Onyx Acceptance Reports Q3 Earnings
27 October 2000
Onyx Acceptance Reports Third Quarter Earnings and Completes A New Residual Warehouse Financing Transaction
FOOTHILL RANCH, Calif., Oct. 26 Onyx Acceptance
Corporation announced today its financial and operational
results for the quarter ended September 30, 2000. Net income and earnings per
diluted share were $1.7 million and $0.32 respectively, compared to
$2.6 million and $0.39 for the same period in 1999. The reduction in net
income and earnings per share was the result of an increase in the loss
reserve rate coupled with interest rate spread compression on contracts
securitized in the third quarter. These factors reduced the gain on sale as a
percentage of contracts securitized to 2.75% for the third quarter of 2000,
compared to 3.42% for the same period in 1999.
Total revenues increased by 4.4% to $26.2 million during the third quarter
of 2000, compared to $25.1 million in the same period in 1999. Service fee
income increased 69.5% to $13.9 million for the third quarter 2000 compared to
$8.2 million for the same period in 1999. Service fee income comprised
53.0% of total third quarter revenues, up from 32.8% during the third quarter
of 1999. This increase marks a milestone for the Company: for the first
time, servicing income for the quarter surpassed gain-on-sale revenue. The
Company continues to become less reliant on the initial gain-on-sale for its
reported financial results. Higher service fees, late fees and document fees
related to the growth in the servicing portfolio was the predominant reason
for this increase. The average servicing portfolio for the three months ended
September 30, 2000 was $2.5 billion, compared to $1.8 billion for the same
period in 1999. Contract purchases were $367.6 million for the quarter,
compared to $398.8 million for the same period in 1999. The reduction in
volume reflects management's decision to focus on credit quality rather than
volume. The reduction also reflects the increased competition for near prime
paper in the current market.
Onyx recorded a gain on sale of $12.1 million (2.75% of the issue amount)
on its third quarter securitization of $440.0 million, compared to a gain of
$13.7 million (3.42% of the issue amount) on $400.0 million of contracts
securitized during the same period of 1999. The reduction of the gain was due
to an increase in the loss reserve rate and reduced net interest spread on the
securitization compared to the third quarter of 1999. Off balance sheet
reserves as a percentage of securitized assets increased to 4.60% as of
September 30, 2000 compared to 4.45% for the same period in 1999.
Net interest income was $283 thousand for the third quarter of 2000,
compared to $3.1 million during the same period in 1999. The reduction in net
interest income was primarily due to the prefunded structure of the
securitization executed during the third quarter of 2000. A prefunded
securitization reduces the time period that the contracts are held for sale,
and, as a result, reduces the interest income earned on the related contracts.
Total operating expenses as a percentage of average servicing portfolio
declined to 3.45% for the third quarter 2000, compared to 4.16% for the
quarter ended September 30, 1999. Total delinquencies as a percentage of the
period-end servicing portfolio increased to 3.88% from 3.24% at year-end 1999.
Annualized net charge-offs as a percent of the average servicing portfolio
increased to 2.20% during the third quarter of 2000, from 1.80% for the same
period in 1999.
The Company recently completed an additional residual warehouse facility
in the amount of $35.0 million with Credit Suisse First Boston. The line will
be used as an additional liquidity source to fund its operations. The line is
similar in its operation to the Company's existing residual lines totaling
$70.0 million with Salomon Smith Barney and Merrill Lynch related entities.
During the third quarter, the Company purchased 51,000 shares of its
Common Stock as a part of its stock repurchase program authorized by its Board
of Directors in May of 2000. As of September 30, 2000, the Company has
retired approximately 942,000 shares of its Common Stock, and has expended
approximately $4.4 million in connection with this program. Repurchases may
continue from time to time at prevailing market prices, through open market or
unsolicited negotiated transactions, depending upon market conditions. The
Company may discontinue purchases at any time that management determines
additional purchases are not warranted.
ONYX ACCEPTANCE CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED) (AUDITED)
September 30, December 31,
2000 1999
ASSETS
CASH & CASH EQUIVALENTS $3,290,046 $5,190,271
CONTRACTS HELD FOR SALE
- Net of Allowance (1) 162,660,402 229,991,667
CREDIT ENHANCEMENT ASSETS 138,674,029 142,883,970
OTHER ASSETS 12,054,069 15,769,202
TOTAL ASSETS $316,678,546 $393,835,110
LIABILITIES AND EQUITY
LIABILITIES
DEBT $222,030,530 $298,167,249
OTHER LIABILITIES 40,076,044 42,559,837
TOTAL LIABILITIES 262,106,574 340,727,086
TOTAL EQUITY 54,571,972 53,108,024
TOTAL LIABILITIES AND EQUITY $316,678,546 $393,835,110
(1) Net of Unearned Discounts
ONYX ACCEPTANCE CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
REVENUES:
Net Interest
Income $283,566 $3,160,349 $5,333,345 $9,795,885
Gain on Sale
of Contracts 12,066,135 13,723,258 38,811,634 40,520,626
Service Fee
Income 13,853,022 8,237,101 32,810,895 19,757,636
Total Revenues 26,202,723 25,120,708 76,955,874 70,074,147
EXPENSES:
Provision for
Credit Losses (73,072) 203,579 645,385 952,560
Interest Expense 1,473,256 1,494,556 3,985,380 4,206,962
Operating
Expenses 21,878,432 18,994,516 63,867,128 52,672,183
Total Expenses 23,278,616 20,692,651 68,497,893 57,831,705
Income before
Income Taxes 2,924,107 4,428,057 8,457,981 12,242,442
Income Taxes 1,213,504 1,837,644 3,509,964 5,080,613
NET INCOME $1,710,603 $2,590,413 $4,948,017 $7,161,829
NET INCOME PER
SHARE - BASIC $0.32 $0.42 $0.85 $1.16
NET INCOME PER
SHARE - DILUTED $0.32 $0.39 $0.82 $1.10
BASIC SHARES
OUTSTANDING 5,266,005 6,175,817 5,839,528 6,172,628
DILUTED SHARES
OUTSTANDING 5,423,108 6,656,463 5,999,130 6,527,643
ONYX ACCEPTANCE CORPORATION and SUBSIDIARIES
DELINQUENCY AND LOSS RATES
(UNAUDITED)
(In Thousands)
September 30, December 31,
2000 1999
Delinquency Experience
Number of Number of
Contracts $ Contracts $
Servicing Portfolio 259,162 $2,584,152 209,745 $2,133,460
Serviced Delinquency
31 to 59 days 5,728 $55,052 3,963 $38,376
60 to 89 days 2,440 24,253 1,671 16,596
90 days or more 2,040 20,895 1,383 14,203
Total 10,208 $100,200 7,017 $69,175
Delinquency as a
percentage of
number and amount
of contracts 3.94% 3.88% 3.35% 3.24%
Three Months Ended Nine Months Ended
September 30, September 30,
Loss Experience
2000 1999 2000 1999
Average Contracts
Serviced during
the period $2,539,409 $1,824,799 $2,397,770 $1,629,779
Gross Charge-offs $16,259 $9,426 $47,209 $24,528
Recoveries $2,267 $1,228 $6,726 $3,155
Net Charge-offs $13,992 $8,198 $40,483 $21,373
Net Charge-offs
as a percentage
of contracts
outstanding
during the
period 2.20% 1.80% 2.25% 1.75%
Onyx Acceptance Corporation
Static Pool Information for securitized pools outstanding for the period from
the date of securitization through September 30, 2000
Trust: 96-1 96-2 96-3 96-4 97-1
Month
1 0.00% 0.01% 0.00% 0.00% 0.00%
2 0.03% 0.07% 0.02% 0.02% 0.00%
3 0.05% 0.20% 0.07% 0.05% 0.03%
4 0.11% 0.33% 0.16% 0.14% 0.06%
5 0.23% 0.46% 0.43% 0.24% 0.13%
6 0.40% 0.78% 0.54% 0.38% 0.26%
7 0.69% 0.98% 0.74% 0.53% 0.37%
8 0.82% 1.15% 0.97% 0.81% 0.52%
9 0.93% 1.39% 1.13% 0.98% 0.60%
10 1.15% 1.52% 1.32% 1.18% 0.76%
11 1.25% 1.69% 1.47% 1.43% 0.92%
12 1.47% 1.94% 1.60% 1.63% 1.02%
13 1.65% 2.08% 1.77% 1.73% 1.13%
14 1.79% 2.34% 1.94% 1.87% 1.23%
15 2.02% 2.52% 2.09% 2.07% 1.40%
16 2.25% 2.76% 2.27% 2.23% 1.56%
17 2.43% 2.89% 2.42% 2.33% 1.68%
18 2.59% 3.10% 2.57% 2.49% 1.75%
19 2.77% 3.14% 2.70% 2.62% 1.85%
20 2.93% 3.30% 2.83% 2.73% 1.92%
21 3.06% 3.47% 2.94% 2.84% 1.98%
22 3.15% 3.60% 3.00% 2.93% 2.09%
23 3.21% 3.70% 3.08% 3.02% 2.17%
24 3.28% 3.81% 3.17% 3.10% 2.22%
25 3.40% 3.93% 3.28% 3.22% 2.31%
26 3.43% 4.06% 3.38% 3.29% 2.38%
27 3.55% 4.13% 3.43% 3.39% 2.44%
28 3.60% 4.22% 3.54% 3.46% 2.50%
29 3.73% 4.23% 3.59% 3.58% 2.55%
30 3.75% 4.29% 3.69% 3.61% 2.63%
31 3.79% 4.31% 3.77% 3.64% 2.67%
32 3.85% 4.33% 3.75% 3.72% 2.73%
33 3.88% 4.37% 3.77% 3.74% 2.77%
34 3.90% 4.39% 3.79% 3.77% 2.84%
35 3.94% 4.39% 3.81% 3.79% 2.86%
36 3.94% 4.42% 3.83% 3.81% 2.85%
37 3.94% 4.42% 3.84% 3.83% 2.89%
38 3.97% 4.43% 3.88% 3.85% 2.91%
39 3.99% 4.45% 3.92% 3.89% 2.96%
40 3.96% 4.46% 3.92% 3.89% 2.99%
41 3.96% 4.45% 3.92% 3.89% 3.01%
42 3.95% 4.45% 3.91% 3.89% 3.00%
43 3.96% 4.45% 3.91% 3.89% 2.99%
44 3.94% 4.48% 3.91% 3.87%
45 3.97% 4.49% 3.90% 3.87%
46 3.95% 4.52% 3.89% 3.88%
47 3.92% 4.51% 3.90%
48 3.90% 4.49% 3.90%
49 3.89% 4.50% 3.89%
50 3.86% 4.46%
51 3.86% 4.44%
52 3.84% 4.43%
53 3.84%
54 3.83%
55 3.83%
56 3.83%
97-2 97-3 97-4 98-1 98-A
Month
1 0.00% 0.00% 0.00% 0.00% 0.00%
2 0.00% 0.00% 0.00% 0.01% 0.01%
3 0.02% 0.02% 0.01% 0.02% 0.03%
4 0.07% 0.09% 0.04% 0.08% 0.07%
5 0.22% 0.13% 0.11% 0.14% 0.14%
6 0.32% 0.24% 0.20% 0.24% 0.23%
7 0.59% 0.36% 0.28% 0.40% 0.37%
8 0.80% 0.47% 0.43% 0.53% 0.42%
9 0.91% 0.62% 0.55% 0.68% 0.51%
10 1.07% 0.73% 0.72% 0.85% 0.70%
11 1.26% 0.81% 0.87% 1.04% 0.85%
12 1.42% 0.94% 0.95% 1.20% 1.01%
13 1.58% 1.10% 1.08% 1.33% 1.17%
14 1.68% 1.23% 1.19% 1.46% 1.37%
15 1.80% 1.38% 1.36% 1.61% 1.48%
16 1.97% 1.58% 1.42% 1.71% 1.59%
17 2.10% 1.68% 1.52% 1.88% 1.76%
18 2.23% 1.77% 1.64% 2.01% 1.96%
19 2.35% 1.91% 1.75% 2.17% 2.07%
20 2.48% 2.04% 1.85% 2.25% 2.25%
21 2.59% 2.11% 1.97% 2.41% 2.37%
22 2.72% 2.20% 2.08% 2.52% 2.48%
23 2.81% 2.31% 2.12% 2.63% 2.65%
24 2.85% 2.41% 2.23% 2.75% 2.76%
25 2.93% 2.51% 2.36% 2.86% 2.81%
26 2.96% 2.59% 2.41% 2.98% 2.95%
27 3.09% 2.71% 2.52% 3.06% 2.99%
28 3.17% 2.79% 2.55% 3.15% 3.03%
29 3.22% 2.92% 2.62% 3.19%
30 3.26% 2.94% 2.71% 3.26%
31 3.33% 3.01% 2.77% 3.33%
32 3.39% 3.04% 2.81%
33 3.48% 3.08% 2.85%
34 3.51% 3.11% 2.88%
35 3.54% 3.20%
36 3.55% 3.21%
37 3.56% 3.23%
38 3.56%
39 3.58%
40 3.58%
98-B 98-C 99-A 99-B 99-C
Month
1 0.00% 0.00% 0.00% 0.00% 0.00%
2 0.00% 0.02% 0.00% 0.00% 0.01%
3 0.02% 0.02% 0.02% 0.03% 0.03%
4 0.08% 0.04% 0.05% 0.07% 0.06%
5 0.19% 0.15% 0.11% 0.14% 0.16%
6 0.33% 0.27% 0.21% 0.27% 0.28%
7 0.45% 0.46% 0.35% 0.43% 0.47%
8 0.61% 0.57% 0.49% 0.60% 0.64%
9 0.82% 0.74% 0.63% 0.85% 0.83%
10 0.95% 0.94% 0.81% 1.07% 1.09%
11 1.10% 1.12% 1.04% 1.34% 1.31%
12 1.20% 1.30% 1.29% 1.56% 1.47%
13 1.36% 1.54% 1.49% 1.79% 1.62%
14 1.48% 1.73% 1.72% 1.90% 1.77%
15 1.64% 1.90% 1.90% 2.08%
16 1.89% 2.10% 2.10% 2.23%
17 2.05% 2.28% 2.26% 2.42%
18 2.22% 2.51% 2.46%
19 2.37% 2.71% 2.59%
20 2.50% 2.83% 2.71%
21 2.67% 2.95%
22 2.79% 3.08%
23 2.92% 3.25%
24 3.29%
25 3.38%
99-D 00-A 00-B 00-C
Month
1 0.00% 0.00% 0.00% 0.00%
2 0.00% 0.00% 0.00% 0.00%
3 0.01% 0.02% 0.02% 0.01%
4 0.04% 0.04% 0.04%
5 0.09% 0.11% 0.10%
6 0.15% 0.18% 0.17%
7 0.24% 0.37%
8 0.43% 0.63%
9 0.59%
10 0.76%
11 0.99%
12 1.20%