Washtenaw (AMEX:TWH)
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The Washtenaw Group, Inc. Reports Lower Q1 Mortgage Origination
Volume and Net Loss
ANN ARBOR, Mich., April 23 /PRNewswire-FirstCall/ -- The Washtenaw Group, Inc.
, the holding company for Washtenaw Mortgage Company, posted lower mortgage
originations and a net loss for the first quarter of 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. PFI shareholders received one share of TWH for
each share held of PFI.
First-quarter results
Mortgage-origination volume for the first quarter of 2004 fell 56% to $395.6
million from $896.9 million for 2003's first quarter, reflecting the continued
industry-wide downturn in mortgage-refinance activity and softness in new
mortgages. As a result, first-quarter results swung to a net loss of
$3,103,337, or $0.69 per share, from net income of $2,659,024, or $0.60 per
share, for the first quarter of 2003. Net interest income was off 75%,
reflecting a decrease in the average balance of loans held for sale.
Noninterest income was down 59% due to a decrease in gains from the sale of
loans and mortgage-servicing rights.
While the Company did a good job of reducing overhead, the Q1-2004 results were
hurt by a valuation adjustment to the mortgage-servicing-rights portfolio of
$2,902,314, equivalent to $0.65 per share. This adjustment was $1,805,004,
equivalent to $0.40 per share, for Q1 2003. The value of these rights declined
in 2002, 2003 and the first quarter of 2004, due to declines in
mortgage-interest rates.
Mr. Huffman said, "We're hopeful that the spring and summer home buying season
will lift new mortgage volume and that homeowners will return to the refinance
market because rates are still very attractive even though they are up from
recent lows. We are a leader in the development and use of online and
automated processing of mortgage applications. This has helped us
significantly to reduce costs and speed processing time. We have added about
500 brokers to our syndicate; we now have more than 2,000 active, independent
brokers. In addition we have increased our marketshare and mortgage volume
from our West Coast region, which now accounts for approximately 20% of total
volume."
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,
2004 2003
ASSETS
Cash and cash equivalents $100,000 $100,000
Accounts receivable, net 5,319,392 5,340,932
Loans held for sale 93,628,858 97,687,823
Mortgage servicing rights, net 21,591,740 24,614,381
Other real estate owned 893,385 925,839
Premises and equipment, net 1,566,900 1,480,988
Other assets 1,249,342 1,030,653
$124,349,617 $131,180,616
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Due to bank 17,883,573 11,074,372
Notes payable 40,007,318 33,211,685
Repurchase agreements 32,159,921 43,926,901
GNMA repurchase liability 6,498,614 8,599,700
Other liabilities 8,673,246 12,162,996
Total liabilities 105,222,672 108,975,654
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
March 31, 2004 and December 31, 2003 44,884 44,884
Additional paid in capital 1,981,252 1,955,932
Retained earnings 17,100,809 20,204,146
Total shareholders' equity 19,126,945 22,204,962
$124,349,617 $131,180,616
THE WASHTENAW GROUP, INC.
Consolidated Statements of Income
Three Months Ended
March 31,
2004 2003
Interest income $1,208,841 $3,062,016
Interest expense 821,762 1,539,577
Net interest income 387,079 1,522,439
Noninterest income
Servicing income 2,388,877 1,719,956
Gain on sales of mortgage servicing
rights and loans, net 2,748,977 11,437,201
Other income 285,544 204,170
Total noninterest income 5,423,398 13,361,327
Noninterest expense
Compensation and employee benefits 3,307,966 5,301,144
Occupancy and equipment 419,348 395,303
Telephone 78,379 129,200
Postage 148,681 184,358
Amortization of mortgage servicing
rights 1,953,227 1,183,785
Mortgage servicing rights valuation
adjustment 2,902,314 1,805,004
Loss and provision for loss on loan
repurchases and other real estate 616,834 917,341
Other noninterest expense 994,833 932,788
Total noninterest expense 10,421,582 10,848,923
Income (loss) before income taxes (4,611,105) 4,034,843
Income tax expense (benefit) (1,507,768) 1,375,819
Net income (loss) $(3,103,337) $2,659,024
Earnings (loss) per share $(0.69) $0.60
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.