First Investors Reports Record First Quarter Earnings
HOUSTON, Sept. 14, 2011 /PRNewswire/ -- First Investors Financial Services Group (OTCQB: FIFS) has reported net income of $1,881,107, or $0.34 per fully-diluted share, for the three months ended July 31, 2011, as compared to $276,054, or $0.06 per fully-diluted share, for the three months ended July 31, 2010. The increase in net income is primarily attributable to an increase in interest income as a result of growth in the average portfolio outstanding and lower provision expense. These were partially offset by higher interest expense and lower servicing revenue.
As of July 31, 2011, First Investors' portfolio of receivables held for investment, net was $352.2 million compared to $332.8 million at April 30, 2011. For the three months ended July 31, 2011, the Company reported $56.7 million in new loan originations compared to $28.3 million for the three months ended July 31, 2010. As a result of the increase in new loan originations, the average outstanding balance for the portfolio of receivables held for investment increased 3.1% during the three months ended July 31, 2011 as compared to July 31, 2010.
Net interest income for the three months ended July 31, 2011, increased 24.9% compared to the three months ended July 31, 2010. The increase was due to several factors, including (i) the increase in the average portfolio of receivables held for investment, (ii) an increase in the effective yield on the portfolio of receivables held for investment, and (iii) the positive impact of the previously announced portfolio purchase in October 2010, which was not present during the three months ended July 31, 2010. Effective yields increased from 13.38% for the three months ended July 31, 2010, to 14.86% for the three months ended July 31, 2011. The Company's weighted average cost of funds increased slightly from 2.46% for the three months ended July 31, 2010, to 2.53% for the three months ended July 31, 2011. The increase in effective yields reflects an increase in the weighted average interest rate on the portfolio of receivables held for investment, lower purchase premium amortization and lower interest write-offs related to charged off accounts. The slight increase in the cost of funds is primarily the result of the Company's decision to lock in interest rates on a portion of the $150 million in asset-backed notes issued in January 2011. The decrease in revenue from servicing activities for the three months ended July 31, 2011, reflects the amortization of the Company's third-party managed receivables, the acquisition of a portfolio in October 2010 from a third-party client and the release of servicing rights on a third-party managed portfolio in September 2010 in exchange for a termination fee. The Company also announced that it had finalized the sale of its 50 percent residual interest in another third-party portfolio in August 2011 in exchange for the release of servicing rights to the portfolio. The transaction will result in a net gain of approximately $0.6 million, positively impacting pre-tax income in the Company's second fiscal quarter.
Total operating expenses increased 3.7% during the three months ended July 31, 2011, compared to the three months ended July 31, 2010, primarily the result of an increase in new loan origination volume, including printing and postage expense associated with the Company's decision to re-enter the direct lending market in August 2010. These increases were offset by lower interest expense related to the repayment of the Company's working capital credit facility, and lower servicing related fees due to a decline in the managed portfolio. The dollar delinquency rate decreased from 2.5% to 2.4%, while the annualized charge-off rate decreased from 6.0% to 3.6% for the three months ended July 31, 2011, as compared to the three months ended July 31, 2010 due to fewer repossessions and higher vehicle recovery rates. The dollar amount of net charge-offs declined from $5.0 million for the three months ended July 31, 2010 to $3.1 million for the three months ended July 31, 2011.
Tommy A. Moore, Jr., President and CEO, commenting on the results, noted, "We are extremely pleased with the results of our first fiscal quarter ended July 31, 2011. From a profitability perspective, it was the highest earning quarter in our history and we believe it sets the stage for a very successful fiscal year. We continue to experience solid growth in both our indirect and direct channels and importantly, have been able to maintain pricing power on our assets despite the low interest rate environment. Our credit quality, particularly our net charge-off rate, continues to be strong despite the seasonal issues that we typically see this time of the year. For the remainder of the year, we will continue to focus on prudently growing our receivables portfolio through both lending channels which will occur through a combination of market expansion, higher mail volumes and the contribution from a third-party affinity relationship we entered into in August, 2011 with a large insurance company under which we will provide financing solutions to a portion of its customer base. We look forward to the remainder of fiscal 2012."
First Investors is a consumer finance company engaged in originating and holding for investment automobile finance receivables and promissory notes originated from franchised automobile dealers or through a refinancing transaction with the vehicle owner. The Company specializes in lending to consumers with impaired credit profiles. The Company also purchases receivables through portfolio acquisitions or from third party originators and performs third-party loan servicing for unaffiliated clients. The Company is headquartered in Houston, Texas. Copies of this press release and other information on the Company including its historical financial statements are also available on the Company's web site at www.fifsg.com.
The statements contained in this release, which are not historical statements of fact, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements involve a number of risks and uncertainties. The actual results of future events could differ materially from those stated in any forward-looking statements herein.
First Investors Financial Services Group, Inc. |
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Condensed Consolidated Statements of Operations and Selected Data (Unaudited) |
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Dollars in thousands, except per share data |
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For the |
||||||
Three Months Ended |
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July 31 |
||||||
2011 |
2010 |
|||||
Interest Income |
$ 13,706 |
$ 11,093 |
||||
Interest Expense |
2,282 |
1,948 |
||||
Net Interest Income |
11,424 |
9,145 |
||||
Provision for Credit Losses |
3,370 |
4,976 |
||||
Income after Provision for Credit Losses |
8,054 |
4,169 |
||||
Servicing Revenue |
212 |
1,362 |
||||
Other finance charges and fees |
798 |
738 |
||||
Income from investment |
7 |
100 |
||||
Total other income |
1,017 |
2,200 |
||||
Total Costs and Expenses |
6,172 |
5,953 |
||||
Income before Provision for Income Taxes |
2,899 |
416 |
||||
Provision for Income Taxes |
1,018 |
140 |
||||
Net Income |
$ 1,881 |
$ 276 |
||||
Basic Net Income Per Common Share |
$ 0.36 |
$ 0.06 |
||||
Diluted Net Income Per Common Share |
$ 0.34 |
$ 0.06 |
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Other Operating Data |
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Average Principal Balance of Receivables |
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Held for Investment |
$ 341,869 |
$ 331,580 |
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Average Managed Receivables |
403,641 |
520,522 |
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Originations Volume |
56,731 |
28,334 |
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Effective Yield on Receivables |
||||||
Held for Investment |
14.8% |
13.4% |
||||
Average Cost of Debt |
2.5% |
2.5% |
||||
Weighted Average Number of |
||||||
Shares Outstanding (in thousands) |
5,287 |
4,678 |
||||
July 31, |
July 31, |
|||||
2011 |
2010 |
|||||
Financial Position |
||||||
Cash and Short-Term Investments |
$ 4,876 |
$ 4,497 |
||||
Restricted Cash |
24,842 |
20,007 |
||||
Receivables Held for Investment, Net |
352,167 |
329,743 |
||||
Assets Held for Sale |
1,384 |
1,461 |
||||
Total Assets |
410,047 |
361,486 |
||||
Total Debt |
356,815 |
319,594 |
||||
Total Other Liabilities |
4,402 |
3,140 |
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Total Liabilities |
361,217 |
322,734 |
||||
Total Shareholders' Equity |
48,830 |
38,752 |
||||
Shareholders' Equity per Common Share |
9.06 |
8.28 |
||||
Tangible Fully Diluted Book Value Per Share |
8.41 |
7.52 |
||||
As of or |
As of or |
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For the Three |
For the Three |
|||||
Months Ended |
Months Ended |
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July 31, |
July 31, |
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Credit Quality Data |
2011 |
2010 |
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Receivables Held for Investment: |
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30 + days past due |
||||||
Number of Loans |
2.8% |
2.9% |
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$ Amount |
2.4% |
2.5% |
||||
Net Charge-offs as a % of average receivables (Annualized) |
3.6% |
6.0% |
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Net Charge-offs for the period ending |
$ 3,114 |
$ 4,957 |
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SOURCE First Investors Financial Services Group
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