Hi Paul, always thought of starting a thread on WFSI, but never thought there would be any interest. I've followed the company for several years and they seem to be a very thinly traded, but profitable company. Buying on dips seems to be very rewarding.
Thanks for pointing out the announcement. It looks positive, but I think that some of the people being layed off may choose to sell their shares. Since I've seen WES move 1/4 on 500 shares traded for the day, I can imagine any selling pressure could bring the stock down.
On the other hand, the restructuring looks on the surface to be a good move. It will save a lot of money. The question is, why close the offices, or why ever open them, if they weren't neccessary. I wonder. They had been working hard to expand their number of offices to grow business and now they don't need these offices any more?
I'm living in Australia, but I will return to the US Feb 28th. I'll want to call them and ask some questions. You might do the same if you are interested.
Was very good to see the big rise in Mortgages and the lowering loan loss.
So, here's the report.
Westcorp Announces Restructuring Program and First Quarter 1998 Charge
Also Reports 1997 Fourth Quarter and Twelve Month Results
IRVINE, Calif.--(BUSINESS WIRE)--Feb. 10, 1998--Westcorp (NYSE:WES - news), the financial services holding company whose principal subsidiaries are WFS Financial Inc (Nasdaq:WFSI - news) and Western Financial Bank, Tuesday announced a restructuring plan for WFSI which combines its western region Dealer Center and Branch Divisions into a single operation.
The new Western Division will provide focused, full spectrum lending to enhance dealer relationships while achieving improved operational efficiencies. The plan is expected to reduce operating expenses by utilizing recently installed technologies, consolidating offices and reducing staff and, once fully implemented, is designed to save up to $12.0 million annually in expense savings.
WFSI will, during the next 60 to 90 days, consolidate 15 prime-lending dealer centers and 44 non-prime lending branch offices in the western United States into 12 regional business centers and 15 satellite offices. Each location will buy the full spectrum of prime and non-prime credit. As a result, approximately 150 positions, or 20% of the workforce in the west, will be eliminated. James Dowlan, senior executive vice president and currently the head of the Dealer Center Division, will lead the combined Western Division.
''We will be combining the best people and practices from our prime and non-prime operations to create a stronger operation that will provide each of our dealers a single point of contact for their full spectrum lending needs,'' said Joy Schaefer, WFSI president and chief executive officer. ''We have been piloting full spectrum operations in other locations and see this as an effective strategy to increase production while significantly reducing operating costs. With this restructuring, all of our offices will now offer the full spectrum of prime and non-prime lending programs to all of their dealers through a single sales and marketing approach.''
''It is expected that this restructuring will result in a one-time pre-tax accounting charge for the first quarter ended March 31, 1998 of approximately $9.0 million or $0.20 per diluted share,'' Lee Whatcott, chief financial officer said. ''Our goal is to improve profitability and enhance shareholder value through a more cost effective operating structure and greater loan volumes.''
Net income for the fourth quarter ended Dec. 31, 1997 was $10.1 million, or $0.38 per diluted share, compared with $7.8 million, or $0.30 per diluted share, for the same period a year earlier. For 1997, net income totaled $36.8 million, or $1.40 per diluted share, compared with $31.8 million, or $1.21 per diluted share, in 1996.
The 1996 annual results included the effect of the one-time pretax charge of $12.0 million for the special assessment to recapitalize the Savings Association Insurance Fund. Excluding this one-time charge, net income for the year ended Dec. 31, 1996 would have been $38.6 million, or $1.47 per diluted share.
Originations of automobile contracts in the fourth quarter totaled $523 million, down from $534 million for the fourth quarter a year ago. For the year, originations were $2.3 billion compared with $2.1 billion for 1996. WFSI's portfolio of serviced contracts reached $3.7 billion at Dec. 31, 1997, up from $3.0 billion at Dec. 31, 1996.
Mortgage loan originations by Western Financial Bank during the fourth quarter totaled $658 million, a 62% increase over the $407 million originated in the fourth quarter of 1996. Originations for the year ended Dec. 31, 1997 totaled $2.3 billion compared with $1.3 billion during 1996. ''Our mortgage production reflects a strong economy and our success in expanding our wholesale mortgage markets,'' said Don Kasle, president and chief executive officer of the Bank.
The Company's earnings level continues to be directly impacted by slower growth in automobile loan volume and asset quality weakness. Loss experience for the fourth quarter of 1997 was 3.4% of serviced automobile contracts compared with 3.3% a year earlier. For the year, loss experience was 3.0% compared with 2.3% for 1996. Off-balance sheet allowance for losses as a percent of contracts sold through securitizations was 6.9% at Dec. 31, 1997 compared with 8.0% at Dec. 31, 1996.
Nonperforming assets totaled $26.1 million at Dec. 31, 1997 compared with $33.0 million at Dec. 31, 1996. Loans past due 60 days or more were 0.9% of total loans at Dec. 31, 1997 and 1.1% at the end of last year while the allowance for loan losses totaled $33.8 million or 1.8% of total loans at Dec. 31, 1997 compared with $40.2 million or 2.3% at Dec. 31, 1996.
Components of net income included the following:
Net interest income totaled $25.8 million and $109 million for
the quarter and year ended Dec. 31, 1997, respectively, compared
with $27.0 million and $103 million for the respective periods
a year earlier resulting from an increase in mortgage-backed
securities and real estate loans.
Noninterest income totaled $57.2 million in the fourth quarter
of 1997 compared with $48.2 million a year earlier primarily
due to the sale of $283 million of mortgage backed securities
which resulted in a one-time gain of $6.3 million. For the
year, noninterest income totaled $218 million compared with
$181 million in 1996, reflecting growth in Westcorp's automobile
and real estate portfolios.
Noninterest expense totaled $59.9 million, up from $55.5 million in the fourth quarter of 1996 and totaled $241 million compared with $204 million for the respective twelve month periods of 1997 and 1996. ''This restructuring will significantly improve our cost structure, positioning us to be more competitive in today's dynamic marketplace,'' Schaefer said.
WFSI is an indirect automobile finance company specializing in the purchase, securitization and servicing of prime and non-prime credit quality contracts. WFSI currently purchases contracts in California and 36 other states.
Western Financial Bank is a diversified financial services company providing a wide array of products and services, including mortgage and commercial banking. The Bank has offices in eight states, including 26 retail banking offices in California. At December 31, 1997, the Bank serviced $6.4 billion of mortgage loans.
This news release contains forward-looking statements including, but not limited to, estimates of the impact of restructuring as well as future loan volumes, losses and operating costs in future periods that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected, including that the systems changes and initiatives that the Company is undertaking do not achieve their intended results. Additional risks that may affect the Company's future performance are detailed under the caption ''Forward-looking Statements'' in the Business section of the Company's annual report on Form 10-K and quarterly reports on Form 10-Q as filed with the Securities and Exchange Commission. |
