Arlington Asset Investment (NYSE:AIC)
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From May 2019 to May 2024
Aames Investment Corporation (NYSE: AIC):
-- Net Cost to Originate Decreases to 1.75% with $1.9 Billion of
Total Originations for the Quarter
-- Company Elects to End REIT Status to Increase Internal Capital
Generation for Portfolio Growth
-- Consolidation of Wholesale Operations Expected to Reduce Net
Cost to Originate Ratio Below 1.50%
-- Company Will File 2005 10-K and Release Full 4th Quarter
Earnings on March 27th
Aames Investment Corporation (NYSE: AIC), a nationwide subprime
mortgage lender, today announced summary 4th quarter 2005 financial
results and an extension in the filing of its 10-K for 2005 due to the
pending completion of a corporate cost reduction initiative. The
Company's Board of Directors has approved the elimination of its REIT
status and a cost consolidation initiative in its wholesale operations
in response to the current challenging market conditions. The Company
requires additional time to finalize its estimate of the full
financial benefit of these changes and to complete its 10-K.
The investor conference call schedule for 5:00 p.m. EST on March
16th has been rescheduled for 9:00 a.m. EST on March 17th to discuss
the summary results and corporate actions. Aames will release full
fourth quarter results and hold an extended investor conference call
after the close of the market on Monday, March 27th.
Highlights for the fourth quarter include:
-- A net cost to originate ratio for the quarter of 1.75%,
compared to 2.08% for third quarter of 2005;
-- Core EPS of $0.02;
-- Total originations $1.9 billion, with its retail channel
accounting for 43% of total.
The Board of Directors of Aames has authorized the Company to
implement a cost reduction initiative, including the elimination of
its REIT status. The election to end its REIT status is expected to
allow the Company to retain its portfolio earnings, increase its book
value and support future loan portfolio growth, while utilizing its
$304 million of net operating loss carry-forward (NOLs). In addition
to the change in tax status, Aames announced a significant cost
reduction initiative designed to reduce the Company's overhead
expenses and its net cost to originate ratio. As part of this
initiative, the Company will reduce its wholesale cost to originate.
The Company will also introduce a more stringent loan pricing matrix
and eliminate loan products that have become unprofitable in the
current market. The Company will implement these strategic moves in
order to better focus on driving improved earnings per share at its
tax efficient mortgage banking platform.
The combined effect of these actions is expected to reduce the
Company's net cost to originate ratio to below 1.50%, improve the net
gain on sale ratio achieved on whole loan sales. In addition, the
change to a C Corp. will allow the Company to retain portfolio
earnings to support a loans held for investment portfolio at its
former taxable REIT subsidiary and utilize its NOLs to shelter a
substantial portion of its future income from taxes.
The Company is finalizing its restructuring plans and will provide
details as to the level of cost elimination and financial benefits
when it releases its full 4th quarter 2005 earnings. The Company
anticipates filling its 10-K for 2005 and reporting fourth quarter
earnings and hosting an investor conference call on March 27, 2006
after the close of the market.
About Aames Investment Corporation
Aames is a nationwide subprime mortgage lender and, through its
subsidiary Aames Financial Corporation, originates mortgage loans in
47 states. Aames Financial is a fifty-year old national mortgage
banking company focused primarily on originating subprime residential
mortgage loans through wholesale and retail channels under the name
"Aames Home Loan." To find out more about Aames, please visit
www.aames.com.
Information Regarding Forward Looking Statements
This press release may contain forward-looking statements under
federal securities laws. These statements are based on management's
current expectations and beliefs and are subject to a number of trends
and uncertainties that could cause actual results to differ materially
from those described in the forward-looking statements. The risks and
uncertainties that may cause the company's performance and results to
vary include: (i) limited cash flow to fund operations and dependence
on short-term financing facilities; (ii) changes in overall economic
conditions and interest rates; (iii) increased delinquency rates in
the portfolio; (iv) intense competition in the mortgage lending
industry; (v) adverse changes in the securitization and whole loan
market for mortgage loans; (vi) declines in real estate values; (vii)
an inability to originate subprime hybrid/adjustable mortgage loans;
(viii) obligations to repurchase mortgage loans and indemnify
investors; (ix) concentration of operations in California, Florida,
New York and Texas; the occurrence of natural disasters (including the
adverse impact of hurricanes Katrina, Rita and Wilma) and (x)
extensive government regulation. For a more complete discussion of
these risks and uncertainties and information relating to the company,
see the Form 10-K for the year ended December 31, 2004 and other
filings with the SEC made by the company. Aames Investment expressly
disclaims any obligation to update or revise any forward-looking
statements in this press release.
Further Information
For more information, contact Steven Canup, Senior Vice President,
Corporate Development and Investor Relations, in Aames Investment's
Investor Relations Department at (323) 210-5311 or at
info@aamescorp.com via email.