Fremont General Reports a 99% Increase in Quarterly Net Income and
Declares a 20% Increase in Common Stock Dividend SANTA MONICA,
Calif., April 28 /PRNewswire-FirstCall/ -- Fremont General
Corporation (the "Company") reported record net income from
continuing operations of $82,663,000 for the first quarter of 2004.
This represents an increase of 99%, as compared to net income from
continuing operations of $41,576,000 for the first quarter of 2003.
Diluted net income per share from continuing operations was $1.12
for the first quarter of 2004, as compared to $0.60 per share for
the first quarter of 2003. The Company's Board of Directors
declared a quarterly cash dividend of $0.06 per share on its common
stock, payable July 30, 2004 to shareholders of record on June 30,
2004. This represents a 20% increase over the previous quarter's
dividend. The declaration of the quarterly dividend represents the
110th consecutive quarterly cash dividend to be paid by the
Company. Residential Real Estate Lending Residential real estate
loan originations totaled $5.09 billion during the first quarter of
2004, up from $2.33 billion during the first quarter of 2003. The
following tables highlight the Company's loan originations by
period indicated: 1st Quarter 2004 2003 Loan Origination Volume (in
$000's): First Mortgages $4,885,972 95.9% $2,231,781 95.8% Second
Mortgages 207,129 4.1% 97,339 4.2% $5,093,101 100.0% $2,329,120
100.0% First Mortgages - Origination 1st Quarter 2004 2003 Type of
Product: Adjustable Rate (2/28) 71.0% 76.7% Adjustable Rate (3/27)
3.8% 1.2% Fixed 25.2% 22.1% 100.0% 100.0% Purpose: Refinance 62.1%
65.0% Purchase 37.9% 35.0% 100.0% 100.0% Average Loan Size $207,279
$188,257 Average FICO Score 621 617 First & Second Mortgages -
Origination Geographic dispersion: California 38.0% 42.4% New York
12.4% 7.7% Florida 8.0% 10.9% Illinois 5.4% 4.4% All other states
36.2% 34.6% 100.0% 100.0% The gain on the sale of residential real
estate loans during the first quarter of 2004 totaled $122.2
million (or 2.62%) on whole loan sales and securitizations of $4.63
billion, as compared to a gain of $56.0 million (or 2.56%) on whole
loan sales of $2.18 billion during the first quarter of 2003. The
Company increased the level of residential real estate loans held
for investment (portfolio) to $1.05 billion as of March 31, 2004,
up from $797.7 million and $351.6 million at December 31, 2003 and
March 31, 2003, respectively. Loans held for sale increased to
$3.75 billion at March 31, 2004, up from $3.65 billion and $1.80
billion at December 31, 2003 and March 31, 2003, respectively.
Commercial Real Estate Lending Commercial real estate loans
receivable, before the allowance for loan losses, totaled
approximately $3.90 billion at March 31, 2004, as compared to $3.98
billion and $3.75 billion at December 31, 2003 and March 31, 2003,
respectively. New loan commitments entered into decreased to $396.9
million during the first quarter of 2004, down from $519.6 million
during the first quarter of 2003. The following table highlights
the commercial real estate loan portfolio as indicated: Portfolio
March 31, December 31, March 31, (In $000's) 2004 2003 2003 Loan
Types: Bridge $1,728,551 $1,659,847 $1,743,880 Permanent 1,215,851
1,281,877 1,370,319 Construction 726,685 804,793 364,665 Single
Tenant Credit 256,002 268,506 292,298 $3,927,089 $4,015,023
$3,771,162 Deferred loan origination fees (31,170) (33,101)
(20,935) $3,895,919 $3,981,922 $3,750,227 Geographic Distribution:
California 37.8% 38.9% 45.4% New York 12.2% 12.7% 7.6% Illinois
9.0% 8.4% 5.8% Florida 6.5% 5.5% 3.9% Texas 5.6% 5.8% 6.8% District
of Columbia 5.4% 5.0% 5.2% All other states 23.5% 23.7% 25.3%
100.0% 100.0% 100.0% Non-accrual loans and REO $103,743 $95,379
$83,447 Non-accrual commercial real estate loans and REO totaled
$103.7 million at March 31, 2004, up from $83.4 million as of March
31, 2003. Net loan charge-offs for the commercial real estate
portfolio increased during the first quarter of 2004 to $9.1
million from $8.6 million during the first quarter of 2003. The net
charge-off ratio for the quarter ending March 31, 2004 for the
commercial real estate loan portfolio was 0.91%, as compared with a
ratio of 0.93% for the quarter ending March 31, 2003. Other
Highlights * Fremont General retired the remaining $22.4 million in
outstanding senior notes due 2004 on schedule in the first quarter
of 2004. Since their issuance in 1999, we have retired the entire
$200 million original principal of our senior notes due in 2004, as
well as $34.3 million of our senior notes due 2009 -- all done
solely from internally generated funds. * During the first quarter
of 2004, after a review of our financing availability, the Federal
Home Loan Bank increased the maximum amount of credit available to
Fremont Investment & Loan by approximately $465 million, as
measured currently and subject to the amount of collateral pledged.
* Fremont Investment & Loan, as of March 31, 2004, had $9.7
billion in assets and $7.1 billion in FDIC-insured deposits, and
was categorized as "well capitalized" with a total Risk-Based
Capital ratio of 14.39%. * The residential real estate loan
servicing platform was servicing approximately $11.1 billion in
loans outstanding as of March 31, 2004. This amount was comprised
of the Company's loans held for investment, loans securitized,
loans held for sale and interim servicing for loans sold to third
parties. * The Company's stockholders' equity per share was $9.75
at March 31, 2004 and the holding company had approximately $127
million in cash and cash equivalents as of March 31, 2004. Fremont
General Corporation is an industrial bank holding company and its
common stock is traded on the New York Stock Exchange under the
symbol "FMT". Fremont Investment & Loan provides nationwide
commercial and residential real estate lending through its 14
regional offices (nine commercial and five residential) and does so
primarily on a first mortgage or first trust deed basis. As of
March 31, 2004, Fremont Investment & Loan had commercial real
estate loans in its portfolio located in 41 states and during the
first quarter of 2004, it originated residential real estate loans
in 45 states. This news release may contain "forward-looking
statements" which are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements and the Company's currently reported
results are based on the Company's current expectations and beliefs
concerning future developments and their potential effects on the
Company. These statements and the Company's reported results are
not guarantees of future performance and there can be no assurance
that actual developments will be those anticipated by the Company.
Actual results may differ materially and adversely from the
Company's projected or reported results as a result of significant
risks, uncertainties and assumptions that are difficult to predict,
including: (i) changes in the interest rate environment, (ii)
changes in general and specific economic conditions and trends,
(iii) changes in asset and loan valuations and the costs of
originating loans, (iv) changes in the volume of loans originated,
loans sold, the pricing of existing and future loans, and the
premiums realized upon the sale of such loans, (v) access to the
necessary capital resources to fund loan originations and the
condition of the whole loan sale and securitization markets, (vi)
the impact of changes in the commercial and residential real estate
markets, (vii) the effect of litigation, state and federal
legislation and regulations, and regulatory actions, (viii) the
collectibility, and timing thereof, of loan balances, and any
adverse development of, and the variability in determining, the
allowance for loan losses, (ix) the ability to retain the
utilization of net tax operating loss carryforwards applied, and
(x) other events and factors beyond our control. For a more
detailed discussion of risks and uncertainties, see the Company's
public filings with the Securities and Exchange Commission. The
Company undertakes no obligation to publicly update any
forward-looking statements. * Fremont General will host an investor
conference call to discuss the Company's results. The call will
begin at 1:00 p.m. (ET) on April 28, 2004. * The call will be
webcast live on the Internet at http://www.fulldisclosure.com/. Go
to the web site at least 15 minutes before the event to download
and install any necessary audio software. The webcast will be
archived until April 28, 2005. * To listen to the live call by
telephone, dial 706/634-1256 ten minutes before the start time. The
telephone replay will be archived until May 27th at 706/645-9291 --
use Conference ID 6642662. * The Company's periodic reports as
filed with the Securities and Exchange Commission can be accessed
at http://www.sec.gov/. * Contact: Investor Relations 310/315-5500
Fremont General Corporation Selected Financial Data (Thousands of
dollars, except per share data) Three Months Ended March 31, 2004
2003 Consolidated Statement of Operations: Interest income:
Interest and fee income on loans: Commercial $76,304 $73,974
Residential 88,090 44,580 Other 109 82 164,503 118,636 Interest
income - other 2,204 2,497 166,707 121,133 Interest expense:
Deposits 35,034 33,371 FHLB advances 7,417 4,847 Warehouse lines of
credit 125 -- Senior Notes 4,208 5,193 Junior Subordinated
Debentures / Preferred Securities 2,320 2,250 Other 40 267 49,144
45,928 Net interest income 117,563 75,205 Provision for loan losses
16,399 22,920 Net interest income after provision for loan losses
101,164 52,285 Non-interest income: Net gain (loss) on: Whole loan
sales and securitizations of residential real estate loans 122,196
55,972 Sales of real estate owned (495) (447) Sale of residual
interests in securitized loans -- 17,503 Whole loan sales of other
loans -- 4 Extinguishment of debt -- 93 Net loan servicing income
5,169 1,986 Other 6,820 3,644 133,690 78,755 Non-interest expense:
Compensation 67,184 38,682 Occupancy 3,508 2,857 Expenses and
provision for losses related to real estate owned 2,095 1,844 Other
20,374 16,831 93,161 60,214 Income before income taxes 141,693
70,826 Income tax expense 59,030 29,250 Net income $82,663 $41,576
Net income per share: Basic $1.16 $0.60 Diluted $1.12 $0.60
Weighted Average Shares Outstanding (in thousands): Basic 71,229
68,962 Diluted 73,642 69,167 Cash Dividends Declared per Common
Share $0.05 $0.03 Stockholders' Equity per Share at Period-End
$9.75 $5.87 Shares Outstanding at Period-End 77,077 75,734 Fremont
General Corporation Selected Financial Data (Thousands of dollars)
March 31, December 31, 2004 2003 Consolidated Balance Sheets:
Assets Cash and cash equivalents $911,472 $835,651 Investment
securities 1,753 1,958 Federal Home Loan Bank stock 115,410 112,587
Loans held for sale - net 3,749,394 3,650,167 Loans receivable -
net 4,733,404 4,577,419 Mortgage servicing rights 11,438 6,898
Residual interests in securitized loans 13,741 6,530 Accrued
interest receivable 38,853 38,663 Real estate owned - net 37,010
25,466 Premises and equipment - net 27,973 24,897 Deferred income
taxes 186,858 193,304 Other assets 73,368 48,367 Total Assets
$9,900,674 $9,521,907 Liabilities Deposits: Savings accounts
$1,315,504 $1,244,083 Money market deposit accounts 450,763 412,524
Certificates of deposit 5,324,495 4,976,559 7,090,762 6,633,166
Warehouse lines of credit -- -- Federal Home Loan Bank advances
1,467,000 1,650,000 Senior Notes due 2004 -- 22,377 Senior Notes
due 2009 189,070 188,987 Liquid Yield Option Notes due 2013 659 654
Junior Subordinated Debentures / Preferred Securities 103,093
100,000 Other liabilities 298,329 261,991 Total Liabilities
9,148,913 8,857,175 Stockholders' Equity Common stock 77,077 75,990
Additional paid-in capital 333,003 296,000 Retained earnings
406,925 328,044 Deferred compensation (67,950) (35,889) Accumulated
other comprehensive income 2,706 587 Total Stockholders' Equity
751,761 664,732 Total Liabilities and Stockholders' Equity
$9,900,674 $9,521,907 Fremont General Corporation Selected
Financial Data (Thousands of dollars) March 31, December 31, March
31, 2004 2003 2003 Loans receivable (held for investment):
Commercial real estate $3,895,919 $3,981,922 $3,750,227 Residential
real estate 1,049,100 797,721 351,643 Syndicated commercial loans
and other 9,201 11,367 17,597 $4,954,220 $4,791,010 $4,119,467
Allowance for loan losses $220,816 $213,591 $175,162 Allowance for
loan losses to: Loans receivable held for investment 4.46% 4.46%
4.25% Non-accrual loans held for investment 261.9% 245.5% 245.2%
Total non-accrual loans to total loans held for investment 1.70%
1.82% 1.73% Non-accrual loans held for investment: Commercial real
estate $68,668 $71,758 $57,970 Residential real estate 11,167 8,482
6,605 Syndicated commercial loans 4,476 6,752 6,854 $84,311 $86,992
$71,429 Accruing commercial real estate loans past due 90 days or
more $4,052 $36,406 $11,571 Foreclosed real estate (REO):
Commercial real estate $35,075 $23,621 $25,477 Residential real
estate 1,935 1,845 1,418 $37,010 $25,466 $26,895 Residential real
estate loans held for sale: First mortgages $3,625,820 $3,513,552
$1,747,041 Second mortgages 155,927 163,802 85,124 $3,781,747
$3,677,354 $1,832,165 Non-accrual residential real estate loans
held for sale $10,355 $6,253 $5,670 1st Quarter 4th Quarter 1st
Quarter 2004 2003 2003 Total net charge-offs of loans held for
investment: Commercial real estate $9,112 $11,743 $8,622
Residential real estate 98 73 136 Syndicated commercial loans (36)
(43) 190 $9,174 $11,773 $8,948 Net charge-offs to average loans
held for investment 0.76% 0.98% 0.87% Net commercial real estate
charge-offs to average loans 0.91% 1.16% 0.93% * Loans receivable
held for investment do not include loans designated as held for
sale and are stated before the allowance for loan losses. * The net
charge-off ratios are annualized percentages. * Accruing loans past
due 90 days or more may include loans that are contractually past
maturity but continue to make interest payments. * Loans held for
sale are residential real estate loans valued at the lower of cost
or market. Fremont General Corporation Selected Financial Data
(Thousands of dollars) Three Months Ended March 31, 2004 2003
Fremont General Credit Corporation: Average net interest-earning
assets (NEA) $9,360,505 $6,255,162 Interest income $166,447
$119,782 Interest expense (42,962) (38,238) Net interest income
$123,485 $81,544 As a percentage of NEA: Interest income 7.15 %
7.77 % Interest expense (1.85)% (2.48)% Net interest income 5.30 %
5.29 % (1) The above net interest income information excludes
holding company assets and net interest income and expense. Whole
loan sales of residential real estate loans $3,795,315 $2,180,966
Securitizations of residential real estate loans 832,633 --
$4,627,948 $2,180,966 Gross premium recognized on loan sales and
securitizations $199,228 $93,353 Premium recapture and reversal
(8,693) (3,259) Net premium recognized on loan sales and
securitizations 190,535 90,094 Less: Direct costs of loan
originations (65,072) (27,867) Adjustments to carrying value of
loans held for sale (5,218) (6,255) Change in fair value of
derivative instruments 1,951 -- Gain on sale (GAAP) 122,196 55,972
Less: Origination expenses allocated during the period of
origination (46,365) (18,240) Net operating gain on sale $75,831
$37,732 Gross premium recognized on loan sales and securitizations
4.30 % 4.28 % Premium recapture and reversal (0.19)% (0.15)% Net
premium recognized on loan sales and securitizations 4.11 % 4.13 %
Less: Direct costs of loan originations (1.41)% (1.28)% Adjustments
to carrying value of loans held for sale (0.12)% (0.29)% Change in
fair value of derivative instruments 0.04 % 0.00 % Gain on sale
(GAAP) 2.62 % 2.56 % Less: Origination expenses allocated during
the period of origination (1.00)% (0.83)% Net operating gain on
sale 1.62 % 1.73 % (1) Direct costs are costs directly incurred
with the origination of the loans and which are deferred and
recognized when the loans are sold. (2) Premium recapture and
reversal represent the recapture or reversal of premium on loans
sold which either prepay early per the terms of each sales contract
or for certain loans repurchased from prior sales; includes some
interest adjustment on loans repurchased. (3) Origination expenses
represent indirect expenses related to the origination of
residential real estate loans during the period of origination and
which are not deferred for GAAP. These expenses are included in
non-interest expense in the consolidated statement of operations
during the period incurred. (4) Net operating gain on sale is a
supplement to, and not a substitute for, the information presented
in the consolidated statement of operations as prepared in
accordance with GAAP. Furthermore, our definition of the indirect
origination expenses may not be comparable to similarly titled
measures reported by other companies. The net operating gain on
sale amount does not include net interest income on residential
real estate loans held for sale or any fair value adjustments on
the Company's residual interests in securitized loans. DATASOURCE:
Fremont General Corporation CONTACT: Investor Relations of Fremont
General Corporation, +1-310-315-5500
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