Doug:
TFCE; News
Tuesday February 23, 5:50 pm Eastern Time
Company Press Release
SOURCE: TFC Enterprises, Inc.
TFC Enterprises Announces 500% Increase In
Earnings Per Share For 1998
NORFOLK, Va., Feb. 23 /PRNewswire/ -- TFC Enterprises, Inc. (Nasdaq: TFCE - news)
Summary of Financial Highlights
($ in thousands except per share amounts)
Years Ended December 31
1998 1997 Change
Net income $4,025 $707 469%
Net income per basic common share $0.36 $.06 500%
Contract Volume $218.5 $171.9 27%
Total net charge-offs to average
gross contract receivables, net
of unearned interest 16.59% 18.60% (11)%
60+ days delinquencies to gross
contract receivables, period end 5.91% 8.85% (33)%
''It gives me tremendous pleasure to share these results for 1998. Hard work, perseverance and adherence to our recovery
plan established in 1996 has, without a doubt, paid off. These results plus the renewal and increase to our primary credit facility
create tremendous momentum going into 1999 and the 21st century,'' said Robert S. Raley Jr., TFCE Chairman, President and
Chief Executive Officer. '' We achieved each performance goal we established for 1998; volume growth, improved yields,
decreased delinquency and charge-off, and reduction in operating costs. This provides us a foundation from which to achieve
one of the goals for 1999 -- getting recognition from the equity markets,'' he added.
All key performance indicators improved in 1998 with 60+ days delinquencies as a percent of period-end gross contract
receivables leading the way with a decrease from 8.85% at December 31, 1997, to 5.91% at December 31, 1998. In
addition, the Company reported that net charge-offs as a percentage of average contract receivables (net of unearned interest)
decreased from 18.60% for 1997 to 16.59% for 1998 and 15.09% in the fourth quarter of 1998 compared to 16.99% in the
fourth quarter of 1997.
Auto finance contract purchase volume was $197.1 million for 1998, or 27%, above the $155.8 million for 1997. The increase
in 1998 volume compared to 1997 reflected growth in the point-of-sale business line. Point-of-sale originations increased $4.3
million over the fourth quarter of 1997 and $56.9 million for the year reflecting the Company's continued marketing efforts to
the military point-of-sale market. Bulk purchases representing acquisitions from dealer generated receivables decreased $15.6
million due to more emphasis placed on the point of sale business line and more selective purchasing of portfolios.
Consumer finance contract originations increased to $8.9 million in the fourth quarter of 1998, an increase of $2.2 million, or
33%, over the fourth quarter of 1997. For the full year of 1998, consumer finance contract originations totaled $21.4 million,
an increase of $5.4 million, or 34%, compared to the full year of 1997.
Continuing improvement in credit quality and servicing of the Company's auto finance contracts again eliminated the need for a
loss provision in 1998. The provision for credit losses on the Company's consumer finance loan business remained constant for
the fourth quarter and the year as compared to the same period of 1997 in spite of growth of $3.6 million in gross contract
receivables in 1998.
Operating expenses as a percent of interest earning assets decreased from 14.12% for the fourth quarter of 1997 to 12.56%
for the fourth quarter of 1998 and from 13.17% for 1997 to 12.89% for 1998. The 1998 percentage excludes a one time $0.4
million charge in the fourth quarter for expenses incurred for a securitization which was not completed due to the market
conditions that existed during the fourth quarter. The decrease was achieved even though The Finance Company started a
national sales department and opened three new loan production offices; First Community Finance increased the number of
offices by one; and the Company expanded it's employee benefit programs.
The yield on interest earning assets was 23.26% in the fourth quarter of 1998, excluding a positive $0.5 million one-time
adjustment to unearned dealer discount and fees; a portion of which could have been earned during the first three quarters of
1998, compared to 21.62% in the fourth quarter of 1997. The yield on interest earning assets was 23.08%; including the $0.5
million adjustment for the full year of 1998, compared to 21.30% for the year of 1997. The improvement was primarily
attributable to an increase in the amount of contract purchase discount accreted to interest revenue as a yield enhancement
resulting from increased discounts on purchased receivables and improved delinquency and charge-off experience.
The cost of interest bearing liabilities was 10.28% in the fourth quarter of 1998, compared with 11.05% in the fourth quarter of
1997. The cost of interest bearing liabilities was 10.58% for 1998, compared to 10.85% for 1997. The decrease is primarily
attributable to a 25 basis point reduction of it's interest rate related to the primary line of credit and the decrease in LIBOR
during the year. The renewal of The Company's primary credit facility includes an additional 25 basis point reduction beginning
in 1999. The Company continues to explore ways to reduce its overall cost of interest bearing liabilities.
For a financial profile, press releases, and additional information on TFC Enterprises, Inc. please visit Corporate Window at
their Web site www.corporatewindow.com. In addition, you can visit THE Finance Company's Web page at
www.thefinanceco.com.
In addition to historical information, this press release contains forward-looking statements that are subject to risks and
uncertainties that could cause the Company's results to differ materially from those anticipated in these forward-looking
statements. Readers are cautioned not to place undue reliance on these forward-looking statements which reflect management's
current analysis. In accordance with the Private Securities Litigation Reform Act of 1995, the following are factors that could
cause the Company's actual results to differ materially from those expressed or implied by such forward- looking statements: a
rise in interest rates, a deterioration of credit experience, the loss of or reduction in its credit facilities, or if the Company were
to face increased competition. Investors are encouraged to review TFC Enterprises's SEC filings for more information about
the factors affecting the Company's business.
TFC Enterprises, Inc., through its wholly-owned subsidiary, THE Finance Company, specializes in purchasing and servicing
installment sales contracts originated by automobile and motorcycle dealers. Through First Community Finance, Inc., another
wholly-owned subsidiary, TFC Enterprises, Inc., is involved in the direct origination and servicing of small consumer loans.
Based in Norfolk, VA, TFC Enterprises, Inc., has offices of THE Finance Company in Killeen, TX; Jacksonville, FL; Norfolk,
VA; Tacoma, WA; San Diego, CA; Clarksville, TN; and Columbus, GA; and sixteen offices of First Community Finance in
Virginia and North Carolina.
NOTE: Detailed supplemental information follows.
Conference Call Notice
Robert S. Raley, Jr., Chairman, President and Chief Executive Officer of TFC Enterprises, Inc., will host a conference call for
analysts and investors at 2:00 p.m. eastern time on March 2, 1999. Those wishing to participate should call 1-800-216-3907 a
few minutes prior to the scheduled start of the conference call.
TFC ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
12/31/98 12/31/97
(dollars in thousands)
Assets
Cash $1,868 $1,9 75
Net contract receivables 155,895 128,503
Recoverable income taxes -- 1,229
Property and equipment, net 1,949 2, 297
Intangible assets, net 10,978 12,070
Deferred income taxes -- 188
Other assets 1,907 1,571
Total assets $172,597 $147,833
Liabilities and shareholders'
equity
Liabilities:
Revolving line of credit $121,281 $98,572
Subordinated notes, net 9,636 11,214
Accounts payable and
accrued expenses 3,180 2,841
Income taxes and other
liabilities 2,394 2,139
Refundable dealer reserve 824 1,987
Total liabilities 137,315 116,753
Shareholders' equity:
Common stock, $.01 par value,
40,000,000 shares authorized;
11,404,882 and 11,290,308
shares outstanding, respectively 49 49
Additional paid-in capital 56,021 55,844
Retained deficit (20,788) (24,813)
Total shareholders' equity 35,282 31,080
Total liabilities and
shareholders' equity $172,597 $147,833
TFC ENTERPRISES, INC.
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
Three months ended Year ended
12/31/98 12/31/97 12/31/98 12/31/97
(in thousands, except per share amounts)
Interest and other
finance revenue $11,070 $8,132 $39,085 $32,317
Interest expense 3,362 2,979 12,952 12,019
Net interest revenue 7,708 5,153 26,133 20,298
Provision for
credit losses 246 253 737 719
Net interest revenue
after provision for
credit losses 7,462 4,900 25,396 19,579
Other revenue 181 293 1,062 1,105
Operating expense:
Salaries 2,907 2,633 11,077 9,866
Employee benefits 518 425 2,003 1,511
Occupancy 239 230 910 896
Equipment 306 324 1,233 1,253
Amortization of
intangibles 272 272 1,091 1,091
Securitization costs 448 -- 448 --
Other 1,429 1,427 5,521 5,360
Total operating
expense 6,119 5,311 22,283 19,977
Income (loss) before
income taxes 1,524 ( 118) 4,175 707
Provision for
income taxes 150 -- 150 --
Net income (loss) $1,374 $( 118) $4,025 $707
Net income (loss) per
common share:
Basic $.12 $ (.01) $.36 $.06
Diluted $.11 $ (.01) $.33 $.06
TFC ENTERPRISES, INC.
FINANCIAL HIGHLIGHTS
(Unaudited)
Three months ended Year ended
12/31/98 12/31/97 12/31/98 12/31/97
(dollars in thousands)
CONTRACT PURCHASES OR ORIGINATIONS
Auto finance:
Point-of-sale $33,398 $29,079 $142,221 $85,311
Bulk 11,420 18,796 54,929 70,520
Consumer Finance 8,895 6,661 21,391 16,023
Total $53,713 $54,536 $218,541 $171,854
AVERAGE BALANCES
Interest earning
assets $180,613 $150,480 $169,340 $151,743
Total assets 171,708 145,395 161,747 148,932
Interest bearing
liabilities 130,908 107,839 122,479 110,812
Equity 34,536 31,143 32,723 30,731
PERFORMANCE RATIOS*
Return on average
assets 3.20% NM 2.49% 47%
Return on average
equity 15.92% NM 12.30% 2.30%
Yield on interest
earning assets 23.26% 21.62% 23.08% 21.30%
Cost of interest
bearing liabilities 10.28% 11.05% 10.58% 10.85%
Net interest margin 15.81% 13.70% 15.43% 13.38%
Operating expense/
interest earning
assets 12.56% 14.12% 12.89% 13.17%
Total net charge-offs
to average gross
contract receivables,
net of unearned
interest 15.09% 16.99% 16.59% 18.60%
60 day delinquencies
to gross contract
receivables, period
end 5.91% 8.85% 5.91% 8.85%
Total allowance and
nonrefundable reserve
to gross contract
receivables net of
unearned interest,
period end 11.80% 14.70% 11.80% 14.70%
Equity to assets,
period end 20.44% 21.02% 20.44% 21.02%
*Annualized as appropriate nnnn
SOURCE: TFC Enterprises, Inc.
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