Union Acceptance Announces Results for the Q1 of Fiscal 2000
19 October 1999
Union Acceptance Corporation Announces Results for the First Quarter of Fiscal 2000
INDIANAPOLIS--Oct. 19, 1999--Union Acceptance Corporation today announced results for the first quarter ended September 30, 1999.Net earnings totaled $5.4 million, or $0.41 per diluted share, compared to net earnings of $2.1 million, or $0.16 per diluted share, reported for the first quarter of last fiscal year.
Selected Key Results
| -- | Net earnings for the quarter ended September 30, 1999 increased by $3.3 million, or 163.4%, from the net earnings reported for the same quarter of last year. |
| -- | Total revenues increased 23.0% to $28.0 million in the first quarter of fiscal 2000 from $22.7 million in the first quarter of fiscal 1999. |
| -- | Tier I credit losses totaled 1.97% for the quarter ended September 30, 1999, compared to 2.78% for the quarter ended September 30, 1998. Tier I credit losses have remained stable over the past three quarters and have improved over the September 30, 1998 quarter reflecting the strategic underwriting changes implemented in fiscal 1997. |
| -- | Delinquency on the Tier I automobile portfolio was 3.18% at September 30, 1999, compared to 3.05% at September 30, 1998. |
| -- | Recovery rates on the Tier I automobile portfolio for the first quarter of fiscal 2000 were 41.12% compared to 38.67% in the same quarter of last fiscal year. |
| -- | Receivable acquisitions for the first quarter ended September 30, 1999 were $330.3 million compared to $404.5 million in the comparable quarter of last year. |
| -- | The Company securitized $364.8 million during the first quarter ended September 30, 1999 for a gain on sale of $6.8 million. This compares to $351.4 million securitized in the comparable quarter of last year for a gain of $6.2 million. |
| -- | The Company's total servicing portfolio grew to $2.6 billion at September 30, 1999, or 16.2% higher than $2.2 billion at September 30, 1998. |
| -- | The Company's allowance for estimated credit losses on securitized receivables was 4.57% as of September 30, 1999, compared to 4.64% at September 30, 1998. |
| -- | At September 30, 1999, $169.8 million of warehouse capacity was utilized, and an additional $54.1 million was available to borrow based on the outstanding principal balance of eligible receivables. In addition, the Company maintained cash on hand of $7.6 million for total available cash of $61.7 million as of September 30, 1999. Total available cash was $68.7 million at September 30, 1998. |
| -- | The Company made a principal payment on its Senior Debt of $22.0 million during August 1999. |
| -- | During the quarter ended September 30, 1999, the Company renewed its credit facility with Bank of America through the Enterprise Funding Corporation conduit and increased its borrowing capacity to $500 million. |
| -- | In addition, UAC Securitization Corporation ("UACSC"), a subsidiary of UAC, closed a $250 million commercial paper conduit with CIBC World Markets ("CIBC") through its Special Purpose Accounts Receivable Corporation ("SPARC") conduit. The SPARC facility and the Enterprise Funding Corporation facility are wrapped by financial guaranty policies issued by MBIA Insurance Corporation. |
"Credit quality coupled with profitable pricing remained our primary focus this quarter, and we completed another successful securitization. Although securitization has been our best funding option, we are pleased that we now have an alternative to public securitization through our commercial paper conduit with CIBC," commented John Stainbrook, President and Chief Executive Officer.
The following tables set forth delinquency and credit loss experience related to the Tier I (prime) automobile portfolio:
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Delinquency Experience
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At September 30, 1999 At June 30, 1999
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(Dollars in thousands)
Number of Number of
Receivables Amount Receivables Amount
------------- -------- ------------- --------
Servicing
portfolio 217,296 $2,530,654 213,746 $2,464,371
Delinquencies
30-59 days 4,714 50,734 3,962 41,475
60-89 days 1,955 20,439 1,614 16,654
90 days or more 875 9,291 670 6,754
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Total delinquencies 7,544 80,464 6,246 64,883
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Delinquency as a
percentage of
servicing portfolio 3.47% 3.18% 2.92% 2.63%
At September 30, 1998
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(Dollars in thousands)
Number of
Receivables Amount
------------- --------
Servicing
portfolio 194,882 $2,151,695
Delinquencies
30-59 days 3,741 38,040
60-89 days 1,873 19,652
90 days or more 793 7,966
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Total delinquencies 6,407 65,658
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Delinquency as a
percentage of
servicing portfolio 3.29% 3.05%
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Credit Loss Experience
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Three Months Ended
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(Dollars in thousands)
September 30, June 30, September 30,
1999 1999 1998
-------------- ---------- --------------
Average servicing
portfolio $2,515,461 $2,424,663 $2,088,163
Gross charge-offs 21,088 20,308 23,651
Recoveries 8,671 8,428 9,146
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Net charge-offs 12,417 11,880 14,505
Gross charge-offs
as a percentage
of average servicing
portfolio(1) 3.35% 3.35% 4.53%
Recoveries as a
percentage of
gross charge-offs 41.12% 41.50% 38.67%
Net charge-offs
as a percentage
of average servicing
portfolio(1) 1.97% 1.96% 2.78%
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(1) Annualized
Selected First Quarter Financial Results
Net earnings for the quarter ended September 30, 1999 increased $3.3 million from the same quarter of the prior year.
The net interest margin after provision for estimated credit losses increased to $6.6 million for the first quarter of fiscal 2000 from $4.5 million in the first quarter of fiscal 1999. Interest on receivables totaled $8.1 million for the quarter ended September 30, 1999, compared to $8.3 million for the quarter ended September 30, 1998. Interest expense totaled $6.6 million for the first quarter of fiscal 2000, a decrease from $7.1 million in the first quarter of fiscal 1999.
Retained interest and other interest income was $5.7 million and $5.6 million for the quarters ended September 30, 1999 and 1998, respectively.
The provision for estimated credit losses on the held for sale portfolio decreased to $750,000 in the quarter ended September 30, 1999 from $2.3 million in the same period of fiscal 1999. This reduction is related to the continued improvement in performance of the held for sale portfolio.
Gain on sale of receivables, net, totaled $6.5 million for the quarter ended September 30, 1999 compared to $2.7 million for the quarter ended September 30, 1998. The gain on sale of receivables, net, consisted primarily of gains on securitization transactions of $6.8 million and $6.2 million and charges for other than temporary impairments of Retained Interest of $240,000 and $3.5 million for the quarters ended September, 1999 and 1998, respectively.
Servicing fees for the quarter ended September 30, 1999 were $6.1 million, a 22.5% increase over $5.0 million for the quarter ended September 30, 1998. This increase was the result of a higher average securitized servicing portfolio.
Total operating expenses totaled $11.8 million for the quarter ended September 30, 1999, or 1.85% of the average servicing portfolio which is well below the industry average. This ratio remained the same as the same quarter of fiscal 1999.
The Company's net pre-tax unrealized gain included in Retained Interest was $5.0 million at September 30, 1999, compared to $322,000 at June 30, 1999. Net of taxes, the unrealized gain on Retained Interest totaled $3.1 million at September 30, 1999 and is reported as Accumulated Other Comprehensive Income.
Corporate Description
UAC is one of the nation's largest independent, indirect automobile finance companies. The Company's primary business is acquiring, securitizing and servicing prime retail installment sales contracts. These contracts are originated by dealerships affiliated with major domestic and foreign automobile manufacturers. The Company is focused on the upper-end of the credit quality spectrum. Union Acceptance Corporation commenced business in 1986 and currently acquires receivables from over 4,200 manufacturer-franchised dealerships in 35 states. By using state-of-the-art technology in a highly centralized underwriting and servicing environment, Union Acceptance Corporation enjoys one of the lowest cost operating structures in the independent prime automobile finance industry.
Forward Looking Information
This news release contains forward-looking statements regarding matters such as delinquency and credit loss trends, recoveries of repossessed vehicles, receivable acquisitions and other issues. Readers are cautioned that actual results may differ materially from such forward-looking statements. Forward-looking statements involve risks and uncertainties including, but not limited to, the relative unpredictability of changes in delinquency and credit loss rates, changes in acquisition volume, general economic conditions that affect consumer loan performance and consumer borrowing practices and other important factors detailed in the Company's annual report on Form 10-K for the fiscal year ended June 30, 1999, which was filed with the Securities and Exchange Commission.
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Union Acceptance Corporation
Selected Financial Data
(Unaudited)
(Dollars in thousands, except per share data)
Balance Sheet Data at: September 30, June 30,
1999 1999
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Cash and cash equivalents $ 7,638 $ 8,088
Restricted cash 12,104 12,379
Receivables held for
sale, net 230,189 267,316
Retained interest in
securitized assets 194,463 190,865
Accrued interest receivable 1,892 2,035
Property, equipment, and
leasehold improvements, net 8,593 8,375
Other assets 22,959 25,868
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Total assets $477,838 $514,926
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Amounts due under warehouse
facilities $169,815 $185,500
Long-term debt 177,000 199,000
Accrued interest payable 1,914 5,287
Amounts due to trusts 12,707 13,152
Dealer premiums payable 864 2,564
Current and deferred income
taxes payable 14,085 16,022
Other payables and
accrued expenses 3,648 3,922
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Total liabilities 380,033 425,447
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Common stock 58,464 58,452
Accumulated other
comprehensive earnings,
net of taxes 3,094 199
Retained earnings 36,247 30,828
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Total shareholders' equity 97,805 89,479
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Total liabilities and shareholders' equity $477,838 $514,926
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30+ Delinquency at: September 30, June 30, September 30,
1999 1999 1998
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Tier I 3.18% 2.63% 3.05%
Tier II 10.99% 9.42% 8.14%
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Total 3.32% 2.78% 3.21%
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Allowance Data at:
Allowance for
estimated credit
losses on securitized
receivables $ 107,422 $ 104,448 $ 95,614
Securitized receivables
serviced $2,351,269 $2,256,415 $2,058,960
Allowance as a
percentage of
securitized receivables
serviced 4.57% 4.63% 4.64%
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Managed Receivable Data at:
Receivables held for sale
Tier I $ 226,505 $ 260,857 $ 155,414
Tier II 694 886 4,997
Securitized
Tier I 2,304,146 2,203,509 1,996,272
Tier II 47,123 52,906 62,688
Receivables serviced
for others 836 912 1,286
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Total Servicing
Portfolio $2,579,304 $2,519,070 $2,220,657
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Union Acceptance Corporation
Selected Financial Data
(Unaudited)
(Dollars in thousands, except per share data)
Three Months Ended
September 30,
----------------------------
Income Statement Data for the Period: 1999 1998
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Interest on receivables held for sale $ 8,145 $ 8,251
Retained interest and other 5,728 5,632
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Total interest income 13,873 13,883
Interest expense 6,564 7,105
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Net interest margin 7,309 6,778
Provision for estimated credit losses 750 2,325
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Net interest margin after
provision for estimated
credit losses 6,559 4,453
Gain on sales of receivables, net 6,530 2,706
Servicing fees, net 6,068 4,953
Late charges and other fees 1,505 1,206
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Other revenues 14,103 8,865
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Salaries and benefits 6,927 5,670
Other general and administrative fees 4,914 4,321
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Total operating expenses 11,841 9,991
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Earnings before provision
for income taxes 8,821 3,327
Provision for income taxes 3,402 1,270
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Net earnings $ 5,419 $ 2,057
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Per Common Share Data:
Earnings (diluted and basic) $ 0.41 $ 0.16
Book value $ 7.38 $ 6.23
Weighted average shares outstanding 13,250,660 13,231,482
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Receivable Acquisition Volume:
Tier I $ 330,282 $ 396,980
Tier II -- 7,513
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Total $ 330,282 $ 404,493
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Securitization Volume:
Tier I $ 364,792 $ 351,379
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Ratios:
Return on average managed assets 0.77% 0.34%
Return on average shareholders' equity 23.25% 10.88%
Operating expenses as a percentage of
average servicing portfolio 1.85% 1.85%
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Portfolio Performance:
Net credit loss (annualized
for the period ended)
----------------------
Tier I 1.97% 2.78%
Tier II 8.64% 8.18%
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Total 2.10% 2.95%
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