WFS Financial Reports Record First Quarter Net Income
IRVINE, Calif.--April 23, 2003--| -- | Net income rose 35% to a record $24.6 million for the quarter |
| -- | Earnings per share increased 20% to $0.60 for the quarter |
| -- | Total revenues grew 31% to $173 million for the quarter |
| -- | Delinquencies declined 109 basis points to 2.41% at end of the quarter |
| -- | Remaining off balance sheet trusts were re-consolidated |
WFS Financial Inc today reported that net income increased 35% to a record $24.6 million for the first quarter of 2003, compared with $18.2 million for the same period a year ago.
Earnings per diluted share rose 20% to $0.60 for the first quarter of 2003, compared with $0.50 for the same period a year earlier.
"Our record earnings represent the culmination of eliminating off balance sheet accounting, as well as our ability to effectively manage our business through a difficult business environment," said Tom Wolfe, president and CEO of WFS Financial.
"Our earnings results are no longer based on estimated future cash flows from securitization transactions but rather actual cash flows earned over the life of the automobile contracts that we originate."
Annualized credit loss experience for the first quarter increased 10 basis points to 2.86% of average managed automobile contracts, compared with 2.76% for the same period a year ago. The percentage of outstanding contracts 30 days or more delinquent improved 109 basis points to 2.41% at March 31, 2003, compared with 3.50% at Dec. 31, 2002.
The allowance for credit losses as a percentage of owned contracts outstanding was 2.8% at March 31, 2003, compared with 2.9% at Dec. 31, 2002.
"Our credit loss experience this quarter reflects continued general weakness in the economy and depressed wholesale used car prices," said Wolfe.
"However, the improvement in the percentage of automobile contracts delinquent, the percentage of repossessed automobiles in inventory and our shift to a higher concentration of prime credit quality originations are key indicators that credit trends will improve during the next few quarters."
Automobile contract purchases totaled $1.4 billion for the first quarter of 2003, a 7% increase from the same period a year earlier. As a result of higher contract originations, the company's portfolio of managed automobile contracts reached $9.7 billion at March 31, 2003, up from $9.4 billion at Dec. 31, 2002.
Total revenues grew 31% for the three months ended March 31, 2003, to $173 million, compared with $132 million for the same period a year earlier.
Net interest income increased 38% to $142 million for the three months ended March 31, 2003, compared with $103 million for the same period a year ago. Net interest margin for the three months ended March 31, 2003 was 5.97%, compared with 6.78% for the same period a year earlier.
Net interest income increased as more automobile contracts were held on the balance sheet offset by narrower net interest margins as the company continues to shift its portfolio to a higher percentage of prime credit quality automobile contracts.
Total noninterest income, which includes primarily automobile servicing related fee income, improved 7% to $31 million for the three months ended March 31, 2003, compared with $29.1 million for the same period a year earlier. This improvement was primarily the result of the elimination of non-cash amortization of residual interests offset by lower contractual servicing fees from whole loan sales and an increase in total managed automobile contracts.
Noninterest expense totaled $59.2 million or 2.5% of average managed contracts for the first quarter of 2003, compared with $52 million or 2.5% for the same period a year ago. The increase in noninterest expense was primarily the result of higher collection related costs.
Provision for credit losses totaled $72.8 million for the three months ended March 31, 2003, compared with $49.7 million for the same period a year ago. The increase is primarily the result of higher credit loss experience, as well as setting aside allowance for credit losses for re-consolidated automobile contracts from securitization trusts formerly treated as off-balance sheet transactions.
Effective Jan. 1, 2003, the company re-consolidated the remaining assets of trusts for all securitization transactions that were initially treated as sales for accounting purposes. There was no gain or loss recorded as a result of this re-consolidation.
Earnings Conference Call
WFS, along with its parent company Westcorp, will host a conference call for analysts and investors at 9 a.m. (PDT) on Thursday, April 24, 2003. As part of this conference call, the company's management will discuss further the earnings results for the quarter.
For a live Internet broadcast of this conference call, go to the company's Web site at http://www.wfsfinancial.com to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available shortly after the call.
WFS is one of the nation's largest independent automobile finance companies. WFS specializes in originating, securitizing and servicing new and pre-owned prime and non-prime credit quality automobile contracts through its nationwide relationships with automobile dealers.
WFS is an equal credit opportunity lender. The company does not discriminate in any credit transactions on the basis of race, color, national origin, religion, sex, marital status, or age.
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to analyses and other information, which are based on forecasts of future results and estimates of amounts not yet determinable. These statements also relate to the company's future prospects, developments and business strategies. These statements are subject to uncertainties and factors relating to the company's operations and business environment, all of which are difficult to predict and many of which are beyond its control, that could cause actual results to differ materially from those expressed in or implied by these forward-looking statements.
These forward-looking statements are identified by use of terms and phrases such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project," "will" and similar terms and phrases, including references to assumptions.
The following factors are among those that may cause actual results to differ materially from the forward-looking statements:
-- Changes in general economic and business conditions;
-- Interest rate fluctuations;
-- The company's financial condition and liquidity, as well as
future cash flow earnings;
-- Competition;
-- The level of operating expenses;
-- The effect of new laws, regulations, court decisions or
significant litigation;
-- The availability of sources of funding;
-- The level of chargeoffs on the automobile contracts that the
company originates; and
-- Other significant unexpected events.
A further list of these risks, uncertainties and other matters can be found in the company's filings with the Securities and Exchange Commission. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, the company's actual results may vary materially from those expected, estimated or projected. The information contained in this news release is as of April 23, 2003. The company assumes no obligation to update any forward-looking statements to reflect future events or circumstances.
WFS FINANCIAL INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended
March 31,
2003 2002
(Dollars in thousands,
except per-share
amounts)
Interest income:
Loans, including fees $244,480 $170,798
Other 2,291 634
TOTAL INTEREST INCOME 246,771 171,432
Interest expense:
Notes payable on automobile secured financing 94,266 63,380
Other 10,685 5,174
TOTAL INTEREST EXPENSE 104,951 68,554
NET INTEREST INCOME 141,820 102,878
Provision for credit losses 72,795 49,708
NET INTEREST INCOME AFTER
PROVISION FOR CREDIT LOSSES 69,025 53,170
Noninterest income:
Automobile servicing 29,277 27,247
Other 1,747 1,803
TOTAL NONINTEREST INCOME 31,024 29,050
Noninterest expense:
Salaries and associate benefits 36,402 31,624
Credit and collections 9,223 8,029
Data processing 4,239 4,261
Other 9,329 8,095
TOTAL NONINTEREST EXPENSE 59,193 52,009
INCOME BEFORE INCOME TAX 40,856 30,211
Income tax 16,241 11,997
NET INCOME $24,615 $18,214
Earnings per common share:
Basic $0.60 $0.50
Diluted $0.60 $0.50
Weighted average number of common shares
outstanding:
Basic 41,022,198 36,671,932
Diluted 41,065,341 36,732,122
WFS FINANCIAL INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
March 31, Dec. 31,
2003 2002
(Dollars in thousands)
ASSETS
Cash and due from banks $792,166 $715,807
Contracts receivable 8,880,179 7,975,503
Allowance for credit losses (244,089) (227,673)
Contracts receivable, net 8,636,090 7,747,830
Amounts due from trusts 101,473
Premises and equipment, net 30,731 32,084
Other 172,192 192,509
TOTAL ASSETS $9,631,179 $8,789,703
LIABILITIES
Lines of credit - parent $39,103 $62,048
Notes payable on automobile
secured financing 8,318,376 7,323,180
Notes payable - parent 404,470 408,010
Amounts held on behalf of trustee 130,624 298,863
Other 78,504 63,070
TOTAL LIABILITIES 8,971,077 8,155,171
SHAREHOLDERS' EQUITY
Common stock, (no par value; authorized
60 million shares; issued and outstanding
41,022,603 shares in 2003 and 41,020,033
in 2002) 338,204 338,186
Paid-in capital 5,372 5,372
Retained earnings 369,415 344,800
Accumulated other comprehensive loss,
net of tax (52,889) (53,826)
TOTAL SHAREHOLDERS' EQUITY 660,102 634,532
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $9,631,179 $8,789,703
WFS FINANCIAL INC AND SUBSIDIARIES
OTHER SELECTED FINANCIAL DATA
(UNAUDITED)
(Dollars in thousands)
Three Months Ended
March 31,
2003 2002
CONTRACT ORIGINATIONS $1,352,053 $1,265,526
March 31, 2003 Dec. 31, 2002
MANAGED CONTRACTS Amount Percent Amount Percent
Owned contracts $8,731,673 90.48% $7,808,557 83.15%
Off balance sheet
securitizations 524,531 5.59
Whole loan sales to
parent 918,556 9.52 1,056,886 11.26
Total managed contracts $9,650,229 100.00% $9,389,974 100.00%
MANAGED DELINQUENCY AND March 31, 2003 Dec. 31, 2002
REPOSSESSIONS Amount Percent Amount Percent
Contracts managed at
end of period $9,650,229 $9,389,974
Period of delinquency
30-59 days $165,052 1.71% $238,204 2.54%
60 days or more 67,065 0.70 90,291 0.96
Total contracts
delinquent $232,117 2.41% $328,495 3.50%
Total repossessions $10,966 0.11% $16,433 0.18%
MANAGED CONTRACTS Three Months Ended
LOSS EXPERIENCE March 31,
2003 2002
Contracts managed at
end of period $9,650,229 $8,405,634
Average contracts
managed during
the period $9,533,314 $8,273,297
Gross chargeoffs $90,779 $79,792
Recoveries 22,598 22,633
Net chargeoffs $68,181 $57,159
Net chargeoffs as a
percentage of
average managed
contracts outstanding
during period 2.86% 2.76%
WFS FINANCIAL INC AND SUBSIDIARIES
CUMULATIVE STATIC POOL LOSS CURVES (UNAUDITED)
AT MARCH 31, 2003
The following table sets forth the cumulative static pool losses by
month for all outstanding public securitized pools:
Period(1) 1998-C 1999-A 1999-B 1999-C 2000-A 2000-B 2000-C(3) 2000-D
1 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2 0.04% 0.04% 0.04% 0.02% 0.03% 0.02% 0.04% 0.04%
3 0.11% 0.11% 0.11% 0.10% 0.10% 0.09% 0.13% 0.11%
4 0.23% 0.20% 0.26% 0.25% 0.20% 0.24% 0.27% 0.24%
5 0.39% 0.33% 0.47% 0.40% 0.36% 0.39% 0.46% 0.39%
6 0.50% 0.46% 0.66% 0.56% 0.55% 0.59% 0.65% 0.54%
7 0.61% 0.62% 0.87% 0.71% 0.71% 0.78% 0.81% 0.74%
8 0.75% 0.76% 1.00% 0.86% 0.91% 0.99% 0.93% 0.93%
9 0.86% 0.92% 1.13% 1.01% 1.10% 1.17% 1.07% 1.13%
10 1.00% 1.11% 1.24% 1.14% 1.27% 1.33% 1.24% 1.34%
11 1.17% 1.30% 1.35% 1.34% 1.45% 1.44% 1.41% 1.50%
12 1.32% 1.47% 1.44% 1.52% 1.58% 1.57% 1.62% 1.74%
13 1.48% 1.61% 1.58% 1.74% 1.73% 1.72% 1.86% 1.95%
14 1.66% 1.73% 1.74% 1.94% 1.85% 1.86% 2.04% 2.21%
15 1.79% 1.81% 1.85% 2.09% 2.00% 2.04% 2.25% 2.48%
16 1.91% 1.89% 2.03% 2.27% 2.15% 2.24% 2.45% 2.71%
17 2.01% 2.00% 2.16% 2.39% 2.37% 2.39% 2.68% 2.89%
18 2.07% 2.10% 2.30% 2.53% 2.52% 2.55% 2.88% 3.08%
19 2.11% 2.24% 2.42% 2.67% 2.67% 2.73% 3.08% 3.22%
20 2.17% 2.35% 2.50% 2.81% 2.83% 2.93% 3.23% 3.40%
21 2.24% 2.46% 2.58% 2.92% 2.99% 3.12% 3.38% 3.59%
22 2.34% 2.55% 2.67% 3.10% 3.16% 3.27% 3.54% 3.78%
23 2.43% 2.63% 2.77% 3.28% 3.34% 3.38% 3.67% 3.96%
24 2.52% 2.71% 2.87% 3.38% 3.49% 3.52% 3.83% 4.18%
25 2.62% 2.77% 3.01% 3.55% 3.63% 3.63% 4.00% 4.41%
26 2.71% 2.82% 3.14% 3.68% 3.75% 3.73% 4.16% 4.58%
27 2.80% 2.89% 3.16% 3.84% 3.86% 3.84% 4.35% 4.79%
28 2.87% 2.96% 3.29% 3.98% 3.97% 3.97% 4.50% 4.96%
29 2.90% 3.02% 3.40% 4.14% 4.09% 4.11% 4.64% 5.08%
30 2.95% 3.09% 3.50% 4.19% 4.21% 4.26% 4.79%
31 3.00% 3.17% 3.61% 4.30% 4.33% 4.40% 4.92%
32 3.02% 3.20% 3.68% 4.38% 4.47% 4.50% 5.02%
33 3.08% 3.27% 3.74% 4.46% 4.59% 4.61%
34 3.14% 3.35% 3.81% 4.57% 4.68% 4.70%
35 3.15% 3.41% 3.87% 4.66% 4.79% 4.78%
36 3.21% 3.47% 3.91% 4.76% 4.86%
37 3.25% 3.52% 3.97% 4.84% 4.93%
38 3.30% 3.55% 4.03% 4.96%
39 3.35% 3.58% 4.09% 5.03%
40 3.39% 3.61% 4.13% 5.13%
41 3.39% 3.63% 4.18% 5.20%
42 3.42% 3.66% 4.23% 5.24%
43 3.45% 3.68% 4.28%
44 3.47% 3.72% 4.33%
45 3.48% 3.75% 4.35%
46 3.50% 3.79%
47 3.52% 3.80%
48 3.56% 3.83%
49 3.58% 3.85%
50 3.60% 3.85%
51 3.62%
52 3.63%
53 3.64%
54
55
Prime
Mix(2) 70% 70% 70% 67% 68% 69% 68% 68%
Period(1) 2001-A 2001-B(3) 2001-C 2002-1 2002-2 2002-3 2002-4 2003-1
1 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2 0.03% 0.03% 0.04% 0.01% 0.00% 0.02% 0.02% 0.01%
3 0.09% 0.10% 0.09% 0.06% 0.03% 0.06% 0.07%
4 0.20% 0.21% 0.20% 0.15% 0.10% 0.14% 0.16%
5 0.33% 0.33% 0.35% 0.29% 0.18% 0.27% 0.26%
6 0.50% 0.50% 0.49% 0.43% 0.32% 0.44%
7 0.70% 0.69% 0.65% 0.60% 0.49% 0.57%
8 0.84% 0.87% 0.81% 0.84% 0.66% 0.70%
9 1.04% 1.05% 0.95% 1.06% 0.82%
10 1.24% 1.22% 1.07% 1.28% 0.96%
11 1.45% 1.36% 1.20% 1.48% 1.10%
12 1.67% 1.53% 1.37% 1.67%
13 1.90% 1.67% 1.55% 1.82%
14 2.09% 1.81% 1.74%
15 2.25% 2.00% 1.97%
16 2.41% 2.19% 2.16%
17 2.54% 2.37% 2.36%
18 2.73% 2.60% 2.59%
19 2.93% 2.80% 2.78%
20 3.11% 3.01% 2.95%
21 3.34% 3.19%
22 3.54% 3.34%
23 3.72% 3.49%
24 3.92%
25 4.10%
26 4.23%
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
Prime
Mix(2) 71% 71% 76% 70% 87% 85% 80% 80%
(1) Represents the number of months since the inception of the
securitization.
(2) Represents the original percentage of prime automobile contracts
securitized within each pool.
(3) Represents loans sold to Westcorp in whole loan sales and
subsequently securitized by Westcorp. The company manages these
contracts pursuant to an agreement with Westcorp and the
securitization trust.