UPFC Announces 33% Increase in Net Income from Continuing Operations in the First Quarter 2006
NEWPORT BEACH, Calif.--April 24, 2006--United PanAm Financial Corp. today announced results for its first quarter ended March 31, 2006.For the quarter ended March 31, 2006, UPFC reported income of $6.8 million from continuing operations, compared to income of $5.1 million for the same period a year ago, representing a 33% increase over 2005. The company reported income of $0.36 per diluted share from continuing operations for the first quarter of 2006 compared to $0.28 per diluted share for the same period a year ago, representing a 29% increase over 2005. The reported income includes an after tax charge of $347,000 or $0.02 per diluted share as a result of the company's adoption of Statement of Financial Accounting Standards ("SFAS") No. 123(R), Share-Based Payment, on Jan. 1, 2006.
As previously reported, UPFC discontinued its investment activities during the quarter ended March 31, 2006, and reported a loss of $0.7 million from discontinued operations compared to income of $1.1 million for the same period a year ago. For further information, see the company's Form 8-K filed with United States Securities and Exchange Commission on March 31, 2006.
Interest income on loans for the first quarter of 2006 rose 25% to $43.5 million from $34.7 million for the first quarter of 2005. Non-interest income increased to $1.4 million for the first quarter of 2006 from $0.2 million for the first quarter of 2005, primarily from $0.5 million proceeds from a preferred stock investment.
The company purchased $145.8 million of automobile contracts during the first quarter of 2006, compared with $120.6 million during the same period a year ago, representing a 21% increase. Automobile contracts outstanding totaled $716.9 million at March 31, 2006, compared with $570.5 million at March 31, 2005, representing a 26% increase. The growth in automobile contracts is the result of the expansion of our branch network and portfolio growth at the branch level. During the first quarter of 2006, the company opened six new auto finance branches bringing our total to 113 branches in 32 states. The company intends to continue its philosophy of controlled expansion of the auto finance branch network and expects to open a total of 24 new branches during 2006.
The annualized non-interest expense as a percentage of average loan balances decreased to 11.2% for the first quarter of 2006, compared with 11.8% for the same period a year ago, representing a 60 basis points improvement.
The annualized quarterly net charge-off rate was 4.53% for the first quarter of 2006, compared with 4.71% for the comparable 2005 period, representing an 18 basis points improvement, and the allowance for loan losses decreased to $28.2 million at March 31, 2006, from $29.1 million at Dec. 31, 2005, due primarily to a change in accounting estimate resulting from continued improvement in the quality of the company's loan portfolio and reduction in losses.
Delinquencies over 30 days amounted to 0.62% of outstanding automobile contracts at March 31, 2006, compared to 0.90% at Dec. 31, 2005, and 0.39% at March 31, 2005. Delinquencies and total repossessions over 30 days amounted to 0.99% of outstanding automobile contracts at March 31, 2006, compared to 1.34% at Dec. 3, 20051, 2005, and 0.73% at March 31, 2005.
"2006 showed a continuing controlled growth of 26% in automobile contracts while credit quality continued to be strong as indicated by the 18 basis points drop in the company's net charge-off rate from 2005," said Guillermo Bron, chairman. "In addition, as the number of mature branches increased we had a reduction in non-interest expense of 60 basis points from the same period in 2005."
UPFC is a specialty finance company engaged in non-prime automobile finance, which includes the purchasing, warehousing, securitizing and servicing of automobile installment sales contracts originated by independent and franchised dealers of used automobiles. UPFC conducts its automobile finance business through its wholly owned subsidiary, United Auto Credit Corp., with 113 branch offices in 32 states.
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 our recent shift of the funding source of our business; our dependence on securitizations; our need for substantial liquidity to run our business; loans we made to credit-impaired borrowers; reliance on operational systems and controls and key employees; competitive pressures which we face; rapid growth of our business; 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.
Editors Note: Three pages of selected financial data follow.
United PanAm Financial Corp. and Subsidiaries
Consolidated Statements of Financial Condition
March 31, Dec. 31,
(Dollars in thousands) 2006 2005
(Unaudited) (Audited)
------------ -----------
Assets
Cash $5,877 $8,199
Short term investments 12,635 13,096
------------ -----------
Cash and cash equivalents 18,512 21,295
Restricted cash 63,181 53,058
Loans 681,465 633,656
Allowance for loan losses (28,204) (29,110)
------------ -----------
Loans, net 653,261 604,546
Premises and equipment, net 4,147 3,881
Interest receivable 7,334 7,213
Deferred tax assets 12,956 12,956
Other assets 8,596 10,905
Assets of discontinued operations --- 495,318
------------ -----------
Total assets $767,987 $1,209,172
============ ===========
Liabilities and Shareholders' Equity
Warehouse line of credit $140,455 $54,009
Securitization notes payable 444,777 521,613
Accrued expenses and other liabilities 7,740 8,806
Junior subordinated debentures 10,310 10,310
Liabilities of discontinued operations --- 459,519
------------ -----------
Total liabilities 603,282 1,054,257
------------ -----------
Preferred Stock (no par value):
Authorized, 2,000,000 shares; no shares
issued and outstanding at March 31, 2006,
and Dec. 31, 2005 --- ---
Common stock (no par value):
Authorized, 30,000,000 shares; 17,243,978
and 17,120,250 shares issued and
outstanding at March 31, 2006, and
Dec. 31, 2005, respectively 78,434 76,054
Retained earnings 86,271 80,182
Unrealized loss on securities available for
sale, net --- (1,321)
------------ -----------
Total shareholders' equity 164,705 154,915
------------ -----------
Total liabilities and shareholders'
equity $767,987 $1,209,172
============ ===========
United PanAm Financial Corp. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
(Dollars in thousands, except per share data) Three Months
Ended March 31,
-----------------
2006 2005
-------- --------
Interest Income
Loans $43,456 $34,620
Short term investments 21 46
-------- --------
Total interest income 43,477 34,666
-------- --------
Interest Expense
Securitization notes payable 5,937 2,898
Warehouse line of credit 1,394 1,374
Junior subordinated debentures 191 143
-------- --------
Total interest expense 7,522 4,415
-------- --------
Net interest income 35,955 30,251
Provision for loan losses 6,798 5,713
-------- --------
Net interest income after provision for
loan losses 29,157 24,538
-------- --------
Non-interest Income
Loan related charges and fees 759 116
Other income 652 44
-------- --------
Total non-interest income 1,411 160
-------- --------
Non-interest Expense
Compensation and benefits 11,646 9,533
Share based compensation 578 ---
Occupancy 1,677 1,361
Other 5,378 5,116
-------- --------
Total non-interest expense 19,279 16,010
-------- --------
Income from continuing operations before income
taxes 11,289 8,688
Income taxes 4,516 3,549
-------- --------
Income from continuing operations 6,773 5,139
(Loss) income from discontinued operations, net of
tax (684) 1,151
-------- --------
Net income $6,089 $6,290
======== ========
Earnings (loss) per share-basic:
Continuing operations $0.39 $0.31
Discontinued operations (0.04) 0.07
-------- --------
Net income $0.35 $0.38
======== ========
Weighted average basic shares outstanding 17,179 16,538
======== ========
Earnings (loss) per share-diluted:
Continuing operations $0.36 $0.28
Discontinued operations (0.04) 0.06
-------- --------
Net income $0.32 $0.34
======== ========
Weighted average diluted shares outstanding 18,963 18,385
======== ========
United PanAm Financial Corp. and Subsidiaries
Selected Financial Data
(Dollars and shares in thousands) At or For the
Three Months Ended
-------------------
March 31, March 31,
2006 2005
--------- ---------
Automobile Finance Data
Gross contracts purchased $145,794 $120,630
Contracts outstanding 716,940 570,514
Unearned discount (35,475) (27,889)
Allowance for loan losses (28,204) (24,980)
Allowance for loan losses to gross loans net of
unearned discount 4.14% 4.60%
Unearned discount to gross loans 4.95% 4.89%
Annualized net charge-offs to average contracts(1) 4.53% 4.71%
Delinquencies (% of net contracts)
31-60 days 0.39% 0.24%
61-90 days 0.15% 0.09%
90+ days 0.08% 0.06%
--------- ---------
Total 0.62% 0.39%
Repossessions over 30 days past due (% of net
contracts) 0.37% 0.34%
Total Delinquencies and repossessions over 30 days
past due (% of net contracts) 0.99% 0.73%
Other Data
Return on average assets from continuing
operations(1) 3.75% 3.41%
Return on average shareholders' equity from
continuing operations(1) 19.38% 19.19%
Consolidated capital to assets ratio 21.45% 12.32%
Weighted average shares outstanding 17,179 16,538
Additional shares included for fully diluted
calculations 1,784 1,847
--------- ---------
Number of shares used in fully diluted
calculations 18,963 18,385
(1) Quarterly information is annualized for comparability with full
year information.