| Delta Financial Corporation Announces Second Quarter Results
WOODBURY, NY--(BUSINESS WIRE)--Aug. 14, 2001-- Delta Financial Corporation (OTCBB: DLTO) today announced results for the second quarter ended June 30, 2001.
As expected, the Company reported a net loss of $16.5 million, or $1.04 per share (basic and diluted), for the quarter ended June 30, 2001, compared to a net loss of $3.5 million, or $0.22 per share (basic and diluted), for the quarter ended June 30, 2000. For the six months ended June 30, 2001, Delta reported a net loss of $50.3 million, or $3.16 per share (basic and diluted). This compares to a net loss of $1.7 million, or $0.11 per share, reported for the six months ended June 30, 2000. The loss for the quarter ended June 30, 2001, resulted primarily from non-recurring charges associated principally with (1) the Company's disposition and transfer of its servicing platform to Ocwen Financial Corporation in May 2001, (2) a change in accounting estimates regarding the life expectancy of the Company's computer-related equipment, and (3) costs associated with our current debt exchange offer. The Company also recorded a fair value adjustment to its non-performing mortgage loans, which were sold in July 2001.
The net charge for non-recurring items for the second quarter of 2001 totaled $15.2 million on an after-tax basis, or $0.96 per share. The charges are primarily related to (1) the costs of maintaining an unprofitable servicing platform until Delta transferred it to Ocwen in May 2001, plus the associated costs of transferring the servicing portfolio, totaling $10.7 million on an after-tax basis, (2) a change in the useful life of computer-related equipment from five years to three years totaling $3.6 million on an after-tax basis, and (3) debt restructuring costs associated with the Company's current debt exchange offer totaling $0.9 million on an after-tax basis. In addition, the Company recorded an $1.5 million charge related to a fair value adjustment to a pool of non-performing loans that the Company sold in July 2001.
``As anticipated, the results for the second quarter of 2001 primarily reflect the charges incurred in connection with our overall corporate restructuring plan announced in March 2001. We hope to complete our corporate restructuring during the third quarter of 2001 if our exchange offer is successful, and expect to record a loss (and commensurate reduction in our net worth) during the quarter,'' said Hugh Miller, President and Chief Executive Officer.
During the second quarter of 2001, the Company completed a $165 million securitization, utilizing a senior-subordinate structure, which included a surety wrap credit enhancement on the AAA rated securities. The Company sold its rights to service the securitization mortgage loan pool to Ocwen for a cash purchase price and also sold an interest-only certificate for cash. In addition, the Company sold $20.7 million of mortgage loans on a servicing-released basis for an aggregate cash premium of 5.24%.
Loan originations for the second quarter of 2001 were $165.1 million compared to $170.7 million reported in the first quarter of 2001 and $263.6 million reported in the second quarter of 2000. The decrease in origination volume was not unexpected, as management continued to spend much of its efforts on the corporate restructuring (i.e., disposition of servicing platform and debt exchange offer). For the second quarter of 2001, broker and retail originations each accounted for 50% of the Company's overall loan production. This compares favorably to last quarter where the broker and retail channels accounted for 62% and 38% of total production, respectively. For the second quarter of 2000, broker and retail originations and correspondent purchases represented 61%, 29% and 10% of total production, respectively. The Company closed its correspondent division in the second quarter of 2000.
As previously reported, on July 23, 2001, the Company launched an exchange offer in which it is offering the holders of its $150 million of 9 1/2% Senior Secured Notes and 9 1/2% Senior Notes due August 2004 (collectively, the ``Notes'') an opportunity to exchange their Notes for shares of the Company's newly issued preferred stock and membership interests in a newly formed LLC, to which the Company will transfer all of the mortgage-related securities currently securing the senior secured notes. Cash generated by the mortgage-related securities will be paid out to the holders of the LLC membership interests. The exchange offer will remain open until August 20, 2001. As part of the exchange offer, all tendering Noteholders will waive their right to receive the August 1st interest coupon. As such, the Company did not make the coupon payment due on August 1, 2001, on the Notes. The exchange offer is conditioned upon the Company receiving the consent of holders of at least 95% of the Notes. If successful, the exchange offer will eliminate substantially all of the Company's long-term debt; if the exchange offer is not consummated, the Company will likely default on its August 1st interest payment. |
Delta Financial Corporation and Subsidiaries
Consolidated Statements of Operations
(unaudited)(dollars in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
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Revenues: 2001 2000 2001 2000
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Net gain on sale
of mortgage loans $ 14,320 11,274 19,697 25,928
Interest 5,243 7,567 (9,546) 18,104
Servicing fees 770 3,738 2,983 7,804
Origination fees 4,732 6,365 8,894 13,053
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Total revenue 25,065 28,944 22,028 64,889
Expenses:
Payroll and related cost 11,959 15,699 23,283 31,260
Interest expense 5,992 8,528 11,821 16,331
General and administrative 23,562 10,750 35,393 20,206
Restructuring and other
special charges (13) - 1,246 -
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Total expenses 41,500 34,977 71,743 67,797
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(Loss) income before tax
(benefits) expense (16,435) (6,033) (49,715) (2,908)
Income taxes (benefits) 93 (2,506) 565 (1,207)
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Net loss $(16,528) (3,527) (50,280) (1,701)
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Per share data:
Net loss per share -
basic and diluted $ (1.04) (0.22) (3.16) (0.11)
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Weighted-average number
of shares outstanding
(thousands) 15,902 15,921 15,912 15,921
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Delta Financial Corporation and Subsidiaries
Consolidated and Condensed Balance Sheets
(unaudited) (dollars in thousands)
June 30, December 31,
2001 2000
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Assets:
Cash and interest-bearing deposits $ 4,230 62,270
Loans held for sale, net 79,686 82,698
Interest-only and residual
certificates, net 186,475 216,907
Other assets 22,536 89,370
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Total assets $ 292,927 451,245
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Liabilities:
Warehouse financing and other
borrowings $ 65,210 88,632
Senior notes 149,622 149,571
Other liabilities 30,651 115,318
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Total liabilities 245,483 353,521
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Stockholders' equity: 47,444 97,724
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Total liabilities and
stockholders' equity: $ 292,927 451,245
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