First Investors Reports Lower Second Quarter Earnings
8 December 2000
First Investors Reports Lower Second Quarter Earnings
HOUSTON, Dec. 7 First Investors Financial Services has reported net income of
$504,963 or $0.09 per share for the second quarter ended October 31, 2000 and
$999,560 or $0.18 per share for the first six months of the 2001 fiscal year.
This represents a decrease of 35% from the $775,412 or $0.14 per share
reported for the three months ended October 31, 1999 and a 32% decrease from
the $1,477,828 or $0.27 per share reported for the six month period of fiscal
year 2000.
For the six month period, First Investors' portfolio of receivables held
for investment, net increased 8.7% to $256.4 million as a result of
$70.8 million in new loan originations. Net interest income for the
year-to-date period increased 2.3% over the prior year period due to growth in
the portfolio of receivables held for investment and higher portfolio yields
which offset an increase in net interest cost and lower contributions from
receivables and trust certificates acquired as a result of the First Investors
Servicing Corporation acquisition. The delinquency rate declined from 3.5% at
October 31, 1999 to 3.2% at October 31, 2000 while the annualized charge-off
rate for the six month period increased to 3.4% from 2.7% in the prior year
period.
Tommy A. Moore, Jr., President and CEO, stated, "First Investors continued
to be negatively impacted by tighter net interest spreads during the quarter
though we are beginning to see some yield expansion as a result of pricing
increases and hedging activities initiated late in the first quarter. We also
saw an increase in our charge-off rate, period over period which was
attributable to a slightly higher level of repossessions and higher unit
losses resulting from a softening in used car prices and an abnormal number of
damaged vehicles sold during the quarter. While the charge-off rate was
higher than we would have liked, based upon favorable November repossession
statistics and the improving delinquency rate, we expect the third quarter to
be more in line with historical levels. Overall, while earnings were softer
than expected, we remain focused on earnings growth and solid portfolio
quality, which we believe is important as the general economy shows signs of a
slowdown. We are also very pleased to announce the completion of the renewal
of one of our primary financing facilities. In November, we increased our
commercial paper conduit facility from $135 million to $150 million and
decreased the level of overcollateralization required by four percentage
points. These renewal terms not only provide us with sufficient warehousing
capacity to fund our expected origination growth, but also allow us to more
efficiently utilize our equity capital."
First Investors Financial Services Group, Inc.
Condensed Consolidated Statements of Operations and Selected Data (Unaudited)
Dollars in thousands, except per share data
For the For the
Three Months Ended Six Months Ended
October 31, October 31,
2000 1999 2000 1999
Interest Income $11,602 $10,064 $22,591 $19,673
Interest Expense 5,080 3,986 10,171 7,865
Net Interest Income 6,522 6,078 12,420 11,808
Provision for Credit Losses 2,329 1,913 4,308 3,069
Income after Provision
for Credit Losses 4,193 4,165 8,112 8,739
Other Income 962 1,111 1,806 2,022
Total Operating Expenses 4,019 4,056 8,003 8,434
Income before Provision
for Income Taxes
and Minority Interest 1,136 1,220 1,915 2,327
Provision for Income Taxes 415 445 699 849
Minority Interest 216 --- 216 ---
Net Income $505 $775 $1,000 $1,478
Basic and Diluted
Net Income Per Common Share $0.09 $0.14 $0.18 $0.27
Other Operating Data
Average Principal Balance
of Receivables Held
for Investment $251,001 $206,076 $245,221 $196,953
Total Managed Receivables 291,186 290,395 291,186 290,395
Originations Volume 30,401 33,162 70,816 69,084
Effective Yield on
Receivables Held
for Investment 16.7% 16.1% 16.5% 16.2%
Average Cost of Debt 7.7% 6.5% 8.1% 6.4%
Weighted Average Number of
Shares Outstanding
(in thousands) 5,567 5,567 5,567 5,567
October 31, April 30,
2000 2000
Financial Position (audited)
Cash and Short-Term Investments $27,536 $25,520
Receivables Held for Investment, Net 256,447 235,955
Receivables Acquired for Investment, Net 24,886 21,888
Investment in Trust Certificates 3,287 5,849
Assets Held for Sale 1,118 1,007
Total Assets 326,921 303,259
Total Debt 288,811 268,161
Minority Interest 2,988 ---
Total Shareholders' Equity 31,125 30,126
As of or As of or
For the Six For the Six
Months Ended Months Ended
October 31, October 31,
Credit Quality Data 2000 1999
Receivables Held for Investment:
30 + days past due
Number of Loans 3.3% 3.5%
$ Amount 3.2% 3.5%
Net Charge-offs as a % of average receivables 3.4% 2.7%
Net Charge-offs for the period ending $4,118 $2,654