-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VGhspceLV06SeFMl0bZuaGZ329wJiwbscAlAU9neCRh3U4zM0kjPNhgXE1cWEmUL M9cIt7GUUuRMNvczzAJYAg== 0001275287-05-001925.txt : 20050513 0001275287-05-001925.hdr.sgml : 20050513 20050513163640 ACCESSION NUMBER: 0001275287-05-001925 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050512 ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050513 DATE AS OF CHANGE: 20050513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUNSET FINANCIAL RESOURCES INC CENTRAL INDEX KEY: 0001270436 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 161685692 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-32026 FILM NUMBER: 05829848 BUSINESS ADDRESS: STREET 1: 10245 CENTURION PARKWAY STREET 2: 3RD FLOOR CITY: JACKSONVILLE STATE: FL ZIP: 32256 BUSINESS PHONE: 9044254099 MAIL ADDRESS: STREET 1: 10245 CENTURION PARKWAY STREET 2: 3RD FLOOR CITY: JACKSONVILLE STATE: FL ZIP: 32256 8-K 1 sf2739.txt ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): May 12, 2005 SUNSET FINANCIAL RESOURCES, INC. (Exact name of Registrant as specified in its Charter) Maryland 001-32026 16-1685692 (State or other jurisdiction of (Commission (I.R.S. Employer incorporation or organization) file number) Identification Number) 10245 Centurion Parkway North, Jacksonville, Florida 32256 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (904) 425-4099 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ ITEM 8.01. OTHER EVENTS. Attached as Exhibit 99.1 is a press release issued by the registrant on May 12, 2005. ITEM 9.01. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) Exhibits 99.1 Press Release issued May 12, 2005. 2 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: May 13, 2005 SUNSET FINANCIAL RESOURCES, INC. By: /s/ Michael Pannell ---------------------------- Chief Financial Officer 3 INDEX TO EXHIBITS EXHIBIT NUMBER DESCRIPTION - ------- --------------------------------- 99.1 Press Release issued May 12, 2005 4 EX-99.1 2 sf2739ex991.txt Exhibit 99.1 SUNSET FINANCIAL RESOURCES REPORTS FIRST QUARTER NET INCOME OF $1.4 MILLION JACKSONVILLE, Fla., May 12 /PRNewswire-FirstCall/ -- Sunset Financial Resources, Inc. (NYSE: SFO) announced today financial results for the first quarter ended March 31, 2005. Net income for the quarter ended March 31, 2005, was $1.4 million, or $0.14 per diluted share, compared to a net loss of $1.5 million, or $0.85 per diluted share, in the same period a year ago. Results for the 2004 first quarter reflect approximately two weeks of operations following the Company's initial public offering (IPO) on March 17, 2004. This compares to net income of $583,000, or $0.06 per diluted share for the quarter ended December 31, 2004, which included a loan loss provision of approximately $1.1 million in the Company's commercial portfolio. The diluted weighted average common shares outstanding for the three months ended March 31, 2005 were 10.45 million shares, compared to 2.1 million shares in the prior year and 10.45 million in the quarter ended December 31, 2004. As of March 31, 2005, Sunset's total assets had increased to $1.1 billion (including $818 million of investments in Mortgage Backed Securities; $192 million of residential mortgage related loans and $36 million of commercial bridge loans). As of December 31, 2004, Sunset's total assets were $893 million (including $614 million of investments in Mortgage Backed Securities; $204 million of residential mortgage related loans and $45 million of commercial bridge loans). Bert Watson, Chairman, President and CEO of Sunset Financial Resources, said, "Our strong first quarter results reflect our ability to operate successfully in a rising interest rate environment. As of March 31, total assets increased to a record $1.1 billion, leading to net interest income of $3.5 million in the first quarter due to strong execution in our residential mortgage business." "In addition, we completed a private placement of $20 million of trust preferred securities to support of our commercial mortgage lending activities. At the end of March, our residential mortgage portfolio was fully leveraged at approximately 9.6X and our commercial portfolio was leveraged approximately 1.1X, an increase from 0.3X as of December 31, 2004." Watson concluded, "Management will continue to execute its business plan and expand the Company's asset base. In the face of a difficult environment throughout our initial 12 months of operations, we believe we have made great strides to improve our business platform and maximize shareholder value." For the quarter ended March 31, 2005, the yield on average earning assets was 4.42% and the cost of funds was 3.30%, which equates to an interest rate spread of 1.12%. Sunset's book value per share at March 31, 2005 was $11.22, compared to $11.41 per share as of December 31, 2004. Sunset Financial has scheduled a conference call to discuss its first quarter financial results at 10:00 a.m. ET on Friday, May 13, 2005. Those wishing to listen to the conference call by telephone may dial 1-800-295-4740 and the reservation number is 50275927. Please call approximately ten minutes prior to the scheduled conference call time. The conference call will also be archived on the Company's web site for 30 days following the call at http://www.sunsetfinancial.net. About Sunset Financial Resources, Inc. Sunset Financial Resources, Inc. is a self-managed real estate investment trust (REIT) that went public in March 2004. Sunset Financial Resources seeks to deliver attractive dividend income and steady growth to its shareholders through the acquisition and management of a portfolio of high quality residential mortgage loans and well secured commercial mortgage bridge loans in the United States. Certain statements in this news release may constitute "forward-looking statements" within the meaning of the federal securities laws and involve risks, uncertainties and other factors, which may cause the actual performance of Sunset Financial Resources, Inc. to be materially different from the performance expressed or implied by such statements. These risks include the failure of the Company to successfully execute its business plan, gain access to additional financing, the availability of additional loan portfolios for future acquisition, continued qualification as a REIT, the cost of capital, as well as the additional risks and uncertainties detailed in the Company's periodic reports and registration statements filed with the Securities and Exchange Commission. Sunset Financial Resources, Inc Consolidated Balance Sheets (dollar amounts in thousands)
March 31, December 31, March 31, 2004 2004 2005 ------------ ------------- ------------- (unaudited) (unaudited) Assets Mortgage assets Mortgage backed securities, available for sale $ - $ 614,154 $ 818,427 Securitized hybrid adjustable rate mortgages - 201,381 189,825 Hybrid adjustable rate residential mortgages 149,996 1,286 1,162 Fixed rate residential mortgages 6,144 1,045 939 Commercial mortgages 11,500 44,522 36,474 Total mortgage assets 167,640 862,388 1,046,827 Allowance for loan losses (15) (1,333) (355) Net mortgage assets 167,625 861,055 1,046,472 Cash and cash equivalents 49,430 25,700 22,630 Interest receivable 577 2,676 4,235 Fixed assets, net 662 861 776 Other assets 138 484 2,984 Hedging assets 49 2,716 8,389 Total assets $ 218,481 $ 893,492 $ 1,085,486 Liabilities Whole loan financing facility $ 100,423 $ 9,718 $ - Reverse repurchase agreements - 761,205 943,460 Notes payable to stockholders - - 20,000 Hedging liabilities - 944 6 Accrued liabilities 616 2,367 4,525 Total liabilities 101,039 774,234 967,991 Commitments - - - Shareholders' equity Preferred stock, $.001 par value, authorized 50,000,000; no shares outstanding - - - Common stock 10 10 10 Additional paid in capital 118,948 119,219 119,295 Accumulated other comprehensive income 49 87 787 Retained earnings (1,565) (58) (2,597) Total shareholders' equity 117,442 119,258 117,495 Total liabilities and shareholders' equity $ 218,481 $ 893,492 $ 1,085,486 Book value per share 11.24 11.41 11.22 Leverage 0.9 6.5 8.2
Sunset Financial Resources, Inc Consolidated Statement of Operations (unaudited) (dollar amounts in thousands, except per share amounts) Quarter ended Quarter ended March 31, 2005 March 31, 2004 -------------- -------------- Interest and fee income $ 10,171 $ 44 Interest expense 6,699 32 Net interest income 3,472 12 Provision for loan losses 76 15 Net interest income after provision 3,396 (3) Operating expenses Salaries and employee benefits 740 902 Professional fees 464 224 Other 749 414 Total operating expenses 1,953 1,540 Net income (loss) $ 1,443 $ (1,543) Basic earnings per share 0.14 (0.73) Diluted earnings per share 0.14 (0.85) Weighted average basic shares 10,454 2,112 Weighted average diluted shares 10,454 2,118 Sunset Financial Resources, Inc Trended Income Statements (dollar amounts in thousands)
2004 2005 First Second Third Fourth First quarter quarter quarter quarter quarter ------------ ------------ ------------ ------------ ------------ Interest and fee income $ 44 $ 3,058 $ 5,989 $ 9,142 $ 10,171 Interest expense 32 1,345 3,118 5,347 6,699 Net interest income 12 1,713 2,871 3,795 3,472 Provision for loan losses 15 49 85 1,184 76 Net interest income after provision (3) 1,664 2,786 2,611 3,396 Securities gains - - 403 331 - Loss on sale of loans - - - (48) - Operating expenses Salaries and employee benefits 902 543 660 759 740 Professional fees 224 315 349 263 464 Other 414 635 747 924 749 Special charge - - - 365 - Total operating expenses 1,540 1,493 1,756 2,311 1,953 Net income (loss) $ (1,543) $ 171 $ 1,433 $ 583 $ 1,443 Averages and yields/costs Residential assets NM $ 223,720 $ 476,388 $ 754,493 $ 878,454 Yield NM 3.79% 4.04% 4.25% 4.21% Commercial assets NM 33,671 42,003 52,839 44,457 Yield NM 11.09% 10.24% 7.72% 8.90% Earning assets NM 267,312 535,385 815,065 933,880 Yield NM 4.60% 4.45% 4.46% 4.42% Borrowings NM 163,380 422,786 701,938 823,171 Interest NM 2.02% 1.58% 2.16% 2.65% Swaps NM 0.90% 1.20% 0.78% 0.57% Fees NM 0.39% 0.15% 0.09% 0.08% Total NM 3.31% 2.93% 3.03% 3.30% Net interest margin NM 2.58% 2.13% 1.85% 1.51% Net interest spread NM 1.29% 1.52% 1.43% 1.12%
Sunset Financial Resources, Inc Earning Assets (dollar amounts in thousands) Investment securities Agency Non Agency Securities Securities Total ------------ ------------ ------------ Par $ 612,959 $ 204,449 $ 817,408 Unamortized premium 9,378 1,767 11,145 Unamortized discount (667) (60) (727) Amortized cost 621,670 206,156 827,826 Gross unrealized gains 19 3 22 Gross unrealized losses (7,249) (2,172) (9,421) Estimated fair value $ 614,440 $ 203,987 $ 818,427 Investment securities - repricing characteristics Floating rate $ 65,924 Five year ARM 752,503 $ 818,427 Residential Loans Par Prem/disc Book value ------------ ------------ ------------ Fixed rates $ 911 $ 28 $ 939 Three year ARM 7,992 228 8,220 Five year ARM 65,806 1,832 67,638 Seven year ARM (and other) 114,266 863 115,129 Total residential loans $ 188,975 $ 2,951 $ 191,926 Commercial loans (dollars in millions) Balance Location Participation ------------ ------------ ------------ Retail mall $ 14.7 FL No Resort development 10.0 NC Yes Cemetery / funeral home 5.7 HI Yes Multi sports facility 4.7 NJ No Apartments 1.5 IL No Total $ 36.6 SOURCE Sunset Financial Resources, Inc. -0- 05/12/2005 /CONTACT: Michael Pannell, Chief Financial Officer of Sunset Financial Resources, Inc., +1-904-425-4349, mpannell@sfous.com; or Jeffrey Goldberger, +1-212-896-1249, jgoldberger@kcsa.com, or Michael Cimini, +1-212-896-1233, mcimini@kcsa.com, both of KCSA Worldwide, for Sunset Financial Resources, Inc./ /Web Site: http://www.sunsetfinancial.net / -----END PRIVACY-ENHANCED MESSAGE-----