,770 206,701
Retained interest
in securitized assets 245,876 208,431
Accrued interest receivable 375 1,727
Property, equipment,
and leasehold
improvements, net 9,047 9,494
Other assets 23,697 23,983
----------- -----------
Total assets $ 397,035 $ 478,138
----------- -----------
----------- -----------
Notes payable $ 5,215 $ 152,235
Long-term debt 155,000 177,000
Accrued interest payable 4,544 5,408
Amounts due to trusts 19,822 14,487
Dealer premiums payable 533 3,663
Current and deferred
income taxes payable 5,856 9,740
Other payables and
accrued expenses 6,197 5,576
----------- -----------
Total liabilities 197,167 368,109
----------- -----------
Common stock 145,208 58,632
Accumulated other
comprehensive earnings,
net of taxes 2,632 3,564
Retained earnings 52,028 47,833
----------- -----------
Total shareholders' equity 199,868 110,029
----------- -----------
Total liabilities
and shareholders'
equity $ 397,035 $ 478,138
----------- -----------
----------- -----------
--------------------------------------------------------------------
30+ Delinquency at: June 30, March 31, June 30,
2001 2001 2000
----------------------------------
Tier I 3.52% 3.04% 2.82%
Other 13.50% 12.51% 11.26%
----------------------------------
Total 3.57% 3.10% 2.92%
----------------------------------
----------------------------------
---------------------------------------------------------------------
Allowance Data at:
Allowance for
estimated credit losses
on securitized receivables $ 170,151 $ 143,270 $ 119,003
Securitized receivables
serviced $3,166,542 $3,228,640 $2,676,655
Allowance as a percentage
of securitized
receivables serviced 5.37% 4.44% 4.45%
---------------------------------------------------------------------
Managed Receivable Data at:
Receivables held for sale
-------------------------
Tier I $ 43,168 $ 120,872 $ 202,167
Other 625 916 1,656
Securitized
-----------
Tier I 3,149,304 3,208,601 2,645,983
Other 17,238 20,039 30,672
Receivables serviced
for others 420 469 637
----------------------------------
Total Servicing
Portfolio $3,210,755 $3,350,897 $2,881,115
----------------------------------
----------------------------------
Union Acceptance Corporation
Selected Financial Data
(Unaudited)
(Dollars in thousands, except per share data)
Three Months Ended Twelve Months Ended
June 30, June 30,
---------------------- -----------------------
2001 2000 2001 2000
---------------------- -----------------------
Income Statement Data for the Period:
------------------------------------
Interest on
receivables
held for sale $ 3,844 $ 14,411 $ 39,795 $ 37,461
Retained interest
and other 8,934 6,089 32,618 24,963
---------------------- -----------------------
Total interest
income 12,778 20,500 72,413 62,424
Interest expense 5,372 10,115 33,794 29,663
---------------------- -----------------------
Net interest
margin 7,406 10,385 38,619 32,761
Provision for
estimated credit
losses 715 745 3,240 3,000
---------------------- -----------------------
Net interest
margin after
provision for
estimated credit
losses 6,691 9,640 35,379 29,761
Gain on sales of
receivables, net (13,932) 6,338 14,620 16,883
Loss on interest
rate derivatives
on securitized
receivables (2,353) -- (21,714) --
Gain (loss) on
interest rate
derivatives on
held for sale
receivables 1,647 -- 60 --
Servicing fee
income 8,049 6,139 30,199 24,612
Late charges and
other fees 1,557 1,657 6,947 6,337
---------------------- -----------------------
Other revenues (5,032) 14,134 30,112 47,832
---------------------- -----------------------
Salaries and
benefits 8,646 7,897 33,868 28,915
Other general and
administrative
fees 5,849 5,876 23,306 20,998
---------------------- -----------------------
Total operating
expenses 14,495 13,773 57,174 49,913
---------------------- -----------------------
Earnings before
provision for
income taxes (12,836) 10,001 8,317 27,680
Provision for
income taxes (4,662) 3,847 3,133 10,675
---------------------- -----------------------
Net earnings
(loss) before
cumulative
effect of change
in accounting
principal $ (8,174) $ 6,154 $ 5,184 $ 17,005
Cumulative effect
of change in
accounting
principal, less
applicable taxes
of $568 989 -- 989 --
---------------------- -----------------------
Net earnings
(loss) $ (9,163) $ 6,154 $ 4,195 $ 17,005
---------------------- -----------------------
---------------------- -----------------------
-------------------------------------------- -----------------------
Per Common Share Data:
Earnings (loss)
before cumulative
effect of change
in accounting
principal
(diluted and
basic) $ (0.49) $ 0.46 $ 0.37 $ 1.28
Cumulative effect
of change in
accounting
principal
(diluted and
basic) $ (0.06) -- $ (0.07) --
---------------------- -----------------------
Earnings (loss)
(diluted and
basic) $ (0.55) $ 0.46 $ 0.30 $ 1.28
---------------------- -----------------------
---------------------- -----------------------
Book value $ 6.47 $ 8.29 $ 6.47 $ 8.29
Weighted average
shares
outstanding 16,591,364 13,277,632 14,127,848 13,293,270
-------------------------------------------- -----------------------
Receivable
Acquisitions: $ 198,811 $ 450,206 $ 1,601,077 $ 1,439,903
Receivables Sold: $ 293,017 $ 534,294 $ 1,733,020 $ 1,484,500
------------------------------------------- -----------------------
Ratios:
Return on average
managed assets -1.02% 0.80% 0.12% 0.58%
Return on average
shareholders'
equity -24.95% 23.80% 3.46% 17.30%
Operating
expenses as a
percentage of
average
servicing
portfolio 1.78% 1.96% 1.76% 1.88%
------------------------------------------- -----------------------
Portfolio Performance:
Net credit loss(annualized for the period ended)
Tier I 2.85% 2.05% 2.48% 2.18%
Other 12.29% 6.32% 8.51% 8.62%
---------------------- -----------------------
Total 2.91% 2.11% 2.53% 2.28%
---------------------- -----------------------
---------------------- -----------------------
-------------------------------------------- -----------------------
Pro forma information for the earnings impact of derivative
instruments on held for sale receivables related to FAS 133:
Total revenues $ 7,746 $ 34,634 $ 102,525 $ 110,256
Pro forma
adjustment (1,647) -- (60) --
---------------------- -----------------------
Pro forma total
revenues $ 6,099 $ 34,634 $ 102,465 $ 110,256
---------------------- -----------------------
---------------------- -----------------------
Pro forma net
earnings (loss)
before cumulative
effect of change
in accounting
principal $ (9,220) $ 6,154 $ 5,146 $ 17,005
Pro forma net
earnings (loss) $ (10,209) $ 6,154 $ 4,157 $ 17,005
Pro forma earnings
(loss) per common
share before
cumulative
effect of change
in accounting
principal
(diluted and
basic) $ (0.56) $ 0.46 $ 0.36 $ 1.28
Pro forma earnings
(loss) per
common share
(diluted and
basic) $ (0.62) $ 0.46 $ 0.29 $ 1.28
Pro forma return
on average
managed assets -1.14% 0.80% 0.12% 0.58%
Pro forma return
on average
shareholders'
equity -27.81% 23.80% 3.42% 17.30%
---------------------------------------------------------------------
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 Twelve Months Ended
June 30 June 30
------------------------ ---------------------
2001 2000 2001 2000
------------------------ ---------------------
Interest income, fee
and other income $ 104,871 $ 90,010 $ 420,160 $ 337,191
Funding costs (62,530) (52,559) (248,752) (197,964)
--------- --------- --------- ---------
Net margin 42,341 37,451 171,408 139,227
Operating expenses (14,494) (13,773) (57,173) (49,913)
Credit losses (23,632) (14,768) (82,076) (60,533)
--------- --------- --------- ---------
Pre-tax portfolio-
based earnings 4,215 8,910 32,159 28,781
Income taxes (2) (1,555) (3,439) (11,867) (11,109)
--------- --------- --------- ---------
Net portfolio-
based earnings $ 2,660 $ 5,471 $ 20,292 $ 17,672
========= ========= ========= =========
Portfolio-based
earnings per share $ 0.16 $ 0.41 $ 1.44 $ 1.33
========= ========= ========= =========
----------------------------------------------------------------------
The pro forma return on average managed receivables were as follows:
Three Months Ended Twelve Months Ended
June 30 June 30
--------------------- -----------------------
2001 2000 2001 2000
--------------------- -----------------------
Interest income, fee
and other income 12.90% 12.84% 12.94% 12.71%
Funding costs -7.69% -7.49% -7.66% -7.46%
--------- --------- --------- ---------
Net margin 5.21% 5.35% 5.28% 5.25%
Operating expenses -1.78% -1.96% -1.76% -1.88%
Credit losses -2.91% -2.11% -2.53% -2.28%
--------- --------- --------- ---------
Pre-tax portfolio-
based earnings 0.52% 1.28% 0.99% 1.09%
Income taxes -0.19% -0.49% -0.37% -0.42%
--------- --------- --------- ---------
Net portfolio-
based earnings 0.33% 0.79% 0.62% 0.67%
========= ========== ========== =========
Average Managed
Receivables $3,251,864 $2,805,056 $3,248,072 $2,652,415
----------------------------------------------------------------------
The following is a reconciliation of the pro forma portfolio-based net
earnings to GAAP net earnings:
Three Months Ended Twelve Months Ended
June 30 June 30
---------------------- -----------------------
2001 2000 2001 2000
---------------------- -----------------------
GAAP Net Earnings
(Loss) $ (9,163) $ 6,154 $ 4,195 $ 17,005
Gain on sales of
receivables, net 14,920 (6,338) (13,632) (16,883)
Retained interest
and other income (7,000) (4,115) (24,003) (17,814)
Servicing fee (8,049) (6,139) (30,199) (24,612)
Net margin 40,379 29,525 149,845 117,946
Credit losses (23,632) (14,768) (82,076) (60,533)
Provision for
estimated credit
losses 715 745 3,240 3,000
Loss on interest
rate derivatives 707 -- 21,655 --
--------- --------- --------- ---------
Net adjustments 18,040 (1,090) 24,830 1,104
Tax effect of
adjustments (6,217) 407 (8,733) (437)
--------- --------- --------- ---------
Net portfolio-
based earnings $ 2,660 $ 5,471 $ 20,292 $ 17,672
========= ========= ========= =========
(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.