Franklin Credit Announces Purchase of $310 Million Subprime Mortgage Portfolio
July 19 2004 - 9:30AM
PR Newswire (US)
Franklin Credit Announces Purchase of $310 Million Subprime
Mortgage Portfolio NEW YORK, July 19 /PRNewswire-FirstCall/ --
Franklin Credit Management Corp. (OTC:FCSC) (BULLETIN BOARD: FCSC)
, a specialty financial services company that acquires, manages and
sells subprime residential mortgage assets, today announced the
purchase of a mixed pool of performing, subperforming, and
nonperforming mortgage loans (and related servicing rights) with a
face value totaling approximately $310 million. The loans, which
are secured by single-family residences, were purchased from Bank
One, N.A., and include $246.0 million face amount of first mortgage
loans and $64.5 million face amount of second mortgage loans. The
purchase price was $275.1 million. "We are pleased to announce the
successful closing on our purchase of this large portfolio of
loans," commented Thomas J. Axon, Chairman of Franklin Credit
Management Corp. "On a pro forma basis, the purchase expands our
Net Notes Receivable portfolio by more than 42%, to approximately
$654 million as of March 31, 2004. We expect the acquisition to be
accretive to net income and earnings per share, as it will allow us
to expand our operating platform and leverage SG&A expenses
across a larger revenue base." In its Form 8-K filing with the SEC
relating to the transaction, the Company provided unaudited pro
forma information that gives effect to the acquisition of certain
assets from Bank One, N.A., as if the transactions had occurred as
of January 1, 2003. According to the 8-K filing, revenues would
have approximated $83.4 million and the Company would have earned
net income after taxes of $10.6 million, or $1.62 per diluted
share, on a pro forma basis, for the year ended December 31, 2003.
These pro forma results compare with actual reported revenues of
$57.6 million and reported net income after taxes of $6.7 million,
or $1.02 per diluted share, for the year ended December 31, 2003.
The 8-K filing also provided unaudited pro forma operating
information for the quarter ended March 31, 2004. Pro forma
revenues would have approximated $22.0 million and the Company
would have earned net income after taxes of $3.3 million, or $0.49
per diluted share, for the three months ended March 31, 2004. These
pro forma results compare with actual reported revenues of $15.1
million and reported net income after taxes of $2.0 million, or
$0.30 per diluted share, for the quarter ended March 31, 2004.
About Franklin Credit Management Corp. Franklin Credit Management
Corporation ("FCMC", and together with its wholly-owned
subsidiaries, the "Company") is a specialty consumer finance and
asset management company primarily engaged in the acquisition,
origination, servicing and resolution of performing, sub-performing
and non-performing residential mortgage loans and residential real
estate. The Company acquires these mortgages from a variety of
mortgage bankers, banks, and other specialty finance companies.
These loans are generally purchased in pools at discounts from
their aggregate contractual balances, from sellers in the financial
services industry. Real estate is acquired in foreclosure or
otherwise and is also generally acquired at a discount relative to
the appraised value of the asset. The Company conducts its business
from its executive and main office in New York City and through its
website http://www.franklincredit.com/. Its common stock trades on
the OTC Bulletin Board under the symbol "FCSC". Statements
contained herein that are not historical fact may be
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, that are subject to a
variety of risks and uncertainties. There are a number of important
factors that could cause actual results to differ materially from
those projected or suggested in forward-looking statements made by
the Company. These factors include, but are not limited to: (i)
unanticipated changes in the U.S. economy, including changes in
business conditions such as interest rates, and changes in the
level of growth in the finance and housing markets; (ii) the status
of relations between the Company and its sole Senior Debt Lender
and the Senior Debt Lender's willingness to extend additional
credit to the Company; (iii) the availability for purchases of
additional loans; (iv) the status of relations between the Company
and its sources for loan purchases; (v) unanticipated difficulties
in collections under loans in the Company's portfolio; and
(vi)other risks detailed from time to time in the Company's SEC
reports. Additional factors that would cause actual results to
differ materially from those projected or suggested or suggested in
any forward-looking statements are contained in the Company's
filings with the Securities and Exchange Commission, including, but
not limited to, those factors discussed under the caption "Real
Estate Risk" in the Company's Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q, which the Company urges investors
to consider. The Company undertakes no obligation to publicly
release the revisions to such forward-looking statements that may
be made to reflect events or circumstances after the date hereof or
to reflect the occurrences of unanticipated events, except as other
wise required by securities and other applicable laws. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Company
undertakes no obligation to release publicly the results on any
events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events. For further information, please
contact: Alan Joseph, CFO of Franklin Credit Management Corp. at
212-925-8745 (Ext. 169) DATASOURCE: Franklin Credit Management
Corp. CONTACT: Alan Joseph, CFO of Franklin Credit Management
Corp., +1-212-925-8745, ext. 169, Web site:
http://www.franklincredit.com/
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