Hi Doug;
TFCE news
Tuesday April 20, 12:14 pm Eastern Time
Company Press Release
SOURCE: TFC Enterprises, Inc.
TFC Enterprises Reports a 300% Increase in
Quarterly Net Income and Record Low
Delinquencies
NORFOLK, Va., April 20 /PRNewswire/ -- TFC Enterprises, Inc. (Nasdaq: TFCE - news) today
reported that 1999 net income per diluted common share increased to $0.12 for the first quarter of 1999
from $0.03 for the first quarter of 1998, a 300% increase. ''This achievement is even more remarkable
when you consider there was no income tax provision during the first quarter of 1998,'' said Robert S.
Raley Jr., the TFCEI Chairman, President and Chief Executive Officer. ''Pre-tax income during the first
quarter of 1999 was $0.21 per diluted common share compared to $0.03 per diluted common share for
the same period in 1998'' he added.
Summary of Financial Highlights
($ in thousands except per share amounts)
Quarter Ended March 31
1999 1998 Change
Income before income taxes $2,494 $341 631%
Net income $1,402 $341 311%
Net income per diluted
common share $0.12 $0.03 300%
Contract volume $58.5 $51.3 14%
Total net charge-offs to
average gross contract
receivables net of unearned
interest 14.58% 18.20% 20%
60+ days delinquencies to
gross contract receivables,
period end 5.03% 7.35% 32%
60+ delinquencies plunged to 5.03% for the first quarter of 1999 from 7.35% at the end of the first
quarter of 1998, a significant 32% improvement, and a 15% improvement over 1998 year-end
delinquencies. ''All other key performance indicators also improved,'' said Raley. ''TFCE just completed
the most solid quarter in its twenty-two year history. This sets the stage for a great year'' he added.
Net loan charge-offs as a percentage of average contract receivables (net of unearned interest), calculated
on an annualized basis, decreased from 18.20% for the first quarter of 1998, and 15.09% for the fourth
quarter of 1998, to 14.58% in the first quarter of 1999. For the ninth consecutive quarter no provision for
bad debt losses was required for the Company's auto finance contracts. In addition, the provision for
credit losses on the Company's consumer finance loan business decreased compared to the fourth quarter
of 1998 and the first quarter of 1998.
Operating expense as a percentage of interest-earning assets, calculated on an annualized basis, decreased
from 13.48% in the first quarter of 1998 and 12.56% for the fourth quarter, to 12.15% in the first quarter
of 1999.
Auto finance contract purchase volume increased to $53.6 million in the first quarter of 1999, an increase
of $8.8 million, or 20% over the fourth quarter of 1998 and $5.5 million, or 11% over the first quarter of
1998. Consumer finance contract originations increased to $4.9 million in the first quarter of 1999, an
increase of $1.7 million, or 53% over the first quarter of 1998.
The yield on interest earning assets was 23.27% in the first quarter of 1999, compared to 23.26% for the
fourth quarter of 1998 and 21.64% for the first quarter of 1998. The increase was attributable to
improved pricing.
The cost of interest bearing liabilities was 8.96% in the first quarter of 1999, 10.28% in the fourth quarter
of 1998, and 10.91% in the first quarter of 1998. The decrease in the first quarter of 1999 was primarily
attributable to a 50 basis point decrease in the rate on the Company's primary line of credit and a
decrease in the one-month LIBOR rate. Additionally, interest expense for 1998 included the costs related
to warrants and structuring fees that were fully amortized at December 31, 1998. ''We believe the
renewal of and increase to the credit facility by our primary lender is a vote of confidence that we are
here to stay. The Company continues to explore ways to reduce its overall cost of interest bearing
liabilities.''
Raley further added ''I encourage and welcome everyone to join our conference call and learn even more
about our remarkable results and continued turnaround.''
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 may contain forward-looking statements that are
subject to risks and uncertainties that could cause the Company's results to differ materially from those
anticipated in forward-looking statements. Readers are cautioned not to place undue reliance on
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., conducts its consumer finance operations through three wholly-owned subsidiaries:
THE Finance Company, specializes in purchasing and servicing installment sales contracts originated by
automobile and motorcycle dealers; First Community Finance, Inc. is involved in the direct origination
and servicing of consumer loans and: Recoveries Inc., a third party debt collection agency, services
foreclosed or troubled loan portfolios and receivables for medical organizations and others. Based in
Norfolk, VA, TFC Enterprises, Inc. has eight offices of THE Finance Company throughout the United
States in communities with a large concentration of military personnel 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 April 21, 1999. Those wishing to
participate should call 1-800-752-1361 a few minutes prior to the scheduled start of the conference call.
TFC ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
03/31/99 12/31/98
(dollars in thousands)
Assets
Cash and cash equivalents $1,876 $1,868
Net contract receivables 167,861 155,895
Property and equipment, net 1,961 1,949
Intangible assets, net 10,705 10,978
Other assets 2,283 1,907
Total assets $184,686 $172,597
Liabilities and
shareholders' equity
Liabilities
Revolving lines of credit $130,343 $121,281
Subordinated notes 9,663 9,636
Accounts payable and
accrued expenses 3,543 3,180
Income taxes payable
and other liabilities 3,920 2,394
Refundable dealer reserve 533 824
Total liabilities 148,002 137,315
Shareholders' equity:
Common stock, $.01 par value,
40,000,000 shares authorized,
11,404,882 outstanding at
03/31/99 and 12/31/98 50 50
Additional paid-in capital 56,020 56,020
Retained deficit (19,386) (20,788)
Total shareholders' equity 36,684 35,282
Total liabilities and
shareholders' equity $184,686 $172,597
TFC ENTERPRISES, INC.
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
Three months ended
03/31/99 03/31/98
(in thousands, except
per share amounts)
Interest and other
finance revenue $11,153 $8,520
Interest expense 3,044 3,080
Net interest revenue 8,109 5,440
Provision for credit losses 98 121
Net interest revenue after
provision for credit losses 8,011 5,319
Other revenue 308 328
Operating expense:
Salaries 3,047 2,682
Employee benefits 642 483
Occupancy 230 222
Equipment 313 305
Amortization of intangible assets 273 273
Other 1,320 1,341
Total operating expense 5,825 5,306
Income before income taxes 2,494 341
Provision for income taxes 1,092 --
Net income $1,402 $341
Net income per common share:
Basic $0.12 $.03
Diluted $0.12 $.03
TFC ENTERPRISES, INC.
FINANCIAL HIGHLIGHTS
(Unaudited)
Three months ended
03/31/99 03/31/98
(dollars in thousands)
CONTRACT PURCHASES OR
ORIGINATIONS
Auto finance:
Point of sale $39,303 $37,876
Bulk 14,304 10,225
Consumer finance 4,916 3,220
Total $58,523 $51,321
AVERAGE BALANCES
Interest-earning assets $191,712 $157,459
Total assets 179,136 151,244
Interest-bearing liabilities 135,833 112,972
Equity 35,979 31,252
PERFORMANCE RATIOS*
Return on average assets 3.13% 0.90%
Return on average equity 15.58 4.37
Yield on interest-earning
assets 23.27 21.64
Cost of interest-bearing
liabilities 8.96 10.91
Net interest margin 16.92 13.82
Operating expense as a
percentage of
interest-earning assets 12.15 13.48
Total net charge-offs to
average gross contract
receivables, net of
unearned interest 14.58 18.20
60+ days delinquencies to
period-end gross contract
receivables 5.03 7.35
Total allowance and
nonrefundable reserve to
period-end gross contract
receivables net of
unearned interest 11.50 13.70
Equity to period-end
assets 19.86 20.37
*annualized rates, as appropriate
SOURCE: TFC Enterprises, Inc
Allan P
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