exv99w1
Exhibit 99.1
Origen Financial Announces Third Quarter 2007 Results;
Declares Dividend of $0.09 Per Share
Wednesday November 7, 7:07 pm ET
SOUTHFIELD,
Mich., Nov. 7 /PRNewswire-FirstCall/ — Origen Financial, Inc.
(Nasdaq: ORGN - News), a
real estate investment trust that originates and services manufactured housing loans, today
announced net income of $2.8 million, or $0.11 per share, for the quarter ended September 30, 2007,
compared with net income of $1.8 million, or $0.07 per share, for the quarter ended September 30,
2006, an increase of 56 percent. Origen’s Board of Directors declared a dividend payment for the
third quarter of $0.09 per share to be paid to holders of Origen’s common stock of record on
November 19, 2007. The dividend will be paid on November 30, 2007, and will approximate $2.3
million. The Board of Directors takes into consideration the differences between net income as
determined by Generally Accepted Accounting Principles (“GAAP”) and estimated REIT taxable net
income in the determination of dividend payments.
Highlights for Quarter
Loan origination volume increased 31 percent to $92.8 million versus a year ago.
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Loans processed for third parties totaled $31.1 million for the
quarter, an increase of 98 percent over the third quarter 2006. |
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Total revenue increased 26 percent to $29.3 million versus
$23.2 million for the prior year quarter. |
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Non-performing loans as a percent of average outstanding loan
principal balances decreased to 0.5 percent from 0.6 percent at
September 30, 2006. |
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A $15 million financing was completed consisting of a
$10 million one-year note and a $5 million one-year note and a $5 million one-year note convertible into common
shares of Origen stock at $6.24 per share. Each note bears interest
of 8 percent per year and five year warrants were issued to the
lender, an affiliate of one of Origen’s principal shareholders, to
purchase 500,000 shares of Origen common stock at an exercise price of
$6.16. |
Financial Highlights
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Interest income was $23.7 million for the third quarter 2007, an
increase of 26 percent, primarily due to a 28 percent increase over
the same period a year ago in the average owned loan portfolio.
Non-interest income increased 27 percent over the prior year’s third
quarter to $5.6 million. |
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Interest expense for the third quarter 2007 increased 36 percent to
$15.6 million from $11.5 million for last year’s third quarter as a
result of increased borrowings relating to loan originations, as well
as increases in the LIBOR benchmark rate on Origen’s warehouse line of
credit. |
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The provision for credit losses was $2.2 million for the
third quarter 2007 compared with $1.6 million for the same quarter 2006, an increase
of 38 percent. The provision for the 2006 quarter was favorably
impacted by a reduction of approximately $600,000 in the portion of
the loan loss allowance initially established in year 2005 to
recognize the impact of estimated damage by hurricanes Rita and
Katrina. No such reduction occurred in the 2007 quarter. Absent the
2006 quarter benefit, the 2007 quarter would have reflected no
increase in provision by comparison. As a percentage of average
outstanding loan principal balances, total net charge-offs, on an
annualized basis, decreased to 0.7 percent for the 2007 quarter as
compared to 0.9 percent for the 2006 quarter. |
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Third quarter 2007 non-interest expenses were $8.7 million, a
4 percent increase compared with $8.4 million for the year ago
quarter. Most of the $0.3 million increase was personnel related,
primarily attributable to accrued amounts relating to merit
compensation. |
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At September 30, 2007, loans 60 or more days delinquent were 0.8 |
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percent of the owned loan portfolio compared to 0.9 percent at both
December 31, 2006, and September 30, 2006. Net charge-offs totaled
$2.0 million for the third quarter 2007, unchanged from the third
quarter 2006. |
Events Subsequent to Quarter-end
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On October 16, 2007, Origen completed a $127 million securitization
transaction, Manufactured Housing Contract Trust 2007-B, consisting of
a single AAA rated floating rate class of asset-backed notes, which
were sold to a qualified institutional buyer. |
Ronald A. Klein, Origen’s chief executive officer, stated, “We are very pleased with Origen’s
performance during the third quarter. During a period of extreme turmoil in credit markets, we
increased our quarterly earnings more than 50 percent over the 2006 third quarter while
maintaining, and even increasing, our already high credit standards. While the manufactured housing
industry continues to struggle, with September shipments down 14 percent compared with September
2006, and year-to-date shipments down 22 percent from last year, we were able to increase our
originations 30 percent over last year’s third quarter. Also, our third party originations
increased 98 percent over the year ago period. Most importantly, the credit performance of our loan
portfolio continues to exceed our expectations with our 30+ delinquency for the quarter
approximately 20 percent lower than our excellent levels of third quarter 2006.”
Mr. Klein added, “Like most other financial businesses, we have been impacted by the global credit
and liquidity crunch generally attributed to sub-prime mortgage defaults and foreclosures
occasioned by falling housing values and lenient lending practices. The resulting tightening of
credit criteria and withdrawal of liquidity by banks and other lenders has had a broad effect,
impacting companies like Origen that had no direct exposure to sub-prime mortgage loans. We were
subjected to margin calls and market value adjustments on our credit facilities despite our
continued excellent loan performance. We met these margin calls and raised an additional $15
million of short-term capital to bolster our liquidity and strengthen our financial position. The
ongoing uncertainty and credit stress in the housing and capital markets, and the resulting lack of
liquidity, have caused credit spreads on all structured finance products to widen substantially,
increasing our cost of funds beginning in September. We anticipate that credit spreads will remain
at abnormally wide levels for an extended period of time. Despite the challenging conditions, the
strong credit performance of our originated loans allowed us to execute a profitable securitization
in October. Many lenders have been unsuccessful in accessing securitization markets, so we are
extremely pleased that we were able to place all our bonds with a single, large institutional
investor.
“We continued to see good performance in October. While we have tightened our credit requirements,
and manufactured housing shipments remain depressed, our originations increased over last October.
As we enter a period of tougher competition, along with tightened credit, we expect that our growth
in originations will slow until we see meaningful increases in industry shipments. Our credit
performance remained strong in October as we continue to see better than expected delinquency and
default results.”
Mr. Klein further stated, “Conditions in the credit markets continue to be highly volatile,
uncertain and beyond our control. We are continuously working to improve our capital position to
allow us to meet these market challenges and we will act on opportunities to raise capital that are
consistent with maximizing our shareholders’ value. We continue to focus on originating high
quality loans. It is worth re-emphasizing that we only make fixed rate, fully documented and fully
verified loans that provide value to our customers. We publish the performance of all our
securitized loans, with loan level detail, on our website every month. We believe our transparency
and dedication to sound lending practices have contributed to our ability to outperform in very
difficult market conditions. We continue to work hard every day to maintain and further this
success.”
Earnings Call and Webcast
A conference call and webcast have been scheduled for November 8, 2007, at 11:00 a.m. Eastern Time
to discuss third quarter results. The call may be accessed on Origen’s web site at
http://www.origenfinancial.com or by dialing 877-857-6177. A replay will be available through
November 18, 2007 by dialing 888-203-1112, passcode 6298454. You may also access the replay on
Origen’s website for 90 days after the event.
Forward-Looking Statements
This press release contains various “forward-looking statements” within the meaning of the
Securities Act of 1933 and the Securities Exchange Act of 1934, and Origen intends that such
forward-looking statements will be subject to the safe harbors created thereby. The words “will,”
“may,” “could,” “expect,” “anticipate,” “believes,” “intends,” “should,” “plans,” “estimates,”
“approximate” and similar expressions identify these forward-looking statements. These
forward-looking statements reflect Origen’s current views with respect to future events and
financial performance, but involve known and unknown risks and uncertainties, both general and
specific to the matters discussed in this press release. These risks and uncertainties may cause
Origen’s actual results to be materially different from any future results expressed or implied by
such forward-looking statements. Such risks and uncertainties include, among others, the foregoing
assumptions and those risks referenced under the headings entitled “Factors That May Affect Future
Results” or “Risk Factors” contained in Origen’s filings with the Securities and Exchange
Commission. The forward-looking statements contained in this press release speak only as of the
date hereof and Origen expressly disclaims any obligation to provide public updates, revisions or
amendments to any forward- looking statements made herein to reflect changes in Origen’s
expectations or future events. ORGN-E,ORGN-D,ORGN-G
About Origen Financial, Inc.
Origen is an internally managed and internally advised company that has elected to be taxed as a
real estate investment trust. Based in Southfield, Michigan, with significant operations in Ft.
Worth, Texas, Origen is a national consumer manufactured housing lender and servicer. It offers a
complete line of home only products and land home conforming and non- conforming products. Origen
also provides servicing for manufactured home only and land home loans.
For more information about Origen, please visit
http://www.origenfinancial.com.
ORIGEN FINANCIAL, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
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(Unaudited) |
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September 30, |
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December 31, |
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2007 |
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2006 |
ASSETS |
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Assets |
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Cash and Equivalents |
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$ |
14,824 |
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$ |
2,566 |
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Restricted Cash |
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15,665 |
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15,412 |
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Investment Securities |
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41,885 |
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41,538 |
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Loans Receivable |
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1,157,006 |
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950,226 |
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Premises & Equipment |
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3,132 |
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3,513 |
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Goodwill |
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32,277 |
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32,277 |
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Other Assets |
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28,182 |
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27,535 |
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Total Assets |
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$ |
1,292,971 |
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$ |
1,073,067 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Liabilities |
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Warehouse Financing |
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$ |
238,687 |
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$ |
131,520 |
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Securitization Financing |
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786,971 |
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685,013 |
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Repurchase Agreements |
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16,894 |
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23,582 |
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Note Payable |
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14,445 |
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2,185 |
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Other Liabilities |
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31,303 |
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26,303 |
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Total Liabilities |
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1,088,300 |
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868,603 |
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Equity |
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204,671 |
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204,464 |
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Total Liabilities and Equity |
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$ |
1,292,971 |
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$ |
1,073,067 |
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ORIGEN FINANCIAL, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(Dollars in thousands, except for share data)
(Unaudited)
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2007 |
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2006 |
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2007 |
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2006 |
Interest Income |
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Total Interest Income |
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$ |
23,656 |
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$ |
18,807 |
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$ |
67,063 |
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$ |
54,072 |
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Total Interest Expense |
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15,628 |
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11,451 |
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42,637 |
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31,328 |
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Net Interest
Income Before Loan Losses |
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8,028 |
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7,356 |
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24,426 |
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22,744 |
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Provision for Loan Losses |
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2,191 |
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1,598 |
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5,785 |
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4,924 |
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Net Interest
Income After Loan Losses |
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5,837 |
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5,758 |
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18,641 |
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17,820 |
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Non-interest Income |
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5,632 |
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4,362 |
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15,928 |
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12,750 |
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Non-interest Expenses: |
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Total Personnel |
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5,946 |
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5,719 |
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18,863 |
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17,986 |
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Total Loan Origination & Servicing |
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395 |
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402 |
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1,454 |
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1,114 |
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State Taxes |
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115 |
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76 |
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352 |
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251 |
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Total Other Operating |
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2,234 |
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2,169 |
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6,579 |
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6,327 |
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Total Non-interest Expenses |
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8,690 |
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8,366 |
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27,248 |
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25,678 |
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Net Income
Before Income Taxes and Cumulative Effect of Change in Accounting Principle |
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2,779 |
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1,754 |
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7,321 |
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4,892 |
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Income Tax Benefit |
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(51 |
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(43 |
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Net Income
Before Cumulative Effect of Change in Accounting Principle |
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2,830 |
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1,754 |
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7,364 |
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4,892 |
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Cumulative Effect of Change in Accounting Principle |
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46 |
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Net Income |
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$ |
2,830 |
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$ |
1,754 |
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$ |
7,364 |
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$ |
4,938 |
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Weighted
Average Common Shares Outstanding, Basic |
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25,365,778 |
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25,203,558 |
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25,289,680 |
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25,099,157 |
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Weighted
Average Common Shares Outstanding, Diluted |
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25,431,398 |
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25,247,421 |
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25,382,607 |
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25,174,272 |
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Earnings Per
Share on Basic Average Shares Outstanding |
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$ |
0.11 |
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$ |
0.07 |
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$ |
0.29 |
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$ |
0.20 |
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Earnings Per
Share on Diluted Average Shares Outstanding |
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$ |
0.11 |
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$ |
0.07 |
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$ |
0.29 |
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$ |
0.20 |
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