United PanAm Financial Announces Second Quarter 2003 Results
NEWPORT BEACH, Calif.--July 25, 2003--United PanAm Financial Corp. today announced results for its second quarter ended June 30, 2003.For the quarter ended June 30, 2003 the company reported net income of $4.11 million, equal to $0.23 per diluted share, compared to net income of $3.02 million, or $0.17 per diluted share for the same period a year ago. This represents a 36% increase in net income between the two periods and a 35% increase in earnings per diluted share. During the second quarter of 2003, the company recognized an after-tax gain of $190,000 on the sale of securities, which is equivalent to $0.01 per share.
Net interest income for the second quarter of 2003 rose 43% to $18.28 million from $12.77 million in the second quarter of 2002.
For the six months ended June 30, 2003, the company reported net income of $8.02 million, equal to $0.45 per diluted share, compared to net income of $5.69 million or $0.33 per diluted share for the comparable period a year ago. This represents a 41% increase in net income between the two periods and a 36% increase in earnings per diluted share.
During the first six months of 2003 the company recognized a non-recurring after-tax gain of $615,000 on the sale of securities and sale of all remaining mortgage related assets, which is equivalent to $0.04 per share.
Net interest income for the first 6 months of 2003 increased 37% to $33.51 million from $24.47 million for the first six months of 2002.
The company purchased $117 million of gross auto loans, including unearned interest, during the second quarter of 2003 representing a 51% increase over the second quarter of 2002. Auto loans outstanding totaled $356.0 million at June 30, 2003, a 30% increase over June 30, 2002. The growth in auto loans is the result of planned expansion of the branch network throughout the country and portfolio growth at the branch level. During the second quarter of 2003, the company opened four new auto loan branches bringing its total to 62 branches in 25 states. The company will continue its philosophy of controlled expansion of the auto finance branch network and plans to open an additional eight branches before year-end.
Delinquency over 30 days amounted to 0.56% of auto loans at June 30, 2003 compared with 0.57% for the comparable period in 2002 and charge offs amounted to 5.39% in the first six months of 2003 compared to 5.89% during the comparable six month period in 2002.
"Effective July 1, 2003 we were included in the Russell 2000, which I believe is recognition of our 11 consecutive quarters of increased earnings per share," said Guillermo Bron, Chairman. "In spite of the difficult economic environment, delinquency and charge offs decreased from first half of 2002 levels as a result of management's continued focus on and maintenance of strict operating guidelines. In addition, auto loan originations continue to increase in accordance with our planned branch expansion program."
Beginning in 2003, in anticipation of new accounting regulations, the company adopted a revised accounting policy, changing from the purchase accounting method to an incurred loss method for purchased auto loans. The new accounting method will change the allocation of discount on loans purchased from loan loss allowance to unearned discount (increasing unearned loan discount and interest income from the accretion of unearned finance charges). Loan loss allowances for loans originated beginning in 2003 and thereafter, will be created through provisions for loan losses in the income statement and increased interest income from the accretion of unearned discount on loans purchased. The accounting change did not cause any material impact in the first half results. In addition, management believes the revised accounting policy will not cause any material change in the financial results for the remainder of 2003.
United PanAm Financial Corp., a specialty finance company, originates and acquires for investment retail automobile installment sales contracts and insurance premium finance contracts. Its principal operating units include Pan American Bank, FSB, the largest Hispanic-controlled savings association in California, with over $1.3 billion in assets at June 30, 2003, United Auto Credit Corporation with 62 branch offices in 25 states, and the insurance premium finance division, which is the largest non-insurance provider of financing for insurance premiums in California.
Any statements set forth above that are not historical facts are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act ("SLRA") of 1995, including statements concerning the company's strategies, plans, objectives and intentions. Such statements are subject to a variety of estimates, risks and uncertainties, known and unknown, which may cause the company's actual results to differ materially from those anticipated in such forward-looking statements. Potential risks and uncertainties include, but are not limited to, such factors as limited operating history, the impaired or limited credit history of the company's borrowers, the availability of additional financing, the concentration of the company's business in California, rapid growth of the company's businesses, the accuracy of the charges included in the discontinued operations cost estimate, the reliance on the company's systems and controls and key employees, fluctuations in market rates of interest, general economic conditions, the effects of accounting changes and other risks, certain of which are detailed from time to time in the company's filings with the United States Securities and Exchange Commission.
United PanAm Financial Corp. and Subsidiaries
Consolidated Statements of Financial Condition
(Unaudited)
June 30, December 31,
(Dollars in thousands) 2003 2002
Assets
Cash and due from banks $ 7,334 $ 9,964
Short term investments 24,768 3,590
Cash and cash equivalents 32,102 13,554
Securities available for sale,
at fair value 916,054 603,268
Loans 395,810 331,257
Less unearned discount (8,462) --
Less allowance for loan losses (16,854) (23,179)
Loans held for sale 370,494 308,078
Premises and equipment, net 2,807 2,700
Federal Home Loan Bank stock,
at cost 9,587 1,675
Accrued interest receivable 1,606 1,880
Other assets 16,772 20,131
Total assets $ 1,349,422 $951,286
Liabilities and Shareholders'
Equity
Deposits $ 468,807 $468,458
Repurchase Agreements 778,834 384,624
Accrued expenses and other
liabilities 4,385 8,545
Total liabilities 1,252,026 861,627
Common stock (no par value):
Authorized, 30,000,000
shares
Issued and outstanding,
15,871,306 at June 30, 2003
and 15,836,725 at
Dec. 31, 2002 65,012 64,957
Retained earnings 31,830 23,814
Unrealized gain on
securities available
for sale, net 554 888
Total shareholders' equity 97,396 89,659
Total liabilities and
shareholders' equity $ 1,349,422 $951,286
United PanAm Financial Corp. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Three Months Six Months
(In thousands, except per share data) Ended June 30, Ended June 30,
2003 2002 2003 2002
Interest Income
Loans $19,973 $14,081 $36,776 $27,115
Securities 4,116 3,124 7,830 5,782
Total interest income 24,089 17,205 44,606 32,897
Interest Expense
Deposits 3,544 3,115 7,236 6,348
Federal Home Loan Bank advances -- 215 -- 784
Repurchase Agreements 2,261 1,107 3,857 1,300
Total interest expense 5,805 4,437 11,093 8,432
Net interest income 18,284 12,768 33,513 24,465
Provision for loan losses 2,095 99 2,630 183
Net interest income
after provision
for loan losses 16,189 12,669 30,883 24,282
Non-interest Income
Net gain on sale of securities 315 -- 315 61
Service charges and fees 217 197 447 388
Loan related charges and fees 69 71 161 156
Other income 170 32 1,069 61
Total non-interest income 771 300 1,992 666
Non-interest Expense
Compensation and benefits 6,477 4,971 12,488 9,780
Occupancy 1,107 895 2,138 1,770
Other 2,512 2,126 4,792 4,322
Total non-interest expense 10,096 7,992 19,418 15,872
Income before income taxes
and cumulative effect of
change in accounting
principle 6,864 4,977 13,457 9,076
Income taxes 2,758 1,953 5,441 3,492
Income before cumulative effect
of change in accounting
principle 4,106 3,024 8,016 5,584
Cumulative effect of change in
accounting principle net of
tax -- -- -- 106
Net income $ 4,106 $ 3,024 $ 8,016 $ 5,690
Earnings (loss) per share -- basic:
Income before cumulative
effect of change in
accounting principle $ 0.26 $ 0.19 $ 0.51 $ 0.36
Cumulative effect of
change in accounting
principle -- -- -- 0.01
Net income $ 0.26 $ 0.19 $ 0.51 $ 0.37
Weighted average shares
outstanding 15,877 15,571 15,872 15,571
Earnings per share -- diluted:
Income before cumulative
effect of change in
accounting principle $ 0.23 $ 0.17 $ 0.45 $ 0.32
Cumulative effect of change
in accounting principle -- -- -- 0.01
Net income $ 0.23 $ 0.17 $ 0.45 $ 0.33
Weighted average
shares outstanding 18,148 17,626 17,887 17,500
Selected Financial Data
(Unaudited)
At or For the At or For the
(Dollars in thousands) Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
Automobile Finance Data
Gross contracts purchased $ 116,650 $ 77,207 $ 222,889 $149,081
Contracts outstanding 355,992 273,923 355,992 273,923
Allowance for credit
losses to total loans 4.66% 7.77% 4.66% 7.77%
Unearned discount on loans
to total loans 2.38% --% 2.38% --%
Annualized net charge-offs to
average contracts(1) 5.09% 5.21% 5.39% 5.89%
Delinquencies (% of net contracts)
31-60 days 0.39% 0.34% 0.39% 0.34%
61-90 days 0.11% 0.15% 0.11% 0.15%
90+ days 0.06% 0.08% 0.06% 0.08%
Insurance Premium Finance Data
Loans originated $ 30,289 $ 30,135 $ 54,739 $ 58,345
Loans outstanding at period
end 39,716 41,906 39,716 41,906
Allowance for loan losses (258) (524) (258) (524)
Annualized net charge-offs to
average loans(1) 0.29% 0.79% 0.40% 0.74%
Allowance for credit losses
to total loans 0.65% 1.25% 0.65% 1.25%
Other Data
Return on average assets(1) 1.30% 1.66% 1.39% 1.71%
Return on average shareholders'
equity (1) 17.30% 15.25% 17.31% 14.58%
Retail deposits $ 332,533 $ 322,333 $ 332,533 $322,333
Brokered deposits 136,274 28,902 136,274 28,902
Weighted average interest
rate on deposits 2.84% 3.22% 2.84% 3.22%
Consolidated capital to assets
ratio 7.22% 10.16% 7.22% 10.16%
Pan American Bank capital ratios:
Tangible 6.43% 8.99% 6.43% 8.99%
Core 6.43% 8.99% 6.43% 8.99%
Risk-based 16.48% 21.19% 16.48% 21.19%
(1) Quarterly information is annualized for comparability with
full year information.