AutoBond Releases Third Quarter Earnings
17 November 1998
AutoBond Releases Third Quarter Earnings
AUSTIN, Texas, Nov. 16 -- AutoBond Acceptance Corporation
(Amex: ABD) ("AutoBond"), listed on the Amex under the symbol ABD, is
reporting a third quarter 1998 loss of $0.38 per share on a net loss of
$2,051,476 versus income of $0.08 per share on net income of $511,814 for the
third quarter 1997. Revenue for the third quarter 1998 was $4,723,397 versus
$6,369,852 for the third quarter 1997.
The third quarter loss was due primarily to reduced production levels.
Loan production was $23.5 million during the third quarter of 1998, a slight
increase from $22.9 million during the second quarter of 1998. This level is
primarily attributable to temporarily low acquisition volume due to a slower
than expected return to normal volumes that were adversely affected by the
delay between the expiration of the Daiwa warehouse facility in March 1998,
and the implementation of the Dynex Warehouse Financing in June 1998.
AutoBond expects fourth quarter 1998 volume to increase relative to the third
quarter level. To that end, October 1998 acquisition volume exceeded
$10 million and November production volume as of November 14, 1998 exceeded
$6.5 million.
Despite the third quarter loss, the Company's unrestricted cash position
is stronger than it has ever been and stood at $7,804,822 at
September 30, 1998. This compares favorably with $159,293 in unrestricted
cash at year-end 1997. In addition, the Company had $5,783,445 in contracts
held for sale at September 30, 1998, which generated significant additional
cash and gain-on-sale in the fourth quarter.
Delinquency Statistics:
AutoBond's overall delinquency trends, as reflected below, have improved
significantly since December 1997 when the Company assumed full servicing
responsibilities from its former servicer. The Company attributes this
improvement to a variety of factors including: (i) synergies that were
created with the internalization of the servicing function; (ii) proprietary
servicing platform technology; (iii) the addition of personnel with excellent
collections experience; (iv) new training programs; and (v) simple diligence
and hard work in the collections area. The Company expects this trend to
continue and has purchased a predictive dialer that should further the trend.
The Company's year-to-date delinquency statistics follow:
12/31/97 3/31/98 6/30/98 9/30/98
Principal balance of
finance contracts
outstanding: $187,098,957 $195,498,519 $193,476,561 $192,138,429
60-89 days past
due: 5.85% 3.37% 3.75% 3.26%
90 days past
due and over: 4.47% 5.15% 4.08% 3.81%
Total 60 days
past due and over: 10.32% 8.52% 7.83% 7.07%
As noted above, the most recent quarter compares particularly well with
fourth quarter 1997 statistics. Over this period, 60-89 days past due
decreased 2.59%, and 90 days past due and over decreased 0.66%. In total,
delinquencies over this period decreased 3.25%.
Additional Sales Representatives:
The Company continues to expand and grow acquisition volume and has
significantly expanded its sales force by hiring an additional 16 seasoned
Marketing Representatives since the end of July, bringing the current total to
43.
Dealer Statistics:
The Company continues to streamline and strengthen its dealer
relationships. To that end, it has attempted to eliminate dealers that submit
applications, but do not forward contracts, thereby creating underwriting and
other related expenses. In addition, the Company continues to focus on
developing new dealer relationships utilizing the new and existing Sales
Representatives. The Company has also focused on originating more contracts
through its existing dealer base.
Dealer statistics from July 1998 through October 1998 reflect the results
of this effort:
% Change
July Aug. Sept. Oct. July-Oct.
Number of Dealers: 3,754 3,703 3,487 3,107 -17.2%
Number of Dealers
submitting apps: 691 713 871 992 43.6%
Number of Dealers
funding loans: 222 243 265 309 39.2%
Number of Dealers
funding 1 loan: 105 114 141 145 38.1%
Number of Dealers
funding 3 or more
loans: 77 83 74 104 35.1%
Application/Approval/Contract Statistics:
The Company's Application/Approval/Contract Statistics reflect the
positive influence of the ALL Program and the hiring of the aforementioned
additional Sales Representatives. Applications have increased 52% from
July 1998 through October 1998, while the number of contracts approved is up
47%, and the number of contracts funded is up 49% over the same time period.
It is important to note that these increases have been accomplished with no
change in the Company's underwriting criteria and this is reflected in the
Company's approval-to-application ratio which has decreased from 28.9% for the
month of July, to 28.0% for the month of October, after dipping to a low of
23.3% during the month of September. A summary of AutoBond's most recent
Application/Approval/Contract Statistics follows:
Applications Approvals % Contracts %
July 9,339 2,700 28.9% 591 6.3%
August 10,249 2,619 25.6% 681 6.6%
September 11,842 2,764 23.3% 691 5.8%
October 14,155 3,967 28.0% 883 6.2%
ALL Program Results To-Date:
The ALL Program was implemented in conjunction with the development of a
proprietary credit-scoring model. The Company studied the performance
criteria and characteristics of its servicing portfolio of approximately
28,000 finance contracts, representing its four-year operating history. Until
recently, AutoBond acquired finance contracts from automobile dealers at an
average price discount of 8.5%. The ALL Program involves acquisition
discounts ranging in five tiers from 0% to 10%. AutoBond believes that the
base credit criteria that have been operative for the past four years will not
be affected by the ALL Program. Since inception, the Company has recognized
the benefit of the ALL Program in the number of contracts it is funding on a
tier-by-tier basis. Additionally, the Company has recognized the impact of
buying higher quality contracts at lower discounts as the implied discount for
all contracts purchased has decreased 1.3% from 8.5% to 7.2% from July to
October. The Company anticipates that improved delinquency performance that
results from buying higher quality contracts justifies, and will more than
offset, the decrease in the implied discount.
Contract funding statistics, by tier, from 7/1/98 through 10/31/98 follow:
Implied
Tier 1 Tier 2 Tier 3 Tier 4 Tier 5 Total Discount
Acq.
Discount (0%) ($195) (5%) (8.5%) (10%)
July 0 0 0 591 0 591 8.5%
August 0 0 0 685 0 685 8.5%
September 4 21 34 568 64 691 8.2%
October 24 87 180 397 195 883 7.2%
Other Developments:
Bolstering efforts to increase acquisition volume while maintaining
appropriate credit criteria, AutoBond is pleased to announce that Malia
Bingham has joined the Company to serve as Vice President - Business
Development. Ms. Bingham previously held senior management positions in
start-up operations and business development with both Americredit Corporation
and Fairlane Credit LLC.
AutoBond currently has 6,531,311 common shares and 1,125,000 preferred
shares outstanding. AutoBond is a specialty consumer finance company engaged
in underwriting, acquiring, servicing and securitizing retail installment
contracts originated primarily by franchised automobile dealers in connection
with the sale of used and, to a lesser extent, new vehicles to selected
consumers with limited access to traditional sources of credit. AutoBond is
located in Austin, Texas and acquires contracts nationwide from dealers in
approximately 40 states.
This press release contains certain forward looking statements that
involve some risk and uncertainty, so readers are cuationed not to place undue
reliance on any forward looking statements that are made.
AUTOBOND ACCEPTANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, September 30
1997 1998
(Unaudited)
ASSETS
Cash and cash equivalents $159,293 $ 7,804,822
Restricted funds 6,904,264 153
Finance contracts held for sale, net 1,366,114 5,783,445
Collateral acquired, net 150,908 22,339
Retained interest in securitizations 32,016,649 17,000,966
Debt issuance cost 605,847 828,751
Due from affiliates 176,963 471,722
Property, Plant, and Equipment, net 1,148,559 1,179,344
Deferred income taxes --- 47,754
Other assets 681,851 772,130
Total assets $ 43,210,448 $33,911,426
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Notes payable $9,841,043 $14,249,233
Revolving Credit Facilities 7,639,201 ---
Accounts payable and accrued
liabilities 3,386,685 938,810
Bank overdraft 2,936,883 1,799,474
Payable to affiliates 554,233 ---
Deferred income taxes 3,504,249 ---
Total liabilities $ 27,862,294 $16,987,517
Commitments and contingencies
Shareholders' equity:
Preferred stock, no par value;
5,000,000 shares authorized; $ --- $10,856,000
1,125,000 shares of 15% Series A
cumulative preferred stock,
$10 liquidation preference,
issued and outstanding, at
September 30, 1998 1,000 1,000
Common stock, no par value;
25,000,000 shares authorized,
6,531,311 shares issued and
outstanding at December 31, 1997
and September 30, 1998
Capital in excess of stated capital 8,781,669 9,475,207
Due from shareholders (10,592) (10,592)
Accumulated other comprehensive income 1,049,256 ---
Retained earnings (accumulated deficit) 5,526,821 (2,897,706)
Investment in common stock agreement --- (500,000)
Total shareholders' equity $ 15,348,154 $16,923,909
Total liabilities and
shareholders' equity $ 43,210,448 $33,911,426
AUTOBOND ACCEPTANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1998 1997 1998
Revenues:
Interest income $1,313,304 $ 468,726 $ 3,107,402 $ 2,134,508
Gain on sale of
finance contracts 4,840,620 3,456,303 13,532,765 10,093,123
Servicing income 225,482 798,368 659,791 2,116,310
Other income (loss) (9,554) --- (62,323) (79,715)
Total revenues $6,369,852 $4,723,397 $17,237,635 $14,264,226
Expenses:
Provision for credit
losses $ 125,000 $ --- $ 125,000 $ 100,000
Interest expense 1,101,829 1,015,794 2,930,592 3,391,600
Salaries and
benefits 2,140,420 2,601,865 5,413,045 7,468,197
General and
administrative 1,722,689 1,523,132 4,481,846 4,398,016
Impairment of
retained interest
in securitizations --- 1,637,190 467,926 7,515,015
Other operating
expenses 483,140 1,044,853 1,265,830 2,573,723
Total expenses $5,573,078 $7,822,834 $14,684,239 $ 25,446,551
Income (loss) before
income taxes 796,774 (3,099,437) 2,553,396 (11,182,325)
Provision (benefit)
for income taxes 284,960 (1,047,961) 895,685 (3,775,923)
Net income (loss)$ 511,814 $(2,051,476) $ 1,657,711 $ 7,406,402)
Weighted average
number of common
shares basic 6,512,500 6,531,311 6,512,500 6,531,311
Weighted average
number of common
shares diluted 6,543,320 6,531,311 6,538,032 6,531,311
Net income available
to common
shareholders $ 511,814 $(2,473,351) $1,657,711 $ (8,424,527)
Earnings/(Loss)
per common share:
Basic $ 0.08 $ (0.38) $ 0.25 $ (1.29)
Diluted $ 0.08 $ (0.38) $ 0.25 $ (1.29)
Other comprehensive
income, net of tax:
Unrealized gain (loss)
on retained interest
in securitizations $306,342 $(1,416,628) $ 1,265,971 $ (1,049,256)
Other comprehensive
income (loss) $306,342 $1,416,628) $ 1,265,971 $ (1,049,256)
Comprehensive
income (loss) $818,156 $(3,468,104) $ 2,923,682 $ (8,455,658)
Contact: Adrian Katz 512-435-7000.