The Washtenaw Group Reports Lower 2004 Results From Mortgage
Slowdown ANN ARBOR, Mich., March 4 /PRNewswire-FirstCall/ -- The
Washtenaw Group, Inc. (AMEX:TWH), the holding company for Washtenaw
Mortgage Company, posted net losses for the fourth quarter and year
ended December 31, 2004, from significantly lower mortgage volume,
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 1,900 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. PFI shareholders received one share of
TWH for each share held of PFI. Fourth-quarter results
Fourth-quarter results were off from last year, reflecting
appreciably lower mortgage-origination volume, coupled with lower
servicing income and gains from the sales of loans and
mortgage-servicing rights. The net loss for the fourth quarter was
$1,162,172, or $0.26 per diluted share, compared with the
year-earlier net loss of $367,518, or $0.08 per diluted share.
Mortgage volume was $195,594,907, compared with mortgage volume of
$485,087,135 for the final quarter of 2003 -- a 60% volume swing.
Full-year results Full-year results were also impacted by the
falloff in mortgage volume, which totaled $1.2 billion for all of
2004, compared with record production volume of $3.7 billion for
2003. The net loss for the year was $6,406,723, or $1.43 per
diluted share. This compares with year earlier net income of
$9,531,442, or $2.14 per diluted share. The 2004 results include a
credit of $2,167,904, equivalent to $0.48 per diluted share, for an
interest-rate- related valuation adjustment to the
mortgage-servicing rights portfolio. The 2003 results include a
charge of $1,734,698, equivalent to $0.39 per diluted share, for
the accounting adjustment. The value of these rights rose in 2004
and declined in 2003 due to increases and decreases, respectively,
in mortgage-interest rates. Mr. Huffman said, "Our results were
disappointing, especially since we worked hard to expand our
brokerage network, consolidate operations and cut costs. Higher
long-term interest rates deter refinance activity, our core
business. However, with continued flattening of the yield curve,
refinance business could rapidly improve." Mr. Huffman noted that
the Company had closed its West Coast Regional office and expanded
hours at its Michigan headquarters operation to service the West
and Southwestern markets. 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 December 31, 2004 and 2003
2004 2003 ASSETS Cash and cash equivalents $100,000 $100,000
Accounts receivable, net 7,107,462 5,340,932 Loans held for sale
68,518,733 97,687,823 Securities available for sale 22,234,244 -
Mortgage servicing rights, net 17,240,953 24,614,381 Other real
estate owned 1,589,591 925,839 Premises and equipment, net
1,678,252 1,480,988 Other assets 835,787 1,030,653 $119,305,022
$131,180,616 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Due
to bank 6,507,279 11,074,372 Notes payable 59,952,788 33,211,685
Repurchase agreements 22,390,336 43,926,901 GNMA repurchase
liability 6,465,538 8,599,700 Other liabilities 8,000,486
12,162,996 Total liabilities 103,316,427 108,975,654 Shareholders'
equity Preferred stock, $.01 par value 1,000,000 shares authorized;
none outstanding - - Common stock, $.01 par value 9,000,000 shares
authorized 4,488,351 outstanding at December 31, 2004 and 2003
44,884 44,884 Additional paid in capital 2,006,816 1,955,932
Retained earnings 13,797,423 20,204,146 Accumulated other
comprehensive income 139,472 - Total Shareholders' equity
15,988,595 22,204,962 $119,305,022 $131,180,616 THE WASHTENAW
GROUP, INC. Consolidated Statements of Income Years ended December
31, 2004, 2003 and 2002 2004 2003 2002 Interest income $3,912,206
$12,983,856 $11,400,554 Interest expense 2,980,323 6,429,429
5,593,984 Net interest income 931,883 6,554,427 5,806,570
Noninterest income Servicing income 8,545,895 7,534,998 6,117,236
Gain on sales of mortgage servicing rights and loans, net 7,270,136
42,772,289 25,012,380 Other income 982,559 1,019,929 663,618 Total
noninterest income 16,798,590 51,327,216 31,793,234 Noninterest
expense Compensation and employee benefits 10,437,371 21,431,079
14,353,581 Occupancy and equipment 1,833,958 1,681,847 1,219,234
Telephone 303,153 561,375 507,952 Postage 481,243 736,716 624,498
Amortization of mortgage servicing rights 7,290,696 6,319,081
4,531,997 Mortgage servicing rights valuation adjustment
(2,167,904) 1,734,698 8,616,240 Loss and provision for loss on loan
repurchases and other real estate 5,492,082 7,139,693 1,859,034
Other noninterest expense 3,724,262 3,857,251 3,149,448 Total
noninterest expense 27,394,861 43,461,740 34,861,984 Income (loss)
before income taxes and cumulative effect of change in accounting
principle (9,664,388) 14,419,903 2,737,820 Income tax expense
(benefit) (3,257,665) 4,888,461 947,966 Income (loss) before
cumulative effect of change in accounting principle (6,406,723)
9,531,442 1,789,854 Cumulative effect of change in accounting
principle, net of tax - - 413,449 Net income/(loss) $(6,406,723)
$9,531,442 $2,203,303 Earnings/(loss) per share before cumulative
effect of change in accounting principle $(1.43) $2.14 $0.40 Per
share cumulative effect of change in accounting principle - - 0.09
Earnings/(loss) per share $(1.43) $2.14 $0.49 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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