Here are the fy97 earnings.
Company Press Release Thursday July 31 9:02 AM EDT
UAC Reports $7.4 Million in Net Earnings for Fiscal 1997
INDIANAPOLIS--(BUSINESS WIRE)--July 31, 1997--Union Acceptance Corporation
(NASDAQ/NMS:UACA) today announced earnings of $7.4 million or $0.56 per share for its fiscal
year ended June 30, 1997. Net earnings for fiscal 1996 were $21.1 million or $1.60 per share. The
Company posted a fourth quarter net loss of $11.0 million or $0.83 per share which included a
$16.1 million ($1.21 per share) after-tax charge recorded to increase the allowance for estimated
credit losses on securitized loans to a level deemed appropriate by management. Exclusive of the
charge, annual net earnings were $23.5 million or $1.78 per share. Total revenues were $42.5
million for the fiscal year ended June 30, 1997, (or $69.5 million before the pre-tax charge)
compared to $59.4 million for fiscal 1996. Total loan acquisitions increased 8.9% to $1,122.3
million for fiscal 1997, compared to $1,030.9 million for fiscal 1996. Fourth quarter loan
acquisitions totaled $238.4 million compared to $328.9 million in the year ago quarter.
``Although earnings for the year did not meet our expectations, I am proud of the Company's
performance in fiscal 1997. We increased our geographic presence to 29 states, and had moderate
growth in loan volume while tightening our credit standards. We will continue to grow our portfolio
at a pace that is consistent with the desired level of credit quality and at a price that we believe
delivers profits. Management has worked very hard over the past year to develop improved
underwriting and collection policies designed to maximize profits and minimize credit losses. We face
challenging times in this industry, and I expect that fiscal 1998 will present its own challenges, but
UAC management is prepared to secure UAC's position in the industry over the long-term.'' -- John
Stainbrook, UAC President.
SECURITIZATION
The Company successfully completed a prime securitization of $295.8 million in June 1997
recognizing a gain of $6.7 million. Gross and net spreads on the securitization were 6.64% and
5.15%, respectively. The gain was calculated and a reserve was established assuming a 3.50% loss
rate over the life.
DELINQUENCY, CREDIT LOSS AND ALLOWANCE
There has been a general deterioration in the consumer-credit markets over the past year despite
record low unemployment and relatively good economic conditions. Management believes this
decline comes as a result of higher consumer-debt levels and the consumer's increased readiness to
declare bankruptcy. Management is making improvements in both the underwriting and collection
processes. The Company has tightened its credit standards and is utilizing new tools to re-score
existing portfolios enabling us to focus our collection efforts in the most effective manner.
Delinquency rates related to the prime portfolio improved slightly to 2.96% at June 30, 1997,
compared to 2.99% at March 31, 1997 but up from the 1.84% reported at June 30, 1996. The
increased delinquency from a year ago is a product of changes in consumer credit trends as
discussed above, and, to a lesser extent, the tightening of the Company's deferral policy (effective in
February 1997) which applied more stringent standards for the deferment of delinquent accounts.
This tightening served to increase delinquency and accelerated credit losses in the third and fourth
quarters of fiscal 1997.
Credit losses on the prime auto portfolio totaled $42.3 million for the fiscal year ended June 30,
1997, or 2.40% as a percentage of the average servicing portfolio compared to $21.3 million or
1.58% for the fiscal year ended June 30, 1996. Increased credit losses are a result of higher gross
charge-off rates, as well as a decline in recovery rates. Although recovery rates are down compared
to last fiscal year, there has been improvement in the fourth quarter from the third quarter. Fourth
quarter credit losses were $12.5 million or 2.69% (annualized) as a percentage of the average
servicing portfolio, down from 3.18% in the third quarter, but up from 2.09% in the same quarter of
last year.
The following tables set forth delinquency and credit loss experience related to the prime auto
portfolio:
Prime Delinquency Experience
____________________________
At June 30, 1997 At June 30, 1996
________________ ________________
Number Amount Number Amount
Servicing Portfolio 173,693 $1,860,272 147,722 $1,548,538
Delinquencies
30-59 days 2,487 27,373 1,602 17,030
60-89 days 1,646 18,931 694 7,629
90 days or more 723 8,826 333 3,811
________ ________ ________ ________
Total delinquencies 4,856 $55,130 2,629 $28,470
Total delinquencies as
a % of servicing
portfolio 2.80% 2.96% 1.78% 1.84%
Prime Credit Loss Experience
____________________________
Quarter Ended Fiscal Year Ended
June 30, June 30,
1997 1996 1997 1996
____________________________________________________________________
Avg. Servicing
Portfolio $1,855,488 $1,494,022 $1,759,666 $1,343,770
Gross Charge-offs $21,907 $14,395 $70,829 $40,815
Recoveries 9,421 6,578 28,510 19,543
____________________________________________________________________
Net charge-offs $12,486 $7,817 $42,319 $21,272
____________________________________________________________________
Gross charge-offs
as a % of avg.
servicing portfolio 4.72%(a) 3.85%(a) 4.03% 3.04%
Recoveries as a % of
gross charge-offs 43.01% 45.70% 40.25% 47.88%
Net charge-offs as
a % of avg. servicing
portfolio 2.69%(a) 2.09%(a) 2.40% 1.58%
____________________________________________________________________
(a) Annualized
____________________________________________________________________
Allowance for estimated credit losses on securitized loans related to the securitized portfolio
increased to 4.35% at June 30, 1997, compared to 3.22% at June 30, 1996. The Company
increased its reserves in response to current delinquency and credit loss experience. Reserves are
reviewed to insure their adequacy with respect to the recoverability of excess servicing.
Management believes that current reserves are adequate with respect to anticipated credit losses on
excess servicing.
CORPORATE DESCRIPTION
UAC is an Indianapolis-based diversified consumer finance company engaged in acquiring and
servicing automobile and marine retail installment contracts originated by dealerships affiliated with
major domestic and foreign manufacturers. Through the use of state-of-the-art technology for
underwriting and servicing and disciplined credit standards, the Company focuses its efforts on
acquiring prime automobile loans made to purchasers who exhibit a favorable credit profile. The
Company commenced business in 1986 and currently acquires loans from over 3,200 dealerships in
29 states.
FORWARD LOOKING INFORMATION
This news release contains forward-looking statements regarding the prospective effect of policy
changes on delinquency and other matters. Readers are cautioned that actual results may differ
materially from such forward-looking statements. Forward-looking statements involve risks and
uncertainties including, but not limited to, the relative unpredictability of changes in delinquency and
loss rates, changes in loan acquisition volume, general economic conditions that affect consumer loan
performance and consumer borrowing practices and other important factors detailed in the
Company's annual report on Form 10-K for the fiscal year ended June 30, 1996, which was filed
with the Securities and Exchange Commission.
(tables to follow)
Selected Financial Data
____________________________________________________________________
(Dollars in thousands)
Balance Sheet Data at: June 30, 1997 June 30, 1996
____________________________________________________________________
Cash $58,801 $13,459
Restricted cash 16,657 14,789
Loans, net 121,381 259,290
Excess servicing 98,841 83,434
Spread accounts 71,744 63,590
Other assets 24,742 16,633
________ ________
Total assets $392,166 $451,195
________ ________
________ ________
Amounts due under warehouse
facilities $44,455 $187,756
Long-term debt 221,000 156,000
Accrued interest payable 5,793 5,820
Amounts due to trusts 16,067 7,931
Dealer premiums payable 1,372 3,381
Other payables and accrued
expenses 2,318 3,326
Deferred income tax payable 15,046 8,357
________ ________
Total liabilities 306,051 372,571
________ ________
Common stock 58,270 58,180
Retained earnings 27,845 20,444
________ ________
Total shareholders' equity 86,115 78,624
________ ________
Total liabilities and
shareholders' equity $392,166 $451,195
________ ________
________ ________
____________________________________________________________________
Three Months Ended Fiscal Year Ended
June 30, June 30, June 30,
Income Statement 1997 1996 1997 1996
Data for the Period:
____________________________________________________________________
(Unaudited)
Interest on loans $8,126 $7,802 $34,140 28,712
Interest on spread
accounts and restricted
cash 1,795 1,375 6,504 5,448
Interest expense (6,895) (6,071) (25,688) (22,275)
_______ _______ _______ _______
Net interest margin 3,026 3,106 14,956 11,885
Provision for credit
losses (1,160) (825) (4,188) (2,875)
_______ _______ _______ _______
Net interest margin
after provision 1,866 2,281 10,768 9,010
Gain on sales of loans
(net of $27.0 million
pre-tax charge) (20,335) 7,390 2,613 30,357
Servicing fees, net 6,393 5,580 25,337 16,926
Other 964 824 3,819 3,096
_______ _______ _______ _______
Total revenues (11,112) 16,075 42,537 59,389
_______ _______ _______ _______
Salaries and benefits 3,515 3,373 15,112 11,985
Other 3,903 3,489 14,829 11,856
_______ _______ _______ _______
Total operating expenses 7,418 6,862 29,941 23,841
_______ _______ _______ _______
Earnings/(loss) before
provision for income
taxes (18,530) 9,213 12,596 35,548
Provision for income taxes (7,511) 3,746 5,195 14,406
_______ _______ _______ _______
Net earnings/(loss) $(11,019) $5,467 $7,401 $21,142
_______ _______ _______ _______
_______ _______ _______ _______
____________________________________________________________________
Per Common Share Data:
Net earnings/(loss) for
the period $(0.83) $0.41 $0.56 $1.60
Weighted average
shares outstanding(1) 13,216,788 13,211,358 13,215,112 13,209,378
____________________________________________________________________
Selected Financial Data
(Dollars in thousands)
Three Months Ended Fiscal Year Ended
Loan Acquisition June 30, June 30, June 30,
Volume: 1997 1996 1997 1996
__________ __________ __________ __________
Prime $229,420 $317,122 $1,076,064 $994,833
Non-prime 5,772 11,752 39,610 36,031
Marine 3,204 50 6,590 50
__________ __________ __________ __________
$238,396 $328,924 $1,122,264 $1,030,914
__________ __________ __________ __________
__________ __________ __________ __________
_____________________________________________________________________
Ratios:
Return on Average Assets (9.10%) 4.77% 1.60% 5.04%
Return on Average
Shareholders' Equity(1) (51.37%) 28.42% 8.42% 32.24%
Operating Expenses as a % of
Average Servicing Portfolio 1.54% 1.78% 1.64% 1.73%
Portfolio Performance:
Delinquency at:
Prime 2.96% 1.84%
Non-prime 6.18% 3.35%
Marine 0.10% 0.00%
______ ______
Total 3.07% 1.88%
______ ______
______ ______
Net Credit Loss (Annualized for the period ended:)
Prime 2.69% 2.09% 2.40% 1.58%
Non-prime 8.50% 2.74% 5.18% 2.37%
Marine 0.46% 0.00% 0.25% 0.00%
__________ __________ __________ __________
Total 2.89% 2.11% 2.50% 1.60%
_____________________________________________________________________
Reserve Data at: June 30, 1997 June 30, 1996
________________ _______________
Reserve on securitized
loans $79,013 $43,516
Securitized loans
serviced $1,818,363 $1,351,480
Reserve as a percentage
of securitized
loans serviced 4.35% 3.22%
_____________________________________________________________________
Managed Loan Data at:
Loans held for sale June 30, 1997 June 30, 1996
______________ ______________
Prime $90,331 $228,391
Non-prime 19,829 15,512
Marine 6,227 50
Securitized
Prime 1,769,903 1,319,930
Non-Prime 48,460 31,550
Loans serviced for others 2,526 3,637
______________ ______________
Total Servicing
Portfolio $1,937,276 $1,599,070
______________ ______________
______________ ______________
(1) Shares issued and equity raised in August 1995 IPO were
considered to be outstanding for the entire fiscal year ended
June 30, 1996, for the purpose of the above computations.
Contact:
Union Acceptance Corporation
John M. Stainbrook, 317/231-6490
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