White River Capital, Inc. Announces Results for the 1st Quarter of 2006
INDIANAPOLIS--April 27, 2006--White River Capital, Inc. (Pink Sheets:WRVC):-- Net Income for the First Quarter of 2006 Totaled $1.1 Million
White River Capital, Inc. (Pink Sheets:WRVC) ("White River") today announced net income for the first quarter 2006 was $1.1 million, or $0.29 per diluted share, compared to a first quarter 2005 net loss of $(1.2) million, or $(3.89) per diluted share. The results for the first quarter of 2006 are primarily due to activity from the Coastal Credit LLC ("Coastal Credit") subsidiary which contributed $1.9 million to net income. An income tax benefit of $0.5 million also contributed to net income. Offsetting this net income were interest and other expenses at the holding company of $1.0 million and a quarterly loss of $0.3 million at the Union Acceptance Company LLC ("UAC") subsidiary.
Mark Ruh, President and Chief Operating Officer, stated, "During the first quarter we continued to see excellent overall performance at our Coastal Credit subsidiary. At our UAC subsidiary, we continued to see favorable portfolio performance which added $3.4 million in accumulated other comprehensive income to our equity base. However, any portfolio performance improvement at UAC will be accreted into income only based upon cash receipts from restricted cash accounts associated with the securitized UAC portfolio." Mr. Ruh continued, "We expect to see reduced earnings volatility from our UAC subsidiary as the UAC portfolios continue to liquidate."
Martin Szumski, Chief Financial Officer, also commented, "We are pleased with the first quarter results. While the first quarter holding company expenses were high due to integration costs, we expect these costs to subside in the future. Our equity is now $57.9 million and tangible equity is now $22.8 million. These values translate into a book value per share of $15.19 and a tangible book value per share of $5.99, while our tangible equity is now 11.12% of tangible assets."
Also during the first quarter of 2006, White River paid in full its $3.8 million note payable and accrued interest to the sellers of Coastal Credit.
White River completed the acquisition of Coastal Credit on August 31, 2005. The results of operations for Coastal Credit have been included in the consolidated financial statements since the purchase date.
INTEREST ON RECEIVABLES
Interest on receivables for the first quarter of 2006 totaled $10.0 million compared to $4.5 million for the first quarter of 2005. The increase in interest on receivables resulted largely from the activity of Coastal Credit.
ACCRETION AND OTHER INTEREST
Accretion and other interest decreased to $710 thousand compared to $1.6 million for the quarters ended March 31, 2006 and 2005, respectively. This decrease is attributable to a decrease in accretion income related to cash distributions from the UAC subsidiary Master Trust.
RECOVERY (PROVISION) FOR ESTIMATED CREDIT LOSSES
Recovery (provision) for estimated credit losses was $(137) thousand compared to $(449) thousand for the quarters ended March 31, 2006 and 2005, respectively. UAC significantly contributed to the low provision for estimated credit losses with a $934 thousand recovery due to the improved performance of the securitized finance receivable portfolio during the first quarter 2006. The provision at Coastal Credit for the quarter ended March 31, 2006 was $(1.1) million.
CREDIT (CHARGE) TO MASTER TRUST, NET
The credit (charge) to Master Trust, net was a $(2.4) million charge for the quarter ended March 31, 2006 compared to $(1.6) million charge for the quarter ended March 31, 2005. Charge to Master Trust, net is an expense related to future transfers of funds to the Master Trust from on balance sheet securitized finance receivables of UAC. As the performance of UAC's on balance sheet securitized finance receivables improved, interest income increased, and thus the amounts related to future transfers of funds owed to the Master Trust increased resulting in an increase in the charge to Master Trust, net.
CREDIT QUALITY
The following tables set forth delinquency, loan loss reserve levels, and securitized pool loss information for Coastal Credit and UAC:
Coastal Credit LLC
Delinquency Rates Experienced - Finance Receivables
(in thousands except percentages)
March 31, December 31,
2006 2005
Finance receivables - gross balance $101,340 $97,820
Delinquencies:
30-59 days 994 1,124
60-89 days 623 768
90+ days 597 878
------------ ---------------
Total delinquencies $2,214 $2,770
============ ===============
Delinquencies as a percentage of finance
receivables - gross balance 2.2% 2.8%
Coastal Credit LLC
Allowance for Loan Losses - Finance Receivables
(in thousands except percentages)
Quarters Ended
-------------------------------
March 31, December 31,
2006 2005
Balance at beginning of period $ 6,031 $ 5,200
Charge-offs, net of recoveries (1) (1,186) (407)
Provision for estimated credit losses 1,071 1,238
--------------- --------------
Balance at the end of the period $ 5,916 $ 6,031
=============== ==============
Net charge offs $ 1,186 $ 407
Finance receivables, net of unearned
finance charges $91,381 $87,952
Allowance for loan losses as a percent
of finance receivables, net of
unearned finance charges 6.47% 6.86%
Annualized net charge offs as a
percent of finance receivables, net
of unearned finance charges 5.19% 1.85%
Allowance for loan losses as a percent
of annualized net charge offs 124.70% 370.45%
(1) Charge-offs do not include loans subject to SOP 03-3 which were
charged off during the quarter ended December 31, 2005.
Union Acceptance Company LLC
Delinquency Rates
(in thousands except percentages)
March 31, December 31, March 31,
2006 2005 2005
Securitized finance receivables
principal balance $81,079 $115,031 $134,074
Delinquencies:
30-59 days 4,134 7,703 5,091
60-89 days 1,167 2,390 1,391
90+ days 607 1,271 920
------- -------- --------
Total delinquencies $ 5,908 $ 11,364 $ 7,402
======= ======== ========
Delinquencies as a percentage of
securitized finance receivables 7.3% 9.9% 5.5%
Off-balance sheet finance receivables
principal balance $66,481 $ 82,300 $259,264
Delinquencies:
30-59 days 1,776 2,737 5,459
60-89 days 388 859 1,719
90+ days 237 553 831
------- -------- --------
Total delinquencies $ 2,401 $ 4,149 $ 8,009
======= ======== ========
Delinquencies as a percentage of
securitized finance receivables 3.6% 5.0% 3.1%
Union Acceptance Company LLC
Allowance for Loan Losses - On Balance Sheet Securitized Fiance
Receivables
(in thousands except percentages)
Quarters Ended
--------------------------------
March 31, December 31, March 31,
2006 2005 2005
Balance at the beginning of period $ 6,503 $ 13,980 $ 11,722
Allowance at purchase - - 2,669
Charge-offs (4,251) (5,227) (5,697)
Recoveries 3,549 3,296 3,615
Provision (recovery) for estimated
credit losses (934) (5,546) 449
--------- ------------ ---------
Balance at the end of the period $ 4,867 $ 6,503 $ 12,758
========= ============ =========
Net charge offs $ 702 $ 1,931 $ 2,082
Securitized finance receivables $81,079 $115,031 $134,074
Allowance for loan losses as a percent
of securitized finance receivables 6.00% 5.65% 9.52%
Annualized net charge offs as a
percent of securitized finance
receivables 3.46% 6.71% 6.21%
Allowance for loan losses as a percent
of annualized net charge offs 173.33% 84.19% 153.19%
ABOUT WHITE RIVER, COASTAL CREDIT AND UAC
White River is the holding company for Coastal Credit LLC and Union Acceptance Company LLC.
Coastal Credit is a specialized subprime auto finance company, headquartered in Virginia Beach, Virginia, engaged primarily in (1) acquiring retail installment sales contracts from both franchised and independent automobile dealers which have entered into contracts with purchasers of used and, to a much lesser extent, new cars and light trucks, and (2) servicing the contract portfolio. Coastal Credit commenced operations in Virginia in 1987 and conducts business in seventeen states -- Arizona, California, Delaware, Florida, Georgia, Louisiana, Maryland, Mississippi, Nevada, North Carolina, Ohio, Oklahoma, Pennsylvania, Tennessee, Texas, Virginia and Washington - through its seventeen branch locations.
Union Acceptance Company LLC is a specialized auto finance company, based in Indianapolis, Indiana, which holds and oversees its portfolio of approximately $150.0 million in non-prime auto receivables, as of March 31, 2006. As of such date, its portfolio is held approximately 44.3% in off-balance sheet securitizations, 54.1% through subsidiary non-recourse financings and 1.6% directly or by subsidiaries not subject to financing. Since August 2003, UAC is continuing business activities under a confirmed Second Amended and Restated Plan of Reorganization under Chapter 11 of the U.S. Bankruptcy Code under which net proceeds from its residual interest in its receivables portfolios and other bankruptcy estate assets must be paid to creditors holding notes and claims under the plan. During 2005, White River purchased and now directly owns approximately 88% of such notes and claims.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
Additional information is available in White River's public filings with the U.S. Securities and Exchange Commission (the "SEC") (which can be viewed on the SEC's website at www.sec.gov), including but not limited to:
-- its Annual Report on Form 10-K dated March 31, 2006, and
-- its Proxy Statement on Schedule 14A dated April 10, 2006.
FORWARD-LOOKING STATEMENTS
This press release contains certain forward-looking information about White River that is intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of White River. White River cautions readers that a number of important factors could cause actual results to differ materially from those expressed in, implied or projected by, such forward-looking statements. Risks and uncertainties include, but are not limited to:
-- losses and prepayments on our receivable portfolios;
-- general economic, market, or business conditions;
-- changes in interest rates, the cost of funds, and demand for our financial services;
-- changes in our competitive position;
-- our ability to manage growth and integrate acquired businesses;
-- the opportunities that may be presented to and pursued by us;
-- competitive actions by other companies;
-- changes in laws or regulations;
-- the outcome of pending litigation;
-- changes in the policies of federal or state regulators and agencies.
These and other risks are described in White River's public filings with the SEC; see, in particular, risk factors described under Item 1A in White River's Annual Report on Form 10-K for the year ended December 31, 2005, on file with the SEC. If any of these risks or uncertainties materializes or if any of the assumptions underlying such forward-looking statements proves to be incorrect, White River's results could differ materially from those expressed in, implied or projected by such forward-looking statements. White River assumes no obligation to update such forward-looking statements.
WHITE RIVER CAPITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
ASSETS March 31, December 31,
2006 2005
Cash and cash equivalents $ 6,066 $ 6,878
Restricted cash 21,396 22,739
Securitized finance receivables -- net 76,816 109,506
Finance receivables -- net 73,837 70,784
Beneficial interest in Master Trust 17,843 13,968
Goodwill 35,097 35,097
Deferred tax assets 5,286 4,707
Other assets 4,265 3,315
--------- ---------
TOTAL $ 240,606 $ 266,994
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Collateralized financing $ 90,267 $ 122,293
Line of credit 56,000 51,500
Secured note payable 15,000 15,000
Subordinated debentures 7,700 7,700
Note payable - Coastal Credit purchase holdback - 3,840
Accrued interest 2,027 2,131
Amounts due to Master Trust 7,396 7,417
Creditor notes payable 1,632 1,461
Other payables and accrued expenses 2,644 2,291
--------- ---------
Total liabilities 182,666 213,633
--------- ---------
SHAREHOLDERS' EQUITY:
Preferred Stock, without par value,
authorized 3,000,000 shares;
none issued and outstanding - -
Common Stock, without par value, authorized
20,000,000 shares; 3,813,155 and 3,810,155
issued and outstanding at March 31, 2006
and December 31, 2005 respectively 179,203 179,157
Warrants 534 534
Accumulated other comprehensive income 16,700 13,305
Accumulated deficit (138,497) (139,635)
--------- ---------
Total shareholders' equity 57,940 53,361
--------- ---------
TOTAL $ 240,606 $ 266,994
========= =========
WHITE RIVER CAPITAL, INC.
Book Value per Share and Tangible Book Value per Share
(in thousands except share related values)
March 31, December 31,
2006 2005
Total shareholders' equity (deficit) $ 57,940 $ 53,361
Less goodwill (35,097) (35,097)
---------- ----------
Tangible book value $ 22,843 $ 18,264
========== ==========
Shares outstanding 3,813,155 3,810,155
Book value per share $ 15.19 $ 14.00
Tangible book value per share $ 5.99 $ 4.79
WHITE RIVER CAPITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
Quarters Ended March 31,
2006 2005
INTEREST:
Interest on receivables $ 10,032 $ 4,480
Accretion and other interest 710 1,550
---------- --------
Total interest income 10,742 6,030
Interest expense (3,322) (4,023)
---------- --------
Net interest margin 7,420 2,007
Provision for estimated credit losses (137) (449)
---------- --------
Net interest margin after provision for
estimated credit losses 7,283 1,558
---------- --------
OTHER REVENUES:
Credit (charge) to Master Trust -- net (2,388) (1,623)
Other income 107 258
---------- --------
Total other revenues, net (2,281) (1,365)
---------- --------
OTHER EXPENSES:
Salaries and benefits 1,995 92
Third party servicing expense 703 810
Other operating expenses 1,624 390
Bankruptcy costs 75 109
---------- --------
Total other expenses 4,397 1,401
---------- --------
INCOME (LOSS) BEFORE INCOME TAXES 605 (1,208)
INCOME TAXES BENEFIT 532 -
---------- --------
NET INCOME (LOSS) $ 1,137 $ (1,208)
========== ========
NET INCOME (LOSS) PER COMMON SHARE (BASIC) $ 0.30 $ (3.89)
========== ========
NET INCOME (LOSS) PER COMMON SHARE
(DILUTED) $ 0.29 $ (3.89)
========== ========
BASIC WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING 3,812,822 310,191
========== ========
DILUTED WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING 3,864,086 310,191
========== ========