SOUTHFIELD, Mich., March 13 /PRNewswire-FirstCall/ -- Origen
Financial, Inc. (NASDAQ:ORGN), a real estate investment trust that
is in the business of originating and servicing manufactured
housing loans, today announced a net loss of $39.1 million for the
quarter ended December 31, 2007, representing $1.54 per share on a
fully-diluted basis, as compared to net income of $2.0 million, or
$0.08 per share on a fully-diluted basis for the quarter ended
December 31, 2006. Net loss for the full year of 2007 was $31.8
million or $1.26 per fully-diluted share, as compared to net income
of $7.0 million, or $0.28 per fully-diluted share for the full year
of 2006. Origen's Board of Directors did not declare a common stock
dividend payment for the fourth quarter of 2007. Due to the nature
of the items which created the loss for 2007, REIT net taxable
income for 2007 was not affected, and there will be no
re-characterization of dividends reported to stockholders for the
tax year 2007. Recent and current conditions in the credit markets
have adversely impacted Origen's business and financial condition.
Subsequent to Origen's annual evaluation of asset impairment at
December 31, 2007, the company determined that its recorded
goodwill was fully impaired. The extended decline of the company's
share price resulting from turmoil in the credit markets led Origen
to record a non-cash goodwill impairment charge in the fourth
quarter of $32.3 million. In addition, Origen had credit facilities
structured as repurchase agreements backed by four asset-backed
bonds. In February 2008, Origen sold one of its asset-backed bonds
to eliminate pressure from its lender. The proceeds from the sale
of this bond retired all debt under repurchase agreements secured
by this bond and three others that the company continues to hold.
Origen consequently re-characterized the sold bond as available for
sale as of December 2007 and recognized an other-than-temporary
impairment charge of $9.2 million. Without the non-cash impairment
charge for goodwill and the sale of the bond, Origen earned $9.7
million for the 2007 year. Current Market Conditions and their
Effect on Origen's Business Origen's business model is dependent on
the availability of credit, both for the funding of newly
originated loans and for the periodic securitization of pools of
loans that have been originated and funded by short-term borrowings
from warehouse lenders. The securitization process permits Origen
to sell bonds secured by the loans it has originated. The proceeds
from the bond sales are used to pay off the warehouse lenders and
recharge the availability of funding for newly originated loans. If
warehouse funding is not available, or is available only on terms
that do not permit Origen to profit from loan origination, Origen's
origination of loans only can be continued at a loss. If there is
no market for securitization at rates of interest and leverage
levels acceptable to Origen, Origen's only alternative for
satisfying its obligations under its warehouse line is to sell the
manufactured housing loans to a purchaser. If purchasers are
unwilling to pay at least the full amount advanced to borrowers
plus all related fees and costs, sales of loans are not profitable
for Origen. During 2007, the credit markets that Origen depends
upon for warehouse lending for originations and for securitization
of its originated loans, as well as the whole loan market for
acquisition of loans originated by Origen, deteriorated. This
situation began with problems in the sub-prime loan market and
subsequently has had the same effect on lenders and investors in
asset classes other than sub-prime mortgages, such as Origen's
manufactured housing loans. Despite actions by the Federal Reserve
Bank to lower interest rates and increase liquidity, uncertainty
among lenders and investors has continued to reduce liquidity,
drive up the cost of lending and drive down the value of assets in
these markets relied upon by Origen. The specific effects are that
banks and other lenders have reported large losses, have demanded
that borrowers reduce the credit exposure to these assets resulting
in "margin calls" or reductions in borrowing availability, and have
caused massive sales of underlying assets that collateralize the
loans. The consequence of these sales has been further downward
pressure on market values of the underlying assets, such as
Origen's manufactured housing loans, despite the continued high
intrinsic quality of Origen's loans in terms of borrower
creditworthiness and low rates of delinquencies, defaults and
repossessions. For Origen, the effect of these conditions has been
as follows: -- The company's stock price has steadily declined to a
point where it is well below its tangible net book value. As a
consequence, the company recorded a non-cash impairment charge,
writing off its entire goodwill of $32.3 million in December 2007.
-- In February 2008, to satisfy its primary lender, the company
sold an asset-backed bond for $22.5 million, in order to fully pay
off $19.6 million of obligations secured by this bond and three
others that the company continues to hold. Sale of this bond
resulted in the company recording an asset impairment charge in
2007 of $9.2 million. -- Origen's warehouse facility, which has an
outstanding loan balance of approximately $146.4 million, expires
on March 14, 2008. As Origen depends on securitization of its loans
to pay down its warehouse line, the absence of a profitable
financing in the securitization market requires that Origen sell
its loans that are currently on its warehouse line in order to pay
off the warehouse line. -- The absence of a profitable exit in the
securitization market and reduced pricing in the whole loan market
requires that Origen suspend originating loans for its own account
until these markets recover. Origen will continue to provide its
third-party loan origination services. -- Origen has approximately
$50 million outstanding under its supplemental advance residual
facility that expires on March 14, 2008. Origen's lender under this
facility has agreed to extend the due date of this facility until
June 13, 2008, subject to certain conditions. The Board of
Directors is assessing the best possible courses of action for the
company to realize the highest value for its stockholders,
including (a) continuation of the company's business, currently
pared down to its third-party fee business and management of its $1
billion loan portfolio; (b) a possible sale of certain company
assets; or (c) the possible sale of the entire company. Despite
exceptional operating results, excluding impairments, and continued
outstanding credit performance on Origen's loan portfolio during
the last year, the specific actions noted above were taken by the
company as a consequence of the described market conditions. The
actions do not reflect on the credit performance or long-term
realizable value of Origen's loan portfolio, which in management's
opinion continues to remain very high. Sale of Un-securitized Loans
The company has been in discussions and expects to sell its
un-securitized loans soon and will use most of the proceeds to pay
off its warehouse facility. The loan sale is subject to final
agreement and customary closing conditions. Continuing Operations
As noted above, Origen has determined to suspend portfolio loan
originations and has taken steps to right-size its workforce. At
the present time, Origen retains and operates its third-party loan
origination business and management of its loan portfolio. Ronald
A. Klein, Origen's Chief Executive Officer, stated, "Despite the
extreme market difficulties we faced last year, we were
nevertheless able to increase our overall originations, complete
two successful securitizations, and our portfolio performance has
been exceptional. During a period of extreme turmoil in the credit
markets, we increased our already high credit standards.
Additionally, our third party originations increased substantially
over the prior year. Most importantly, the credit performance of
our loan portfolio continues to exceed our expectations. In 2007,
we had record low default rates, record low charge-offs, record low
delinquencies, and record high recovery rates. This loan portfolio
continues to perform at record levels to date notwithstanding the
general turmoil in the housing market. We continue to work
tirelessly to protect and maximize stockholder value as we examine
our alternatives." "We have been negatively impacted by the global
credit and liquidity crunch generally attributed to have started
with sub-prime mortgage defaults and foreclosures occasioned by
falling housing values and lenient lending practices. Credit
tightening and resulting asset repricing has impacted companies
like Origen that had no direct exposure to sub-prime mortgage
loans. We have been subjected to margin calls and market value
adjustments on our credit facilities despite our continued
excellent loan performance. The ongoing uncertainty and credit
stress in the housing and capital markets, and the resulting lack
of liquidity have curtailed access to the securitization market.
Further securitization financings of our loans have effectively
become unavailable to us on a profitable basis. In the end, our
management and Board had no practical choice but to suspend funding
new loans until market conditions allow us to earn a profit from
those activities." "Despite our decision to sell our un-securitized
loans, the company continues to hold assets believed by management
to have significant value. Our Board and management continue to
strive to maximize the value of these assets and operations for our
stockholders." Earnings Call and Webcast A conference call and
webcast have been scheduled for March 14, 2008, at 11:00 a.m.
Eastern Time to discuss fourth quarter and year-end results and
current operations. The call may be accessed on Origen's web site
at http://www.origenfinancial.com/ or by dialing 877-419-6590. A
replay will be available through March 24, 2008 by dialing
888-203-1112 passcode 3845644. You may also access the replay on
Origen's website for 90 days after the call. Forward-Looking
Statements This press release contains various "forward-looking
statements" within the meaning of the Securities Act of 1933 and
the Securities Exchange Act of 1934, and Origen intends that such
forward-looking statements will be subject to the safe harbors
created thereby. The words "will," "may," "could," "expect,"
"anticipate," "believes," "intends," "should," "plans,"
"estimates," "approximate" and similar expressions identify these
forward-looking statements. These forward-looking statements
reflect Origen's current views with respect to future events and
financial performance, but involve known and unknown risks and
uncertainties, both general and specific to the matters discussed
in this press release. These risks and uncertainties may cause
Origen's actual results to be materially different from any future
results expressed or implied by such forward-looking statements.
Such risks and uncertainties include, among others, the foregoing
assumptions and those risks referenced under the headings entitled
"Factors That May Affect Future Results" or "Risk Factors"
contained in Origen's filings with the Securities and Exchange
Commission. The forward-looking statements contained in this press
release speak only as of the date hereof and Origen expressly
disclaims any obligation to provide public updates, revisions or
amendments to any forward-looking statements made herein to reflect
changes in Origen's expectations or future events.
ORGN-E,ORGN-D,ORGN-G About Origen Financial, Inc. Origen is an
internally managed and internally advised company that has elected
to be taxed as a real estate investment trust. Origen is based in
Southfield, Michigan, with significant operations in Ft. Worth,
Texas. For more information about Origen, please visit
http://www.origenfinancial.com/. Financial Tables Follow ... ORIGEN
FINANCIAL, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands,
except for share data) ASSETS (Unaudited) December 31, December 31,
2007 2006 Assets Cash and Equivalents $10,791 $2,566 Restricted
Cash 16,290 15,412 Investment Securities 32,393 41,538 Loans
Receivable-Net 1,193,916 950,226 Servicing Advances 6,298 7,741
Servicing Rights 2,146 2,508 Premises & Equipment 2,974 3,513
Repossessed Houses 4,981 3,046 Goodwill - 32,277 Other Assets
14,412 14,240 Total Assets $1,284,201 $1,073,067 LIABILITIES AND
STOCKHOLDERS' EQUITY Liabilities Warehouse Financing $173,072
$131,520 Securitization Financing 884,650 685,013 Repurchase
Agreements 17,653 23,582 Note Payable 14,593 2,185 Other
Liabilities 45,848 26,303 Total Liabilities 1,135,816 868,603
Equity 148,385 204,464 Total Liabilities and Equity $1,284,201
$1,073,067 ORIGEN FINANCIAL, INC. CONSOLIDATED STATEMENT OF
EARNINGS (Dollars in thousands, except for share data) Twelve
Months Ended (Unaudited) December 31, December 31, Increase 2007
2006 (Decrease) Interest Income Total Interest Income $92,127
$74,295 $17,832 Total Interest Expense 59,758 43,498 16,260 Net
Interest Income Before Loan Losses and Impairment 32,369 30,797
1,572 Provision for Loan Losses 8,739 7,069 1,670 Impairment of
Purchased Loan Pool - 485 (485) Net Interest Income After Loan
Losses and Impairment 23,630 23,243 387 Non-interest Income 22,040
17,787 4,253 Non-interest Expenses: Total Personnel 24,449 23,847
602 Total Loan Origination & Servicing 1,985 1,619 366 Goodwill
Impairment 32,277 - 32,277 Investment Impairment 9,179 114 9,065
Total Other Operating 9,487 8,501 986 Total Non-interest Expenses
77,377 34,081 43,296 Net Income (Loss) Before Income Taxes and
Before Cumulative Effect of Change in Accounting Principle (31,707)
6,949 (38,656) Income Tax Expense 60 24 36 Net Income (Loss) Before
Cumulative Effect of Change in Accounting Principle (31,767) 6,925
(38,692) Cumulative Effect of Change in Accounting Principle - 46
(46) Net Income (Loss) (31,767) 6,971 (38,646) Weighted Average
Common Shares Outstanding, Basic 25,316,278 25,125,472 190,806
Weighted Average Common Shares Outstanding, Diluted 25,316,278
25,181,654 134,624 Earnings Per Share on Basic Average Shares
Outstanding $(1.26) $0.28 $(1.54) Earnings Per Share on Diluted
Average Shares Outstanding $(1.26) $0.28 $(1.54) ORIGEN FINANCIAL,
INC. CONSOLIDATED STATEMENT OF EARNINGS (Dollars in thousands,
except for share data) (Unaudited) Quarter Ended December 31,
December 31, Increase 2007 2006 (Decrease) Interest Income Total
Interest Income $25,064 $20,223 $4,841 Total Interest Expense
17,121 12,170 4,951 Net Interest Income Before Losses and
Impairment 7,943 8,053 (110) Provision for Loan Losses 2,954 2,145
809 Impairment of Purchased Loan Pool - 485 (485) Net Interest
Income After Losses and Impairment 4,989 5,423 (434) Non-interest
Income 6,112 5,037 1,075 Non-interest Expenses: Total Personnel
5,586 5,861 (275) Total Loan Origination & Servicing 531 505 26
Goodwill Impairment 32,277 - 32,277 Investment Impairment 9,179 -
9,179 Total Other Operating 2,556 2,037 519 Total Non-interest
Expenses 50,129 8,403 41,726 Net Income Before Income Taxes
(39,028) 2,057 (41,085) Income Tax Expense 103 24 79 Net Income
$(39,131) $2,033 $(41,164) Weighted Average Common Shares
Outstanding, Basic 25,395,205 25,203,558 191,647 Weighted Average
Common Shares Outstanding, Diluted 25,395,205 25,203,558 191,647
Earnings Per Share on Basic Average Shares Outstanding $(1.54)
$0.08 $(1.62) Earnings Per Share on Diluted Average Shares
Outstanding $(1.54) $0.08 $(1.62) DATASOURCE: Origen Financial,
Inc. CONTACT: W. Anderson Geater, Chief Financial Officer of Origen
Financial, Inc., 1-866-4-ORIGEN; or Leslie Loyet of Financial
Relations Board, +1-312-640-6672, Web site:
http://www.origenfinancial.com/
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