The Washtenaw Group, Inc. Reports Q3 Results ANN ARBOR, Mich., Nov.
5 /PRNewswire-FirstCall/ -- The Washtenaw Group, Inc. (AMEX:TWH),
the holding company for Washtenaw Mortgage Company, recorded
significantly lower mortgage volume and a net loss for the third
quarter and nine-months ended September 30, 2004, 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 approximately 2,000 correspondent lenders in
approximately 40 states. The Washtenaw Group, Inc. resulted from
the previously announced spin-off of Washtenaw Mortgage Company
into a separate, publicly held corporation, from Pelican Financial,
Inc. (AMEX:PFI). The spin-off was effective at the close of
business December 31, 2003. Operating results Mortgage-origination
volume fell precipitously to $212.2 million, from record
originations of $1.0 billion for the third quarter of 2003. For the
first nine months of 2004, mortgage originations were $990.0
million, a sharp downturn from record originations of $3.2 billion
for the first nine months of 2003. As a result of the lower
mortgage volume and the continuing losses on loan repurchases and
other real estate, the Corporation posted a net loss of $2,258,000,
equivalent to $0.50 per share, for the third quarter of 2004,
compared with record net income from continuing operations of
$3,834,000, or $0.86 per share, for the comparable 2003 period. For
the first nine months, the Corporation recorded a net loss of
$5,245,000, equivalent to $1.17 per share, compared with record net
income from continuing operations of $9,899,000, or $2.22 per
share, for the first nine months of 2003. Losses on loan
repurchases and other real estate totaled $1.6 million and $4.4
million for Q3-2004 and the first nine months of 2004,
respectively. The results for Q3-2004 were lowered by a
GAAP-required valuation- adjustment to the
mortgage-servicing-rights portfolio of $101,000, equivalent to
$0.02 per share. The results for Q3-2003 were aided by a valuation-
adjustment credit of $2,416,000, equivalent to $0.54 per share.
Results for the first nine months of 2004 were reduced by a
valuation adjustment of $941,000, equivalent to $0.21 per share,
compared with a valuation-adjustment of $2,219,000, or $0.49 per
share, which boosted results for the first nine months of 2003. Mr.
Huffman said, "The year has been difficult and disappointing. We
have cut expenses, introduced numerous new products, and increased
our broker network. New- and existing-housing sales are relatively
strong, however the mortgage sector appears to be treading water
because of fluctuating interest rates and the buying-public's
predilection for lower-margin ARMs over fixed- rate mortgages. We
look forward to more stable interest rates, because we are well
positioned to grow." He noted that the Corporation's results
continue to be impaired by credit- quality issues, such as
inflated-property values. 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 Sheet September 30, December 31,
2004 2003 (Unaudited) ASSETS Cash and cash equivalents $100,000
$100,000 Accounts Receivable, net 8,819,429 5,340,932 Loans held
for sale 36,001,483 97,687,823 Mortgage servicing rights, net
18,993,159 24,614,381 Other real estate owned 1,209,745 925,839
Premises and equipment, net 1,735,238 1,480,988 Other assets
750,036 1,030,653 $67,609,090 $131,180,616 LIABILITIES AND
SHAREHOLDERS' EQUITY Liabilities Due to bank $6,999,229 $11,074,373
Notes payable 19,290,750 33,211,684 Repurchase agreements 8,098,423
43,926,901 GNMA Repurchase Liability 6,736,448 8,599,700 Other
liabilities 9,479,336 12,162,996 Total liabilities 50,604,186
108,975,654 Shareholders' equity Preferred Stock, $.01 par value
1,000,000 shares authorized; none outstanding - - Common stock,
$.01 par value 9,000,000 shares authorized; 44,884 44,884 4,488,351
outstanding at September 30, 2004 and December 31, 2003 Additional
paid-in capital 2,000,424 1,955,932 Retained earnings 14,959,596
20,204,146 Total shareholders' equity 17,004,904 22,204,962
$67,609,090 $131,180,616 THE WASHTENAW GROUP, INC. Consolidated
Statements of Income (Unaudited) Three Months Ended Nine Months
Ended September 30, September 30, 2004 2003 2004 2003 Interest
income $759,471 $3,865,346 $3,173,463 $10,924,519 Interest expense
627,301 1,878,526 2,294,982 5,375,221 Net interest income 132,170
1,986,820 878,481 5,549,298 Noninterest income Servicing income
2,137,041 1,857,838 6,748,692 5,291,939 Gain on sales of mortgage
servicing rights and loans, net 1,628,134 11,822,407 6,252,720
38,295,453 Other income 208,630 246,930 788,970 809,141 Total
noninterest income 3,973,805 13,927,175 13,790,382 44,396,533
Noninterest expense Compensation and employee benefits 2,305,171
6,818,980 8,270,469 18,611,430 Occupancy and equipment 509,951
418,824 1,381,789 1,258,690 Telephone 84,418 160,429 239,624
446,333 Postage 103,862 180,414 364,157 572,554 Amortization of
mortgage servicing rights 2,046,115 1,684,337 5,967,051 4,325,636
Mortgage servicing rights valuation adjustment 100,760 (2,416,090)
(940,829) 2,219,089 Loss and provision for loss on loan repurchases
and other real estate 1,576,413 2,197,541 4,441,898 4,364,381 Other
noninterest expense 794,978 1,072,453 2,810,348 3,123,757 Total
noninterest expense 7,521,668 10,116,888 22,534,507 34,921,870
Income before income taxes (3,415,693) 5,797,107 (7,865,644)
15,023,961 Provision for income taxes (1,157,723) 1,962,761
(2,621,094) 5,125,001 Net income (loss) $(2,257,970) $3,834,346
$(5,244,550) $9,898,960 Basic and diluted earnings (loss) per share
$(0.50) $0.86 $(1.17) $2.22 DATASOURCE: The Washtenaw Group, Inc.
CONTACT: Howard Nathan of The Washtenaw Group, Inc.,
+1-800-765-5562; or Mike Marcotte of Marcotte Financial Relations,
+1-248-656-3873, for The Washtenaw Group, Inc.
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