Origen Financial Announces Fourth Quarter and Full Year 2005 Results and Dividend Policy16 March 2006
Origen Financial, Inc. (Nasdaq: ORGN), a real estate investment trust that originates and services manufactured housing loans, today announced net earnings of $0.9 million for the quarter ended December 31, 2005, representing $0.04 per share on a fully-diluted basis, as compared to a net loss of $6.0 million, or $0.24 per share on a fully-diluted basis for the quarter ended December 31, 2004. Origen's net loss for the full year 2005 was $2.7 million, or $0.11 per share, on a fully-diluted basis, versus a net loss for the full year 2004 of $3.0 million, or $0.14 per share, on a fully-diluted basis. The full year 2005 loss is the result of previously announced items, including (1) loan loss provisions and asset impairment charges relating to estimated loan losses as a result of the effects of Hurricanes Katrina and Rita equating to approximately $0.19 per share and (2) the elimination of a loan recourse liability with Vanderbilt Mortgage and Finance, Inc. equating to approximately $0.03 per share.
Origen's Board of Directors determined that no dividend payment would be made for the fourth quarter. It is the stated intention of the Board to pay dividends at least equal to 90% but not more than 100% of annual estimated REIT taxable net income, which differs from net income calculated in accordance with generally accepted accounting principles ("GAAP"). Dividends totaling $0.18 per share distributed through the third quarter of 2005, relating to Origen's 2005 tax year, were sufficient to satisfy this policy.
Highlights for the Quarter and Full Year
* Fourth quarter loan origination volume, excluding third party
originations, increased 15.1 percent to $68.5 million versus $59.5
million for the year ago quarter. Full year origination volume was
$268.0 million as compared to $243.0 million for the prior year, an
increase of 10.3 percent.
* Third party loan origination volume for the fourth quarter and full year
2005 totaled $11.0 million and $32.0 million as compared to $8.1 million
and $9.9 million for 2004, an increase of 35.8 percent and 223.2
percent, respectively.
* Total revenue increased 36.6 percent to $20.4 million for the fourth
quarter 2005 and 38.0 percent to $74.0 million for the full year, as
compared to 2004.
* Non-performing loans as a percent of average outstanding loan principal
balances decreased to 1.1 percent at December 31, 2005 as compared to
1.6 percent at December 31, 2004.
* Net loan charge-offs for the full year 2005 were $10.0 million as
compared to $10.5 for 2004, a 4.8 percent decrease, despite the fact
that loan balances outstanding increased by 36.4 percent over the same
period, from $563.3 million to $768.4 million.
* In the fourth quarter 2005, $156.2 million of asset-backed notes were
issued secured by manufactured housing contracts with seven offered
classes consisting of AAA, AA, A, BBB and BBB- rated bonds. For the
full year of 2005, asset-backed note issuances totaled $321.5 million.
Financial Highlights
Total interest income for the fourth quarter increased 29.6 percent to $16.2 million from $12.5 million for the same quarter 2004 and 39.8 percent to $59.4 million from $42.5 million for the full year. Non-interest revenue totaled $4.1 million for the fourth quarter 2005 and $14.7 million for the full year as compared to $2.3 million and $11.2 million for 2004, representing increases of 78.3 percent and 31.3 percent, respectively. The increase in revenue was due primarily to the increase in Origen's owned loan portfolio.
Interest expense for the fourth quarter 2005 increased to $8.7 million from $5.0 million versus last year's fourth quarter, an increase of 74.0 percent. Full year interest expense for 2005 was $28.5 million as compared to $15.0 million for 2004, an increase of 90.0 percent. These increases reflect a significant increase in interest rates during 2005 as well as an increased level of borrowing to fund Origen's increase in its owned loan portfolio.
The provision for credit losses was $2.3 million for the fourth quarter 2005 versus $2.1 million for the same quarter 2004. The provision for the full year 2005, excluding the estimated impact of hurricanes Katrina and Rita, was $9.2 million as compared to $7.1 million for the 2004 quarter, an increase of 29.6 percent. This increase was primarily the result of a 36.4 percent increase in the outstanding loan portfolio for the year. As a result of the estimated impact on loan losses from the hurricanes, the credit loss provision for 2005 was increased by an additional $3.5 million.
Fourth quarter 2005 non-interest expenses were $8.4 million as compared to $13.7 million for the year ago quarter. The 38.7 percent decrease is the result of a $3.2 million reduction in the provision for loan recourse liability, costs incurred in the fourth quarter of 2004 associated with a reduction in Origen's workforce, as well as professional fees, personnel costs and other timing-related items recognized in the year ago quarter. For the year 2005, non-interest expenses were $35.1 million versus $34.6 million for 2004, an increase of 1.4 percent.
Portfolio Performance
At December 31, 2005, loans 60 or more days delinquent were 1.3 percent of the owned loan portfolio compared to 1.8 percent at December 31, 2004. The positive impact of higher credit quality loans originated after year 2001, when compared to loans originated prior to year 2002 (the "legacy loans"), continued to increase as such legacy loans became a less significant portion of Origen's owned loan portfolio. While such loans comprised 7.2 percent and 18.3 percent of the total loan portfolio at December 31, 2005, and December 31, 2004, 55.8 percent and 75.4 percent, respectively, of net loan losses for the twelve months then ended were attributable to these loans.
Ronald A. Klein, Origen's CEO, stated, "We are pleased with our fourth quarter performance. Despite difficult market conditions we increased our originations year over year, reduced delinquency and returned to profitability for the quarter. While manufactured housing shipments have shown an increase, virtually all of the increase was due to orders placed by FEMA and we have yet to see a sustained pickup in core manufactured housing demand. Furthermore the flat yield curve, as well as the steady increase in interest rates, has negatively impacted our net interest margins. In order to sustain our growth and performance we feel it is critical to maintain our credit discipline. Thus far in 2006 our originations are up in excess of 10% year over year. Moreover, our loan performance continues to improve significantly as our 30+ day delinquency is the lowest it has been in our history. We have invested in technology in order to provide superior customer service and we feel that the recently announced partnership with Hometown America further validates the quality of our origination and servicing platform."
Earnings Call and Webcast
A conference call and webcast have been scheduled for March 14, 2006, at 11:00 a.m. EST to discuss fourth quarter results. The call may be accessed on Origen's web site at http://www.origenfinancial.com or by dialing 800-289- 0496. A replay will be available through March 21, 2006 by dialing 888-203- 1112, passcode 1945199. You may also access the replay on Origen's website for 90 days following 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.
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, except for share data)
ASSETS
(Unaudited)
December 31, December 31,
2005 2004
Assets
Cash and Equivalents $8,307 $9,293
Restricted Cash 13,635 9,222
Investment Securities 41,914 37,622
Loans Receivable 768,410 563,268
Premises & Equipment 3,558 2,336
Goodwill 32,277 32,277
Other Assets 24,902 28,529
Total Assets $893,003 $682,547
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Warehouse Financing $65,411 $107,373
Securitization Financing 578,503 328,388
Repurchase Agreements 23,582 20,153
Note Payable 2,212 -
Loan Recourse Liability 292 6,603
Other Liabilities 23,052 16,564
Total Liabilities 693,052 479,081
Equity 199,951 203,466
Total Liabilities and Equity $893,003 $682,547
ORIGEN FINANCIAL, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(Dollars in thousands, except for share data)
Twelve Months Ended
(Unaudited)
December 31, December 31, Increase (Decrease)
2005 2004 $ %
Interest Income
$59,391 $42,479 $16,912 39.8%
Total Interest Expense 28,468 15,020 13,448 89.5%
Net Interest Income Before
Losses and Impairment 30,923 27,459 3,464 12.6%
Provision for Loan Losses 12,691 7,053 5,638 79.9%
Impairment of Purchased
Loan Pool 428 - 428 N/A
Net Interest Income After Losses 17,804 20,406 (2,602) -12.8%
Non-interest Income 14,651 11,184 3,467 31.0%
Non-interest Expenses:
Total Personnel 22,550 21,947 603 2.7%
Total Loan Origination &
Servicing 1,603 1,354 249 18.4%
Provision for Recourse
Liability 218 3,132 (2,914) -93.0%
Write-down of Residual
Interests 724 25 699 2796.0%
Loss on Recourse Buy-out 792 - 792 N/A
Total Other Operating 9,227 8,098 1,129 13.9%
Total Non-interest Expenses 35,114 34,556 558 1.6%
Net Income (Loss) $(2,659) $(2,966) $307 -10.4%
Common Shares Outstanding 25,450,726 25,215,400 235,326 0.9%
Weighted Average Common
Shares Outstanding, Basic 24,878,116 21,439,029 3,439,087 16.0%
Weighted Average Common
Shares Outstanding, Diluted 24,878,116 21,439,029 3,439,087 16.0%
Earnings Per Share on Basic
Average Shares Outstanding $(0.11) $(0.14) $0.03 -21.4%
Earnings Per Share on Diluted
Average Shares Outstanding $(0.11) $(0.14) $0.03 -21.4%
ORIGEN FINANCIAL, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(Dollars in thousands, except for share data)
(Unaudited)
Quarter Ended
December 31, December 31, Increase (Decrease)
2005 2004 $ %
Interest Income
Total Interest Income $16,195 $12,463 $3,732 29.9%
Total Interest Expense 8,663 4,982 3,681 73.9%
Net Interest Income Before
Losses and Impairment 7,532 7,481 51 0.7%
Provision for Loan Losses 2,319 2,131 188 8.8%
Net Interest Income After Losses 5,213 5,350 (137) -2.6%
Non-interest Income 4,101 2,314 1,787 77.2%
Non-interest Expenses:
Total Personnel 5,485 7,424 (1,939) -26.1%
Total Loan Origination &
Servicing 438 358 80 22.3%
Write-down of Residual Interest - 25 (25) -100.0%
Provision for Recourse Liability (77) 3,132 (3,209) -102.5%
Total Other Operating 2,565 2,755 (190) -6.9%
Total Non-interest Expenses 8,411 13,694 (5,283) -38.6%
Net Income (Loss) $903 $(6,030) $6,933 115.0%
Common Shares Outstanding 25,450,726 25,228,150 222,576 0.9%
Weighted Average Common
Shares Outstanding, Basic 24,980,889 24,726,729 254,160 1.0%
Weighted Average Common
Shares Outstanding, Diluted 25,330,142 24,726,729 603,413 2.4%
Earnings Per Share on Basic
Average Shares Outstanding $0.04 $(0.24) $0.28 116.4%
Earnings Per Share on Diluted
Average Shares Outstanding $0.04 $(0.24) $0.28 116.4%
Source: prnewswire
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