Onyx Posts Q2 Earnings
22 July 1998
Onyx 2nd Quarter Earnings Increase 107%
IRVINE, Calif., July 22 -- Onyx Acceptance Corporation
, a specialized automobile finance company, today reported
results for the quarter ended June 30, 1998.
Net income for the second quarter of 1998 was $1.4 million or $.21 per
diluted share compared to $653,210 or $.10 per diluted share for the same
period of 1997. Net income for the six month period ended June 30, 1998
increased to $2.2 million or $.34 per diluted share from $1.3 million or $.20
per diluted share for the like period of 1997. The increase in earnings and
earnings per diluted share for the quarter and six month period ended June 30,
1998 resulted from several factors. The Company securitized $208.8 million
in retail installment contracts during the second quarter of 1998 compared to
$121.7 million in the second quarter of 1997. For the six month period ended
June 30, 1998, the Company securitized and sold a total of $396.8 million of
retail installment contracts. Of this total, $381.8 million were securitized,
while $15.0 million were sold on a whole loan basis, with servicing retained.
Another factor contributing to the increase in earnings and earnings per
diluted share was the performance of the servicing portfolio. All measures of
portfolio performance continued to improve on a quarter over quarter basis and
for the second quarter ended June 30, 1998 as compared to second quarter ended
June 30, 1997. At June 30, 1998, the trend of reductions in delinquency,
repossessions and credit losses continued, complemented by increased reserve
levels. At June 30, 1998, serviced loans delinquent over 30 days totaled
$15.1 million or 1.49% of total serviced loans outstanding, compared to $11.6
million or 2.05% at June 30, 1997. On a quarter over quarter basis, the
dollar amount of contracts delinquent decreased $563,000 from March 31, 1998
to June 30, 1998 while the Company experienced a 14.1% growth in the serviced
portfolio for the quarter. The Company increased its off balance sheet
reserves from 3.57% of securitized assets at year end 1997 to 3.76% of
securitized assets at June 30, 1998.
Annualized loan losses for serviced loans as a percentage of average
serviced loans outstanding decreased to 1.78% during the second quarter of
1998 compared to 2.04% during the second quarter of 1997. The widespread
improvement was attributed to the continued focus on collection efforts, and
consistent application of underwriting guidelines.
Total revenues, including servicing income, for the second quarter of 1998
were $14.2 million compared to $8.7 million for the same period ended June 30,
1997, an increase of 63.2%. Total revenues, including servicing income, for
the six month period ending June 30, 1998 were $26.1 million compared to $15.9
million for the like period in 1997.
The increase in revenues and servicing income is a result of the continued
expansion of the Company's servicing portfolio. The servicing portfolio
increased 77.0% to $1.0 billion at June 30, 1998 from $564.9 million at June
30, 1997. For the six month period ended June 30, 1998, the average contracts
serviced were $875.7 million compared to $475.1 million for the same period in
1997. The growth in the servicing portfolio was a result of the increased
volume of contracts purchased. Contracts purchased during the second quarter
of 1998 were $229.6 million as compared to $145.5 million for the second
quarter of 1997, an increase of 57.8%. Contracts purchased during the six
month period ending June 30, 1998 was $447.9 million compared to $271.3
million for the same period in 1997.
During the second quarter of 1998, Onyx securitized a total of $208.8
million of contracts and recorded a gain on sale of $9.4 million compared to a
securitization in the amount of $121.7 million with a gain on sale of $4.3
million in the second quarter of 1997. For the six months ended June 30,
1998, the Company recorded a gain on sale of $18.1 million on total sales and
securitizations of $396.8 million as compared to a gain on sale of $8.1
million with securitizations totaling $211.7 million. The Company is
currently using securitization estimates that are consistent with management's
expectations of the future performance of each securitized pool of loans.
These estimates are an ABS prepayment speed of 1.75%, net annualized loss
assumption of 2.0% and a discount rate of 3.50% over the pass-through rate.
John W. Hall, President and CEO said that, "Our results provide evidence
that the resources the Company has committed to its collection efforts, and to
evaluate the credit quality of the contracts that it buys, are producing
outstanding results. We are very proud to have surpassed, in the second
quarter, $1 billion in automobile receivables serviced and we remain dedicated
to managing our growth and maintaining sound underwriting principles. We
believe our focus on conservative loan to value and payment to income ratios
will enable us to sustain the outstanding performance of the portfolio."
Onyx Acceptance Corporation is an Irvine, CA based company providing
financing to new and select used car dealerships throughout the United States
with Auto Finance Centers located throughout California and in Arizona,
Florida, Georgia, Illinois, Michigan, Nevada, and Washington.
This news release contains forward-looking statements that are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those projected. The most significant among these risks and
uncertainties are (a) the Company's use of estimates of future performance of
securitized loans, (b) the Company's level of delinquencies, gross charge-offs
and net losses, (c) the ability to achieve adequate interest rate spreads, (d)
the effects of economic factors on consumer debt and (e) competitive
pressures. Other important factors are detailed in the Company's annual
report on Form 10-K for the year ended December 31, 1997 and its quarterly
report on Form 10-Q for the period ended March 31, 1998.
ONYX ACCEPTANCE CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
June 30, December 31,
1998 1997
ASSETS
CASH & CASH EQUIVALENTS $657,869 $991,010
TRUST RECEIVABLES 31,756,357 27,628,619
CONTRACTS HELD FOR SALE - Net of
Allowance(a) 101,078,637 64,342,309
RETAINED INTEREST IN SECURITIZED
ASSETS 63,010,874 48,838,815
OTHER ASSETS 5,963,802 4,767,490
TOTAL ASSETS $202,467,539 $146,568,243
LIABILITIES AND EQUITY
LIABILITIES
DEBT $142,560,098 $91,508,209
OTHER LIABILITIES 17,145,857 14,504,542
TOTAL LIABILITIES 159,705,955 106,012,751
TOTAL EQUITY 42,761,584 40,555,492
TOTAL LIABILITIES AND EQUITY $202,467,539 $146,568,243
(a) Net of Unearned Discounts
ONYX ACCEPTANCE CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
REVENUES:
Finance Revenue $5,221,533 $3,265,712 $9,702,083 $5,147,704
Interest Expense 3,616,724 1,830,284 6,437,710 2,885,192
Net Finance Revenue 1,604,809 1,435,428 3,264,373 2,262,512
Provision for credit
losses 324,819 211,324 631,807 504,594
Net Finance Revenue
after Provision 1,279,990 1,224,104 2,632,566 1,757,918
Gain on Sale of Loans 9,406,175 4,300,069 18,073,193 8,076,212
Service Fee Income 3,159,533 2,975,717 4,758,269 5,595,354
EXPENSES:
Salaries and Benefits 6,334,576 4,327,419 12,275,745 7,744,744
Depreciation 499,356 258,819 926,338 460,801
Occupancy 442,412 333,183 814,853 657,274
General and
Administrative expenses 4,254,211 2,461,962 7,716,955 4,399,714
Total Expenses 11,530,555 7,381,383 21,733,891 13,262,533
NET INCOME BEFORE
INCOME TAXES 2,315,143 1,118,507 3,730,137 2,166,951
INCOME TAXES 960,784 465,297 1,548,007 901,297
NET INCOME $1,354,359 $653,210 $2,182,130 $1,265,654
NET INCOME PER SHARE -
BASIC $0.22 $0.11 $0.36 $0.21
NET INCOME PER SHARE -
DILUTED $0.21 $0.10 $0.34 $0.20
BASIC SHARES
OUTSTANDING 6,092,400 6,005,444 6,058,610 5,983,809
DILUTED SHARES
OUTSTANDING 6,533,804 6,374,934 6,477,178 6,389,423
ONYX ACCEPTANCE CORPORATION and SUBSIDIARIES
DELINQUENCY AND LOSS RATES
(UNAUDITED)
(In Thousands)
Three Months Ended
June 30,
1998 1997
Contracts Purchased $229,660 $145,548
Six Months Ended
June 30,
1998 1997
Contracts Purchased $447,864 $271,260
Number of Number of
Delinquency Experience Contracts $ Contracts $
Servicing Portfolio 98,918 $1,009,246 54,243 $564,922
Serviced Delinquency
31 to 59 days 921 $9,041 699 $7,023
60 to 89 days 244 2,473 178 1,981
90 days or more 332 3,552 229 2,591
Total 1,497 $15,066 1,106 $11,595
Delinquency as a percentage
of number and amount of
contracts 1.51% 1.49% 2.04% 2.05%
Three Months Ended Six Months Ended
March 31, March 31,
1998 1997 1998 1997
Loss Experience
Average Contracts Serviced
during the period $935,391 $517,134 $875,657 $475,141
Gross Charge-offs $4,917.2 $2,999.6 $9,374.8 $5,308.8
Recoveries $761.8 $368.2 $1,457.6 $697.7
Net Charge-offs $4,155.4 $2,631.4 $7,917.2 $4,611.1
Net Charge-offs as a
percentage of contracts
outstanding during the
period 1.78% 2.04% 1.81% 1.94%
Month 95-1 96-1 96-2 96-3
1 0.00% 0.00% 0.01% 0.00%
2 0.01% 0.03% 0.07% 0.02%
3 0.02% 0.05% 0.20% 0.07%
4 0.02% 0.11% 0.33% 0.16%
5 0.05% 0.23% 0.46% 0.43%
6 0.06% 0.40% 0.78% 0.54%
7 0.08% 0.69% 0.98% 0.74%
8 0.10% 0.82% 1.15% 0.97%
9 0.21% 0.93% 1.39% 1.13%
10 0.24% 1.15% 1.52% 1.32%
11 0.29% 1.25% 1.69% 1.47%
12 0.41% 1.47% 1.94% 1.60%
13 0.55% 1.65% 2.08% 1.77%
14 0.70% 1.79% 2.34% 1.94%
15 0.83% 2.02% 2.52% 2.09%
16 0.98% 2.25% 2.76% 2.27%
17 1.06% 2.43% 2.89% 2.42%
18 1.11% 2.59% 3.10% 2.57%
19 1.27% 2.77% 3.14% 2.70%
20 1.37% 2.93% 3.30% 2.83%
21 1.41% 3.06% 3.47% 2.94%
22 1.54% 3.15% 3.60% 3.00%
23 1.59% 3.21% 3.70%
24 1.69% 3.28% 3.81%
25 1.76% 3.40% 3.93%
26 1.83% 3.43% 4.06%
27 1.86% 3.55%
28 1.97% 3.60%
29 2.01% 3.73%
30 2.08% 3.75%
31 2.13%
32 2.16%
33 2.26%
34 2.27%
35 2.28%
36 2.28%
37 2.30%
38 2.28%
39 2.28%
Month 96-4 97-1 97-2 97-3
1 0.00% 0.00% 0.00% 0.00%
2 0.02% 0.00% 0.00% 0.00%
3 0.05% 0.03% 0.02% 0.02%
4 0.14% 0.06% 0.07% 0.09%
5 0.24% 0.13% 0.22% 0.13%
6 0.38% 0.26% 0.32% 0.24%
7 0.53% 0.37% 0.59% 0.36%
8 0.81% 0.52% 0.80% 0.47%
9 0.98% 0.60% 0.91% 0.62%
10 1.18% 0.76% 1.07% 0.73%
11 1.43% 0.92% 1.26%
12 1.63% 1.02% 1.42%
13 1.73% 1.13% 1.58%
14 1.87% 1.23%
15 2.07% 1.40%
16 2.23% 1.56%
17 2.33%
18 2.49%
19 2.62%
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
Month 97-4 98-1 98-A
1 0.00% 0.00% 0.00%
2 0.00% 0.01%
3 0.01% 0.02%
4 0.04% 0.08%
5 0.11%
6 0.20%
7 0.28%
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
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