The Washtenaw Group, Inc. Reports Q1 Results Net Loss Narrowed
Despite Lower Mortgage Volume ANN ARBOR, Mich., May 6
/PRNewswire-FirstCall/ -- The Washtenaw Group, Inc. (AMEX:TWH), the
holding company for Washtenaw Mortgage Company, narrowed its net
loss, despite lower mortgage volume for the first quarter of 2005,
Charles C. Huffman, Chairman and CEO, reported today. Washtenaw
Mortgage Company, one of the nation's leading wholesale mortgage
companies, originates, acquires, sells and services mortgage loans.
The Company is headquartered in Ann Arbor, Michigan, and conducts
business through some 2,000 mortgage brokers in approximately 40
states. Mortgage-origination volume for the first quarter of 2005
was $169 million, off 57% from year-earlier volume of $394 million,
reflecting rising interest rates and the industry-wide downturn in
mortgage-refinance activity. Aided by across-the-board cost-cutting
steps, the company reduced the net loss to $1.67 million, or $0.37
per diluted share, from $3.10 million, or $0.69 per diluted share,
for the first quarter of 2004. Net interest income improved 85%,
reflecting the credit received for custodial deposits maintained at
the warehouse lender. Noninterest income was down 61% due to a
substantial decrease in gains from the sale of loans and
mortgage-servicing rights. Operating expenses were successfully
reduced by 48%, including a 36% dip in compensation and employee
benefits. Headcount has been reduced to 138 from 215 a year ago.
Results for the quarter were aided by a $51,541 credit for a
valuation adjustment to the mortgage-servicing- rights portfolio.
This adjustment was a charge of $2,902,314 for the first quarter of
2004. Mr. Huffman said, "We are doing everything possible to
generate mortgage volume and reduce operating expenses. We have
introduced many of the newest mortgage products, such as zero-down,
interest-only and Alt. A. In fact, we are expanding the criteria
for Alt. A. mortgages to cast a wider net and attract additional
borrowers. We are well positioned from product, personnel and
technology standpoints to take advantage of any up-tick in business
activity. "However, interest rates have been generally unappealing
to the refinance sector, our core business. The spring and summer
home selling season may bring some relief." Safe Harbor. This news
release contains forward-looking statements made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. Such statements are based on management's current
expectations and are subject to risks and uncertainties, which
could cause actual results to differ materially from those
described in the forward- looking statements. Among these risks are
regional and national economic conditions, competitive and
regulatory factors, legislative changes, mortgage interest rates,
cost and availability of borrowed funds, our ability to sell
mortgages in the secondary market, and housing sales and values.
These risks and uncertainties are contained in the Corporation's
filings with the Securities and Exchange Commission, available via
EDGAR. The Company assumes no obligation to update forward-looking
statements to reflect occurrences or unanticipated events or
circumstances after the date of such forward-looking statements.
THE WASHTENAW GROUP, INC. Consolidated Balance Sheets March 31,
December 31, 2005 2004 (Unaudited) ASSETS Cash and cash equivalents
$100,000 $100,000 Accounts receivable 4,503,750 7,107,462 Loans
held for sale 34,289,600 68,518,733 Securities available for sale
5,528,870 22,234,244 Mortgage servicing rights, net 17,363,477
17,240,953 Other real estate owned 1,412,638 1,589,591 Premises and
equipment, net 1,542,608 1,678,252 Other assets 1,360,772 835,787
$66,101,715 $119,305,022 LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities Due to bank $5,323,357 $6,507,279 Notes payable
33,845,866 59,952,788 GNMA repurchase liability 1,274,388 6,465,538
Repurchase agreements 5,159,000 22,390,336 Other liabilities
6,359,786 8,000,486 Total liabilities 51,962,397 103,316,427
Shareholders' equity Preferred stock, $.01 par value 1,000,000
shares authorized; none outstanding - - Common stock, $.01 par
value 9,000,000 shares authorized; 4,488,351 outstanding at March
31, 2005 and December 31, 2004 44,884 44,884 Additional paid in
capital 2,006,816 2,006,816 Retained earnings 12,123,933 13,797,423
Accumulated other comprehensive income/(loss) (36,315) 139,472
Total shareholders' equity 14,139,318 15,988,595 $66,101,715
$119,305,022 THE WASHTENAW GROUP, INC. Consolidated Statements of
Income (Unaudited) Three Months Ended March 31, 2005 2004 Interest
income $1,184,357 $1,208,841 Interest expense 469,617 821,762 Net
interest income 714,740 387,079 Noninterest income Servicing income
1,318,164 2,388,877 Gain on sales of mortgage servicing rights and
loans, net 484,935 2,748,977 Gain on sales of securities, net
122,108 - Other income 187,590 285,544 Total noninterest income
2,112,797 5,423,398 Noninterest expense Compensation and employee
benefits 2,120,685 3,307,966 Occupancy and equipment 449,227
419,348 Telephone 41,340 78,379 Postage 90,681 148,681 Amortization
of mortgage servicing rights 870,209 1,953,227 Mortgage servicing
rights valuation adjustment (51,541) 2,902,314 Loss and provision
for loss on loan repurchases and other real estate 804,092 616,834
Other noninterest expense 1,034,668 994,833 Total noninterest
expense 5,359,361 10,421,582 Loss before income taxes (2,531,824)
(4,611,105) Provision for income taxes (858,334) (1,507,768) Net
Loss $(1,673,490) $(3,103,337) Basic and diluted loss per share
$(0.37) $(0.69) Comprehensive loss $(1,849,277) $(3,103,337)
DATASOURCE: The Washtenaw Group, Inc. CONTACT: Howard Nathan of The
Washtenaw Group, Inc., +1-800-242-6698; Mike Marcotte of Marcotte
Financial Relations, +1-248-656-3873, for The Washtenaw Group, Inc.
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