-----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, WcN1GUkku1v4LHwTBB2gsBte/PZiQjYEKk4oFiip1/8CZak7PNLIJzzp/gOu5nGy W+qGsc3fN1mVfGakFqgJ6g== 0000950168-98-002953.txt : 19980909 0000950168-98-002953.hdr.sgml : 19980909 ACCESSION NUMBER: 0000950168-98-002953 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980807 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980908 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOMEGOLD FINANCIAL INC CENTRAL INDEX KEY: 0000277028 STANDARD INDUSTRIAL CLASSIFICATION: PERSONAL CREDIT INSTITUTIONS [6141] IRS NUMBER: 570513287 STATE OF INCORPORATION: SC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-08909 FILM NUMBER: 98705359 BUSINESS ADDRESS: STREET 1: 15 SOUTH MAIN ST STE 750 CITY: GREENVILLE STATE: SC ZIP: 29601 BUSINESS PHONE: 8642358056 MAIL ADDRESS: STREET 1: 15 SOUTH MAIN ST STE 750 CITY: GREENVILLE STATE: SC ZIP: 29601 FORMER COMPANY: FORMER CONFORMED NAME: EMERGENT GROUP INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: NRUC CORP DATE OF NAME CHANGE: 19911002 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL RAILWAY UTILIZATION CORP DATE OF NAME CHANGE: 19840813 8-K 1 HOMEGOLD FORM 8-K 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: August 7, 1998 HOMEGOLD FINANCIAL, INC. (Exact name of registrant as specified in its charter) SOUTH CAROLINA 0-8909 57-0513287 (State of other juris- (Commission (IRS Employer diction of incorporation) File Number) Identification Number) SUITE 750, 15 SOUTH MAIN STREET, GREENVILLE, SOUTH CAROLINA 29601 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (864) 235-8056 The Exhibit Index appears on page 3 hereof. ITEM 5. OTHER EVENTS ------------ HomeGold Financial, Inc. (the "Company") announced on August 7, 1998, its agreement to sell its Commercial unit and Sterling Lending Corporation, and its second quarter 1998 operating results. The news release is filed herewith as Exhibit 99.1. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS --------------------------------- (a) FINANCIAL STATEMENTS OF THE BUSINESS ACQUIRED. Not applicable. (b) PRO FORMA FINANCIAL INFORMATION. Not applicable. (c) EXHIBITS. 99.1 News Release dated August 7, 1998. SIGNATURES 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. EMERGENT GROUP, INC. By: /s/ Kevin J. Mast ------------------------------ Kevin J. Mast Vice President, Chief Financial Officer, and Treasurer EXHIBIT INDEX 99.1 News Release dated August 7, 1998. EX-99 2 EXHIBIT 99.1 NEWS RELEASE ------------ Contacts: Kevin J. Mast Robert S. Davis Chief Financial Officer Vice President-Administration (864) 235-8056 (864) 235-8056 HOMEGOLD FINANCIAL, INC. ANNOUNCES AGREEMENT TO SELL COMMERCIAL UNIT AND STERLING LENDING CORPORATION, AND SECOND QUARTER 1998 OPERATING RESULTS GREENVILLE, S.C. (August 7, 1998)- HomeGold Financial, Inc. (Nasdaq/NM:HGFN) (formerly Emergent Group, Inc. - Nasdaq/NM:EMER) today announced that it has reached an agreement in principle with a major financial services company for the sale of the majority of the assets of HomeGold's small business loan division at a purchase price which is expected to be approximately $85 million in cash. The division operates under the name Emergent Business Capital, Inc. The transaction includes all of the operations of the small business loan division of HomeGold except for the asset based lending unit, which the Company plans to sell separately. Total net assets of the small business loan division, excluding the asset-based lending unit, at June 30, 1998 were $65 million, or 14% of the total Company. The transaction is subject to, among other things, the approval of the Small Business Administration ("SBA") for the transfer of certain SBA licenses held by the Company, no objection from the Federal Trade Commission under the Hart-Scott-Rodino Act, legal documentation, and Board approval. HomeGold expects to receive these approvals and plans to close the sale by the end of September, although there can be no assurance of this. The buyer plans to operate the division as a separate business unit headquartered in Greenville, South Carolina. The division currently has approximately 85 employees, 40 of which are located in Greenville. The sale will provide HomeGold with net proceeds of approximately $58 million, after repaying the related small business loan division's revolving warehouse lines of credit. This net cash price represents approximately $6 per share of cash on a consolidated basis. The sale is expected to result in a gain of approximately $20 million to the Company upon closing of the transaction. The planned sale includes Emergent Business Capital, Inc., which originates, sells and services small business loans under the SBA's 7(a) licensed guaranteed loan program; Emergent Commercial Mortgage, Inc., an SBA 504 lender; Emergent Business Capital Equity Group, Inc., (formerly known as Emergent Equity Advisors, Inc.); and Reedy River Ventures, L.P., which holds a license to operate as a Small Business Investment Corporation and provides loans to small businesses. Kevin J. Mast, Chief Financial Officer of HomeGold Financial, Inc., stated "This is a great opportunity for both HomeGold and the small business loan division. It completes the Company's plans to focus capital and management on the large and growing non-conforming mortgage market. The Company completed the sale of the majority of the assets of its auto lending division earlier this year to TranSouth Financial Corporation, a division of Associates Financial Services Company, Inc. The sale of the commercial unit provides HomeGold with over $58 million net proceeds, which can be used as operating capital in building its core mortgage business. This divestiture provides HomeGold with the opportunity to focus our management and capital resources on our mortgage business." The Company also announced an agreement was reached with First National Security Corporation of Beaumont, Texas to sell the stock of Sterling Lending Corporation, a small retail mortgage operation based in Baton Rouge, Louisiana. The sale is for $1.5 million, with $400,000 in cash payable at closing and the balance payable in the form of a promissory note for $1.1 million. The Company expects no significant gain or loss on this sale. The transaction is expected to close before the end of the third quarter 1998, although no assurance of such can be given. Sterling Lending Corporation currently has approximately 135 employees with 10 retail branch locations located predominately in the southeastern part of the United States. In the first six months of 1998, Sterling Lending Corporation originated an average of $5.4 million of mortgage loans per month, which is less than 7% of the Company's total mortgage loan production. The Company also announced today a proforma net loss from continuing operations before unusual items (on a fully-taxed basis) of $4.4 million, or $0.45 per share for the second quarter ended June 30, 1998, compared with net income of $4.8 million, or $0.51 per share for the year earlier period. This pro-forma loss for the quarter is a result of the Company's loan production volume being below capacity levels in relation to the general and administrative structure. This compares to a proforma net loss from continuing operations before unusual items (on a fully-taxed basis) of $4.5 million, or $0.46 per share for the first quarter ended March 31, 1998. The proforma net loss before unusual items in the second quarter 1998 is comparable to the first quarter 1998 even though revenues were negatively affected in the second quarter by approximately $3.4 million relating to the Company's decision to sell all of its loans on a whole-loan basis for cash rather than securitizing them. The negative impact was primarily offset by cost savings in general and administrative expenses in the second quarter compared to the first quarter. The Company incurred significant non-recurring or unusual items in the second quarter 1998, which negatively impacted its actual results. These items include a writedown in the value of the residual receivables by $7.3 million due to faster than anticipated prepayment speeds on its securitization pools and $3.3 million in non-recurring expenses for pay adjustments, terminations of personnel and other restructuring costs. Pre-tax losses on subsidiaries to be sold were $2.6 million for the three months ended June 30, 1998. The Company also recorded income tax expense of $2.6 million even though overall the Company generated a pre-tax loss. The current tax is due on income called "excess inclusion income" resulting from the securitization pools. As a result of the above factors, the Company incurred a net loss of $23.0 million for the three months ended June 30, 1998. The loss per share for the second quarter of 1998 was $2.37 on 9.7 million average shares outstanding. Revenues for the second quarter of 1998 were $24.8 million, a decrease of 18% from 1997 second quarter revenues of $30.2 million, principally as the result of lower loan origination volume and the decision to not complete a loan securitization transaction during the quarter. For the six months ended June 30, 1998, proforma net loss from continuing operations before non-recurring or unusual items (on a fully taxed basis) was $8.9 million ($0.91 per share) compared with net income of $5.2 million ($0.55 per share) for the prior year period. Revenues for the first six months of 1998 were $49.3 million, a decrease of 1% from the prior year period's revenues of $49.9 million. Net loss including the impact of the non-recurring and unusual items was $43.6 million for the six months ended June 30, 1998, or $4.49 per share on 9.7 million average shares outstanding. The Company's total loan originations for the three months ended June 30, 1998 decreased 12% to $237.3 million from $268.9 million in the first quarter of 1998. The Company's mortgage loan division accounted for $206.9 million, or 87% of the total loan originations, with $30.4 million, or 13%, resulting from its small business loan division. The mortgage loan division's retail operations produced $113.8 million of loans for the second quarter 1998, representing 55% of the total mortgage loans originated by the Company. The Company's wholesale production origination channels generated the remaining 45% of the quarterly originations for the mortgage loan division totaling $93.1 million. As currently structured, the Company believes a 25% annualized growth rate in originations is a reasonable monthly goal. To accomplish this, management is emphasizing training and sales processing coordination. In the retail operations, monthly originations per originator are up from approximately $110,000 in January 1998 to approximately $210,000 in June 1998. This is a positive trend and is one illustration of efficiency improvements. The Company goal is to drive monthly originations per originator to exceed $300,000. Management believes that its broad distribution channels will provide origination growth as improved processing flows are completely implemented. By building a solid retail franchise operation, the Company believes it should be positioned for sustainable growth in 1999. The Company sold a total of $245.3 million of loans in the second quarter of 1998. The loan sales consisted of $229.6 million in whole-loan, servicing-released cash sales of mortgage loans and $15.7 million of loans related to the Company's small business loan division consisting of the sale of the guaranteed portions of SBA loans into the secondary market. Total sales for the second quarter 1998 represent a slight decrease from the comparable quarter for 1997 of $253.7 million in loan sales and securitizations, of which 95% related to the mortgage loan division. The Company's overall credit quality is expected to improve with better collection efforts and more stringent underwriting. Static pool delinquencies were lower in June in each of the Company's pools other than the 1998-1 pool, which is not yet a seasoned pool. These decreases are believed to be a result of the Company's recent changes in management in the portfolio servicing and collections department, and the enhancements in procedures and processes as a result of these changes. Prior to these management changes, delinquencies were continuing to increase during April and May 1998 from the March 1998 levels. The Company initiated a series of strategic steps in the first two quarters of 1998 to improve operations and move toward profitability. Steps undertaken to date include: 1. In January 1998, the Company replaced the senior management team in the retail mortgage loan division. 2. In March 1998, the Company sold substantially all of the auto loan portfolio at book value ($20.4 million), and terminated its auto loan operations. 3. In April 1998, management implemented a new strategy to sell 100% of its mortgage loans designated as "held for sale" loans for cash, emphasizing cash flow. No mortgage loan securitization transaction was done in the second quarter, and none is planned for the third quarter of 1998. Cash flow will continue to be a primary focus for management, as the Company believes that those with positive cash flow should be better positioned for sustainable growth. 4. The Company tightened its underwriting guidelines in April 1998. 5. Management changed the base pay for retail sales originators in May 1998 to be more incentive oriented. 6. The Company reduced its workforce by approximately 200 associates in May 1998 to streamline the organization and to increase efficiencies. However, much of the reduction in costs resulting from this will not be evident until the third quarter 1998 as the result of severance and vacation paid with respect to terminated employees. 7. On June 30, 1998, the Company entered into a new 3 year revolving warehouse line of credit facility to fund its mortgage loan operations. The Company had approximately $24.9 million in availability under its lines of credits at June 30, 1998 based on the borrowing base calculations. Availability is expected to increase as additional loan sales take place later this year. Depending on the Company's liquidity position and capital needs, the Company may, from time to time, repurchase some of its senior unsecured debt on the open market utilizing excess working capital generated. 8. In June 1998, the Company restructured the retail operations in an effort to improve loan processing efficiency and speed. 9. Management has reduced general and administrative expenses ("G&A") to approximately $7.5 million in July 1998 from an average of $9.9 million per month in the first quarter and $8.6 million per month in the second quarter. Management expects third quarter G&A expenses to be $4.0 million lower than the second quarter. G&A expenses are expected to be reduced by an additional $2.0 million per month after September as a result of the sale of selected business units. 10. In July 1998, the Company entered into a letter of intent for the sale of Sterling Lending Corporation for $1.5 million. 11. In July 1998, the Company entered into a letter of intent for the sale of the majority of the small business loan division for net cash proceeds of $58 million. 12. In August 1998, the Company consolidated the processing and closing functions of its retail mortgage regional operating center in Houston with another regional operating center, as well as streamlining several other areas, providing additional cost savings of $170,000 per month. All of these steps are important initiatives and are designed to focus attention on the mortgage loan division and build a much stronger organization with the necessary systems, processes, procedures, and controls. HomeGold Financial, Inc. is a financial services company, which originates, services, and sells non-prime first and second lien residential mortgage loans and loans to small businesses. HomeGold currently has approximately 1,040 employees and operates in 42 states. EXCEPT FOR HISTORICAL INFORMATION CONTAINED HEREIN, THE MATTERS SET FORTH IN THIS DOCUMENT ARE FORWARD-LOOKING STATEMENTS THAT INVOLVE CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS. FOR MORE COMPLETE INFORMATION CONCERNING FACTORS WHICH COULD AFFECT THE COMPANY'S FINANCIAL RESULTS, REFERENCE IS MADE TO THE COMPANY'S REGISTRATION STATEMENTS, REPORTS AND OTHER DOCUMENTS FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION. HOMEGOLD FINANCIAL, INC. AND SUBSIDIARIES (f/k/a Emergent Group, Inc.) CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Dollars in thousands, except share and per share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, YEAR ENDED --------------------- ------------------ DECEMBER 31, 1998 1997 1998 1997 1997 ---- ---- ---- ---- ------------ (UNAUDITED) (UNAUDITED) (AUDITED) Revenues: Interest income $10,516 $ 8,817 $19,190 $ 15,024 $34,008 Servicing income 3,379 1,940 7,601 3,085 8,514 Cash gain on sale of loans 4,530 5,493 7,979 7,296 14,153 Non-cash gain on sale of loans 112 6,396 3,181 10,811 38,675 Loan fee income 5,359 7,337 8,961 13,215 30,207 Other revenues 880 196 2,418 433 1,399 ------------ -------- --------- --------- -------- Total revenues 24,776 30,179 49,330 49,864 126,956 Expenses: Interest expense 9,952 6,055 18,385 9,782 25,133 Provision for credit losses 2,111 2,599 6,940 4,671 10,030 Unrealized loss on residual receivables 7,330 0 8,910 0 0 General and administrative expense 25,791 18,429 55,444 31,715 84,284 ------------ -------- --------- --------- -------- Total expenses 45,184 27,083 89,679 46,168 119,447 ------------ -------- --------- --------- -------- Income (loss) before income taxes and minority interest (20,408) 3,096 (40,349) 3,696 7,509 Provision (benefit) for income taxes 2,566 (1,667) 3,244 (1,625) (3,900) ------------ -------- --------- --------- -------- Income (loss) before minority interest (22,974) 4,763 (43,593) 5,321 11,409 Minority interest in (earnings) loss of subsidiaries (2) -- 2 (156) (156) ------------ -------- --------- --------- -------- Net income (loss) ($22,976) $ 4,763 $(43,591) $ 5,165 $ 11,253 ============ ======== ========= ========= ======== Basic earnings (loss) per share $ (2.37) $ 0.52 $ (4.49) $ 0.56 $ 1.20 ============ ======== ========= ========= ======== Diluted earnings (loss) per share $ (2.37) $ 0.51 $ (4.49) $ 0.55 $ 1.17 ============ ======== ========= ========= ======== Weighted average number of shares outstanding 9,708,083 9,147,570 9,705,055 9,145,385 9,406,221 ============ ======== ========= ========= ======== Weighted average number of shares, options and warrants outstanding 9,708,083 9,310,153 9,705,055 9,318,050 9,598,811 ============ ======== ========= ========= ========
(MORE TABLES FOLLOW) HOMEGOLD FINANCIAL, INC. AND SUBSIDIARIES (f/k/a Emergent Group, Inc.) CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in thousands)
JUNE 30, --------------------- DECEMBER 31, 1998 1997 1997 ------ ------ ------ (UNAUDITED) (AUDITED) ASSETS Cash and cash equivalents $ 43,628 $ 2,445 $ 7,561 Loans receivable - held for investment 87,370 117,182 100,379 Loans receivable - held for sale 226,844 192,881 197,236 ---------- ---------- ---------- Total loans receivable 314,214 310,063 297,615 Less allowances for loan losses 8,385 4,621 6,528 Less unearned discount, dealer reserves and deferrals 4,380 3,803 2,658 Net loans receivable 301,449 301,639 288,429 Accrued interest receivable and other receivables 11,514 7,505 15,087 Residual receivables (net of allowance for loss of $12,861, $6,214 and $14,255, respectively) 67,679 29,077 63,202 Property and equipment, net 21,559 10,348 18,080 Real estate and personal property acquired through foreclosure 4,140 4,063 3,295 Excess of cost over net assets of acquired businesses, net 2,294 2,627 2,874 Debt origination costs, net 6,657 490 4,767 Deferred income tax asset 4,151 2,795 4,151 Servicing asset 1,289 -- 1,468 Other assets 5,523 3,999 7,238 ---------- ----------- ----------- Total assets $ 469,883 $ 364,988 $ 416,152 ========== =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Revolving warehouse lines of credit $ 167,763 $ 174,353 $ 77,605 Mortgage note payable 3,446 0 0 Senior unsecured debt 125,000 0 125,000 Investor savings debentures 138,091 124,890 134,315 Other liabilities 15,606 8,590 15,858 ---------- ---------- ----------- Total liabilities 449,906 307,833 352,778 Minority interest 68 0 0 Shareholders' equity 19,909 57,155 63,374 ---------- ---------- ----------- Total liabilities and shareholders' equity $ 469,883 $ 364,988 $ 416,152 ========== ========== ===========
(MORE TABLES FOLLOWS) HGFN Announces Second Quarter Results Page 8 August 7, 1998 - ------------------------------------------------------------------------------ HOMEGOLD FINANCIAL, INC. AND SUBSIDIARIES (f/k/a/ Emergent Group, Inc.) CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in thousands)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, YEAR ENDED ---------------- ---------------- DECEMBER 31, 1998 1997 1998 1997 1997 ----- ----- ------ ------ --------- (UNAUDITED) (UNAUDITED) (AUDITED) Operating Cash Income: Servicing fees received and excess cash flow from securitization trusts $ 2,143 $ 1,352 $ 4,871 $ 2,322 $ 3,687 Interest received 10,867 7,733 20,234 13,913 31,716 Cash gain on sale of loans 4,530 5,493 7,979 7,296 14,153 Cash loan origination fees received 5,959 9,135 9,842 15,068 31,843 Securitization hedge gains 0 0 38 0 0 Other cash income 1,016 209 2,565 447 1,875 --------- -------- --------- --------- --------- Total operating cash income 24,515 23,922 45,529 39,046 83,274 Operating Cash Expenses: Securitization costs 0 764 851 1,664 3,646 Securitization hedge losses 0 1,606 0 1,606 2,125 Cash operating expenses 24,882 17,814 53,635 31,060 81,594 Interest paid 7,230 5,037 18,769 8,596 20,980 Taxes paid 1,280 498 1,467 566 1,581 --------- -------- --------- --------- --------- Total operating cash expenses 33,392 25,719 74,722 43,492 109,926 --------- -------- --------- --------- --------- CASH FLOW DUE TO OPERATING CASH INCOME AND EXPENSES (8,877) (1,797) (29,193) (4,446) (26,652) Other cash flows from operating activities: Cash provided by (used in) other payables and receivables (9,817) (1,096) 639 (211) (5,355) Cash provided by (used in) loans held for sale 14,982 (101,313) (51,058) (118,779) (114,282) --------- -------- --------- --------- --------- Net cash provided by (used in) operating activities (3,712) (104,206) (79,612) (123,436) (146,289) Net cash provided by (used in) investing activities (106) (6,440) 18,174 (5,900) (11,588) Net cash provided by (used in) financing activities 41,403 111,665 97,505 130,505 164,162 --------- -------- --------- --------- --------- Net increase in cash and cash equivalents 37,585 1,019 36,067 1,169 6,285 Cash and cash equivalents, beginning of period 6,043 1,426 7,561 1,276 1,276 --------- -------- --------- --------- --------- Cash and cash equivalents, end of period $43,628 $ 2,445 $ 43,628 $ 2,445 $ 7,561 ========= ========= ========= ======== ===========
(MORE TABLES FOLLOW) HGFN Announces Second Quarter Results Page 9 August 7, 1998 - ------------------------------------------------------------------------------- HOMEGOLD FINANCIAL, INC. AND SUBSIDIARIES OTHER SELECTED FINANCIAL DATA (Dollars in thousands) (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, YEAR ENDED ----------------- ----------------- DECEMBER 31, 1998 1997 1998 1997 1997 ------ ------ ------ ------ ------ LOAN ORIGINATION VOLUME: - ----------------------- Mortgage Loan Division: Retail $113,764 $148,534 $238,526 $239,594 $562,709 Wholesale 93,096 134,513 198,780 234,667 520,107 --------- -------- -------- -------- -------- Total Mortgage Loan Division 206,860 283,047 437,306 474,261 1,082,816 Small Business Loan Division 30,407 21,490 65,863 30,996 81,018 Auto Loan Division 0 4,052 2,983 8,488 15,703 --------- -------- -------- -------- --------- Total loan origination volume $237,267 $308,589 $506,152 $513,745 $1,179,537 ========= ======== ======== ======== ========= LOAN SALES AND SECURITIZATIONS: Mortgage Loan Division: Whole loan sales $229,624 $118,611 $293,515 $158,480 $435,333 Securitizations 0 121,214 92,173 198,740 487,563 -------- -------- --------- --------- --------- Total Mortgage Loan Division 229,624 239,825 385,688 357,220 922,896 Small Business Loan Division: 7(a) Participations 15,654 13,862 26,192 17,646 41,232 Securitizations 0 0 1,827 4,626 24,286 -------- -------- --------- --------- --------- Total Small Business Loan Division 15,654 13,862 28,019 22,272 65,518 Auto Loan Division (sale of loans) 0 0 20,578 0 0 -------- -------- --------- --------- --------- Total loan sales and securitizations $245,278 $253,687 $434,285 $379,492 $ 988,414 ======== ======== ========= ========= ========= TOTAL SERVICED PORTFOLIO, INCLUDING LOANS SERVICED FOR OTHERS WITHOUT CREDIT RISK: Mortgage Loan Division $752,866 $444,472 $752,866 $444,472 $768,556 Small Business Loan Division 239,505 169,891 239,505 169,891 198,876 Auto Loan Division 578 22,556 578 22,556 21,284 -------- -------- --------- --------- --------- Total serviced portfolio $992,949 $636,919 $992,949 $636,919 $988,716 ========= ======== ======== ======== ========== TOTAL SERVICED UNGUARANTEED PORTFOLIO, EXCLUDING LOANS SERVICED FOR OTHERS WITHOUT CREDIT RISK: Mortgage Loan Division $752,866 $444,472 $752,866 $444,472 $700,248 Small Business Loan Division 99,825 63,043 99,825 63,043 78,822 Auto Loan Division 578 22,556 578 22,556 21,284 -------- -------- --------- --------- --------- Total serviced portfolio $853,269 $530,071 $853,269 $530,071 $800,354 ========= ======== ======== ======== ==========
(MORE TABLES FOLLOWS) HGFN Announces Second Quarter Results Page 10 August 7, 1998 - ------------------------------------------------------------------------------- HOMEGOLD FINANCIAL, INC. AND SUBSIDIARIES UNAUDITED ASSET QUALITY STATISTICS (Dollars in thousands)
JUNE 30, 1998 MARCH 31, 1998 DECEMBER 31, 1997 --------------- ---------------- ----------------- TOTAL COMPANY: $ % $ % $ % -------- ------- -------- ------ -------- ------- Delinquencies as a percent of total unguaranteed serviced loans: 30-59 days $34,702 4.07% $ 34,115 3.73% $29,174 3.65% 60-89 days 13,076 1.53% 11,527 1.26% 10,009 1.25% 90 days or more and loans in foreclosure process 38,556 4.52% 31,934 3.49% 22,147 2.76% -------- ----- -------- ------ -------- ------ Total greater than 30 days $ 86,334 10.12% $ 77,576 8.48% $61,330 7.66% ======== ===== ======== ====== ======== ====== YTD net charge-offs as percentage of average unguaranteed serviced loans (annualized) $ 3,849 0.85% $ 2.432 1.10% $ 6,811 1.38% ======== ===== ======== ====== ======== ====== Total allowances for credit losses as percentage of total unguaranteed serviced loans $ 21,246 2.49% $ 23,801 2.60% $ 20,783 2.60% ======== ===== ======== ====== ======== ====== MORTGAGE LOAN DIVISION: Delinquencies as a percent of total unguaranteed serviced loans: 30-59 days $ 32,977 4.38% $ 32,100 3.90% $ 25,424 3.63% 60-89 days 12,881 1.71% 11,472 1.40% 9,383 1.34% 90 days or more and loans in foreclosure process 36,830 4.89% 30,053 3.65% 21,233 3.03% ======== ===== ======== ====== ======== ====== Total greater than 30 days $ 82,688 10.98% $ 73,625 8.95% $ 56,040 8.00% ======== ===== ======== ====== ======== ====== YTD net charge-offs as percentage of average unguaranteed serviced loans (annualized) $ 2,729 0.68% $ 1,893 0.98% $ 1,305 0.32% ======== ===== ======== ====== ======== ====== Total allowances for credit losses as percentage of total unguaranteed serviced loans $ 15,227 2.02% $ 17,569 2.14% $ 13,839 1.98% ======== ===== ======== ====== ======== ====== SMALL BUSINESS LOAN DIVISION: Delinquencies as a percent of total unguaranteed serviced loans: 30-59 days $ 1,671 1.68% $ 1,949 2.11% $ 2,253 2.86% 60-89 days 134 0.13% 0 0.00% 348 0.44% 90 days or more and loans in foreclosure process 1,495 1.50% 1,526 1.66% 686 0.87% Total greater than 30 days $ 3,300 3.31% $ 3,475 3.77% $ 3,287 4.17% ======== ===== ======== ====== ======== ====== YTD net charge-offs as percentage of average unguaranteed serviced loans (annualized) $ 462 1.04% $ (10) (0.05%) $ 1,683 2.74% ======== ===== ======== ====== ======== ====== Total allowances for credit losses as percentage of total unguaranteed serviced loans $ 5,730 5.74% $ 5,861 6.35% $ 5,330 6.76% ======== ===== ======== ====== ======== ======
-MORE- HGFN Announces Second Quarter Results Page 11 August 7, 1998 HOMEGOLD FINANCIAL, INC. AND SUBSIDIARIES UNAUDITED CONDENSED DIVISIONAL STATEMENTS OF INCOME SIX MONTHS ENDED JUNE 30, 1998 (Dollars in thousands)
CONTINUING DISCONTINUED DISCONTINUED MORTGAGE MORTGAGE COMMERCIAL OPERATIONS OPERATIONS OPERATIONS TOTAL ------------- ------------ ------------- ------- Revenues: Interest income $ 15,200 $ 10 $ 3,980 $ 19,190 Servicing income 5,986 0 1,615 7,601 Cash gain on sale of loans 4,545 1,355 2,079 7,979 Non-cash gain on sale of loans 2,907 0 274 3,181 Loan fee income 7,099 1,474 388 8,961 Other revenues 1,422 193 803 2,418 --------- -------- ---------- ---------- Total revenues 37,159 3,032 9,139 49,330 Expenses: Interest expense 16,032 112 2,241 18,385 Provision for credit losses 5,776 0 1,164 6,940 Unrealized loss on residual receivables 8,350 0 560 8,910 General and administrative expense 43,155 4,872 7,417 55,444 --------- -------- ---------- ---------- Total expenses 73,313 4,984 11,382 89,679 --------- -------- ---------- ---------- Loss before income taxes and minority interest (36,154) (1,952) (2,243) (40,349) Provision (benefit) for income taxes 3,813 (51) (518) 3,244 --------- -------- ---------- ---------- Loss before minority interest (39,967) (1,901) (1,725) (43,593) Minority interest in loss of subsidiaries 2 0 0 2 --------- -------- ---------- ---------- Net loss $ (39,965) $(1,901) $ (1,725) $(43,591) ========= ======= ========= ==========
-MORE- HGFN Announces Second Quarter Results Page 12 August 7, 1998 - ------------------------------------------------------------------------------- HOMEGOLD FINANCIAL, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED CONDENSED DIVISIONAL BALANCE SHEETS JUNE 30, 1998 (Dollars in thousands)
CONTINUING DISCONTINUED DISCONTINUED MORTGAGE MORTGAGE COMMERCIAL OPERATIONS OPERATIONS OPERATIONS ELIMINATIONS TOTAL ---------- ---------- ------------ ------------ ----- ASSETS Cash and cash equivalents $ 41,790 $ 0 $ 1,838 $ 0 $43,628 Loans receivable held for investment 53,082 0 34,288 0 87,370 Loans receivable held for sale 186,342 0 40,502 0 26,844 --------- --------- ---------- ------------- --------- Total loans receivable 239,424 0 74,790 0 314,214 Less allowances for loan losses 5,747 0 2,638 0 8,385 Less unearned discount, dealer reserves and deferrals 3,060 0 1,320 0 4,380 --------- --------- ---------- ------------- --------- Net loan receivables 230,617 0 70,832 0 301,449 Accrued interest receivable and other receivables 9,395 0 2,119 0 11,514 Intercompany receivables and investment in affiliates 49,487 0 0 (49,487) 0 Residual receivables, net 50,299 0 17,380 0 67,679 Property and equipment, net 19,081 1,352 1,126 0 21,559 Real estate and personal property acquired through foreclosure 4,140 0 0 0 4,140 Excess of cost over net assets of acquired businesses, net 1,706 0 588 0 2,294 Debt origination costs, net 6,455 0 202 0 6,657 Deferred income tax asset 2,820 0 1,331 0 4,151 Servicing asset 1,289 0 0 0 1,289 Other assets 4,395 109 1,019 0 5,523 --------- --------- ---------- ------------- --------- Total assets $ 421,474 $ 1,461 $ 96,435 $ (49,487) $ 469,883 LIABILITIES AND SHAREHOLDERS' EQUITY Revolving warehouse lines of credit $ 124,467 $ 0 $ 43,296 $ 0 $ 167,763 Mortgage note payable 3,446 0 0 0 3,446 Senior unsecured debt 125,000 0 0 0 125,000 Investor savings debentures 138,091 0 0 0 138,091 Other liabilities 10,493 366 4,747 0 15,606 --------- --------- ---------- ------------- --------- Total liabilities 401,497 366 48,043 0 449,906 Minority interest 68 0 0 0 68 Intercompany debt 0 586 17,368 (17,954) 0 Shareholders' equity 19,909 509 31,024 (31,533) 19,909 --------- --------- ---------- ------------- --------- Total liabilities and shareholders' equity $ 421,474 $ 1,461 $ 96,435 $ (49,487) $469,883 ============ =========== ========== ============= ========
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