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Monday April 26, 6:22 pm Eastern Time
Company Press Release
BNC Mortgage Inc. Reports Third
Quarter Operating Results
IRVINE, Calif.--(BUSINESS WIRE)--April 26, 1999--BNC Mortgage Inc. (Nasdaq:BNCM -
news) Monday reported earnings and loan production for the nine months and three months ended
March 31, 1999.
Net earnings for the nine months ended March 31, 1999, were $5.3 million or $0.94 per diluted
share, compared to the $5.1 million or $1.16 per diluted share for the corresponding 1998 period.
Net earnings for the three months ended March 31, 1999 were $642,000 or $0.12 per diluted
share compared to $1.5 million or $0.33 per diluted share, in the corresponding 1998 period. The
decrease in net earnings resulted primarily from a reduction in the cash gain on sale of mortgage
loans during the period due to secondary market conditions.
Mortgage loan originations were $881.1 million and $343.2 million for the nine months and three
months ended March 31, 1999, respectively as compared to $536.2 million and $181.6 million in
the corresponding 1998 periods, respectively. Subprime mortgage loan production increased 37.9
percent to $243.8 million for the three months ended March 31, 1999 as compared to $176.9
million for the corresponding 1998 period.
''We are pleased with loan production levels, changes to our cost structure, and the strength of our
current balance sheet. As of March 31, 1999 the company had cash of $28.2 million or $5.26 per
diluted share. We anticipate that the secondary market for subprime mortgages will stabilize or
improve in the near term, and while cash premiums paid for subprime mortgage loans have not
reached historical levels, they appear to have improved over the last quarter. The company
recognized that being a low cost provider is one of the keys to ensuring our continued success in the
future. During the past two quarters, we have taken several steps to ensure that BNC remains one of
the efficient producers, while maintaining a balance to continue our growth,'' said Kelly W.
Monahan, president.
On Feb. 26, 1999 the purchase of certain assets and assumption of certain liabilities of America's
Lender Inc. was completed. The origination platform is being operated as Mortgage Logic.com Inc.
(''Mortgage Logic''), which reflects its use of an automated Internet based wholesale lending
operation that links independent mortgage brokers to an automated underwriting and credit reporting
system. This Internet site allows independent mortgage brokers to access a borrower's credit
history, complete and submit loan applications, and receive loan underwriting decisions.
''During March 1999, its first month of operations as a wholly owned subsidiary of BNC Mortgage
Inc., Mortgage Logic originated $66.0 million in prime mortgage loans, of which $23 million or
approximately 35 percent was originated through this Internet-based system,'' stated Peter R. Evans,
chief financial officer.
''As America's Lender, the Mortgage Logic origination platform has successfully originated loans
through the Internet for over one year. With its leading technology, this Internet site has proven to be
an efficient and low cost means of originating mortgage loans. In the upcoming quarter, we intend to
make certain enhancements to our Internet site including a consumer direct application,'' added
Monahan.
Nine Months Ended March 31, 1999 Compared to March 31, 1998
Net earnings were $5.3 million or $0.94 per diluted share for the nine months ended March 31,
1999 compared to $5.1 million or $1.16 per diluted share for the nine months ended March 31,
1998.
For the nine months ended March 31, 1999, total mortgage loan production increased 64.3 percent
to $888.1 million from $536.2 million for the corresponding 1998 period.
For the nine months ended March 31, 1999, mortgage loan sales increased 65.4 percent to $846.0
million with a cash gain on sale of $27.7 million compared to mortgage loan sales of $511.7 million
with a cash gain on sale of $21.1 million for the corresponding 1998 period.
For the nine months ended March 31, 1999, total revenues increased 31.3 percent to $40.4 million
from $30.7 million for the same period a year earlier, primarily due to the increase in cash gain on
sale of mortgage loans, and increased loan origination income.
For the nine months ended March 31, 1999, total expenses increased 41.5 percent to $31.5 million
from $22.3 million for the corresponding 1998 period.
Three Months Ended March 31, 1999 Compared to March 31, 1998
Net earnings were $642,000 or $0.12 per diluted share for the quarter ended March 31, 1999,
compared to $1.5 million or $0.33 per diluted share for the quarter ended March 31, 1998.
For the quarter ended March 31, 1999, total mortgage loan production increased 88.9 percent to
$343.2 million from $181.6 million for the corresponding 1998 quarter.
For the quarter ended March 31, 1999, mortgage loan sales increased 61.3 percent to $288.0
million with a cash gain on sale of $5.5 million compared to mortgage loan sales of $178.6 million
with a cash gain on sale of $7.6 million for the same fiscal quarter a year ago. The reduction in cash
gain on sale between periods was due to decreased cash premiums paid for subprime mortgage
loans in the secondary market.
For the quarter ended March 31, 1998, total revenues decreased 4.5 percent to $10.3 million from
$10.8 million for the corresponding 1998 period, primarily due to a decrease in cash gain on sale of
mortgage loans.
For the quarter ended March 31, 1999, total expenses increased 11.9 percent to $9.2 million from
$8.2 million for the corresponding 1998 period.
In March and April 1999, the board of directors announced a $2 million increase in the company's
common stock repurchase plan, increasing the total in the plan to $5 million. As of today, the
company is pleased to report that it has repurchased 783,629 shares or 13.34 percent of the issued
shares of stock for an aggregate amount of $4.2 million, at an average price of $5.36 per share.
''These repurchases reflect our continued confidence in the long term potential of the company,''
said Monahan.
BNC Mortgage is a specialty finance company engaged in the business of originating, purchasing
and selling, on a whole loan basis for cash, conforming and non-conforming, residential mortgage
loans secured by one-to-four family residences.
Mortgage Logic.com is a mortgage lender specializing in borrowers with conforming credit that
generally satisfy the underwriting standards such as those utilized by FNMA and FHLMC.
Mortgage Logic currently originates loans in California. It is anticipated that expansion plans will
include several western states.
BNC Mortgage Inc. Third Quarter Report AT&T Teleconference Service April 27, 1999 -- 8 a.m.
-- Pacific Time Zone.
Hosts: Kelly W. Monahan, President and Peter R. Evans, Chief Financial Officer. Teleconference
Dial-In Number: 800/553-0327.
Questions will be accepted during the teleconference.
Note: To hear a play-back of the complete conference on tape, you may dial in as follows:
USA: 800/475-6701 -- ACCESS CODE: 446261 between 10 a.m. April 27, 1999 and 11:59
p.m. May 4, 1999.
International: 320/365-3844 -- ACCESS CODE: 446261 between 10 a.m. April 27, 1999 and
11:59 p.m. May 4, 1999.
Except for historical information contained herein, this news release contains forward-looking
statements within the meaning of Section 27A of the Securities Exchange Act of 1933, as amended
in Section 21E of the Securities Exchange Act of 1934, as amended and involve risks and
uncertainties that could cause actual results to differ materially. These forward-looking statements
can be identified by the use of words ''anticipate'', ''may,'' ''will,'' ''expect,'' ''intend,'' ''could,''
''would,'' ''remain,'' and ''continue,'' or the negative or other variations thereof or comparable
terminology. The company's actual results could differ materially from those anticipated in the
forward-looking statements based on changes in the company's business strategy.
BNC MORTGAGE INC.
CONSOLIDATED STATEMENT OF INCOME
(In thousands except per share data)
Three Nine
Months Ended Months Ended
March 31, March 31,
1999 1998 1999 1998
Revenues:
Gain on sale of mortgage loans $ 5,498 $ 7,598 $27,738 $21,141
Loan origination income 1,927 887 5,614 3,654
Interest income 2,494 2,145 5,893 5,592
Other Income 353 129 1,123 349
Total revenues 10,272 10,759 40,368 30,736
Expenses:
Employees' salaries and
commissions 5,221 4,825 18,363 13,151
General and administrative
expenses 2,452 1,968 9,429 5,225
Interest expense 1,547 1,443 3,756 3,914
Total expenses 9,220 8,236 31,548 22,290
Income before income taxes 1,052 2,523 8,820 8,446
Income tax expense 410 997 3,513 3,389
Net income $ 642 $ 1,526 $ 5,307 $ 5,057
Net income per share -- basic $ 0.12 $ 0.34 $ 0.94 $ 1.20
Net income per share -- diluted $ 0.12 $ 0.33 $ 0.94 $ 1.16
Weighted average number of
shares outstanding -- basic 5,418 4,486 5,613 4,229
Weighted average number of
shares outstanding -- diluted 5,418 4,635 5,613 4,378
BNC MORTGAGE INC.
CONSOLIDATED BALANCE SHEET
(in thousands)
March 31, 1999 June 30, 1998
ASSETS:
Cash and cash equivalents $ 28,162 $ 25,890
Restricted cash 1,100 638
Mortgage loans held for sale 129,390 98,717
Property and equipment, net 2,069 1,533
Intangible assets, net 1,737 --
Deferred income taxes 2,132 2,131
Other assets 1,561 1,646
Total assets $166,151 $130,555
LIABILITIES & STOCKHOLDERS' EQUITY
Liabilities:
Warehouse line-of-credit $125,356 $ 96,022
Accounts payable &
accrued liabilities 5,857 2,880
Accrued income taxes 1,739 802
Total Liabilities 132,952 99,704
Stockholders' Equity:
Preferred stock -- --
Common stock 6 6
Additional paid in capital 13,234 16,193
Retained earnings 19,959 14,652
Total stockholders' equity 33,199 30,851
Total liabilities &
stockholders' equity $166,151 $ 130,555
BNC MORTGAGE INC.
SELECTED FINANCIAL DATA
(In thousands)
Three Months Ended Nine Months Ended
March 31, March 31,
1999 1998 1999 1998
Three Months Ended
Loan Production
Subprime $243,835 $176,873 $717,533 $531,445
Prime (1) 99,352 4,770 163,542 4,770
Total Production $343,187 $181,643 $881,075 $536,215
Operating Expenses
Subprime $ 6,900 $ 6,633 $ 25,938 $ 18,207
Prime (1) 773 160 1,854 169
Total $ 7,673 $ 6,793 $ 27,792 $ 18,376
Operating Expenses as a
Percent of Loan Production
Subprime 2.83% 3.75% 3.61% 3.43%
Prime (1) 0.78 3.35 1.13 3.54
Total 2.24% 3.74% 3.15% 3.43%
(1) Includes data from the Prime Division of BNC Mortgage Inc.
and Mortgage Logic.com Inc.
BNC MORTGAGE INC.
SELECTED FINANCIAL DATA (continued)
(In thousands)
Three Months Ended Nine Months Ended
March 31, March 31,
1999 1998 1999 1998
Loan Sales
Subprime $212,999 $178,607 $705,026 $511,652
Prime (1) 75,021 -- 141,006 --
Total Loan Sales $288,020 $178,607 $846,032 $511,652
Premiums as a Percent
of Loan Sales:
Subprime
Gross Sales Premiums 3.43% 5.64% 4.86% 5.58%
Yield Spread Premium
Paid to Brokers/Lenders (0.92) (1.39) (1.03) (1.45)
Net Sales Premiums 2.51 4.25 3.83 4.13
Origination Fees received 0.71 0.50 0.71 0.71
3.22% 4.75% 4.54% 4.84%
Prime (1)
Gross Sales Premiums 0.93% n/a 1.02% n/a
Yield Spread Premium
Paid to Brokers/Lenders (0.71) n/a (0.49) n/a
Net Sales Premiums 0.22 n/a 0.53 n/a
Origination Fees received 0.54 n/a 0.43 n/a
0.76% n/a 0.96% n/a
Total
Gross Sales Premiums 2.78% 5.64% 4.22% 5.58%
Yield Spread Premium
Paid to Brokers/Lenders (0.87) (1.39) (0.94) (1.45)
Net Sales Premiums 1.91 4.25 3.28 4.13
Origination Fees received 0.67 0.50 0.66 0.71
2.58% 4.75% 3.94% 4.84%
(1) Includes data from the Prime Division of BNC Mortgage Inc.
and Mortgage Logic.com Inc.
Contact:
BNC Mortgage Inc., Irvine
Kelly W. Monahan, President
949/260-6000
More Quotes and News:
BNC Mortgage Inc (Nasdaq:BNCM - news)
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