NEW YORK – Franklin Credit Management Corp. (OTC Bulletin Board: FCSC), a specialty financial services company that originates, acquires, manages and sells subprime residential mortgage assets, today announced record sales and earnings for the third quarter and first nine months of 2004.
For the three months ended September 30, 2004, revenues increased 56% to $22.0 million, compared with $14.1 million in the third quarter of the previous year. Net Income increased 73% to a record $2,517,786, or $0.37 per diluted share, compared with $1,455,424, or $0.22 the previous year.
“We are very pleased to report record revenues and earnings for the third quarter of 2004,” stated Jeffrey Johnson, Chief Executive Officer of Franklin Credit Management Corporation. “Significant gains in interest income, purchase discounts earned, and gains on the sale of notes receivable resulted from our portfolio acquisition programs, including the bulk purchase of $310 million of subprime loans from Bank One on June 30, 2004, and I can report that the assimilation of these loans into our servicing organization was completed in a very efficient manner. Gains on the sale of loans originated by our Tribeca Lending subsidiary continued to increase during the most recent quarter reflecting our strong loan production activity. We also recorded a modest loss on the sale of other real estate owned (OREO), reflecting a decrease in the quality of a few of the 62 OREO properties that were sold in the period.”
“Operating expenses grew at a slower rate than revenues, allowing our pretax profit margin to expand to 21.0% of revenues in the third quarter of 2004, compared with 19.0% in the prior-year quarter.”
For the nine months ended September 30, 2004, the Company reported record revenues of $52.8 million, which represented an increase of 26% when compared with $42.0 million in the corresponding period of the previous year. Net income rose 31% to a record $6,192,100, or $0.92 per diluted share, versus net income of $4,732,045, or $0.73 per diluted share, in the nine months ended September 30, 2003.
“Shortly after the end of the third quarter, we announced the bulk purchase of $99.4 million in subprime mortgage loans from Master Financial Corporation, a national mortgage banking company,” continued Johnson.
“We expect a strong fourth quarter and are optimistic that earnings for the year ending December 31, 2004 will exceed last year’s record $1.02 per diluted share. With interest rates expected to rise in coming months, the “spread” between our portfolio yield and the interest rates at which we borrow will likely narrow. However, we are optimistic that the growth in our loan portfolio and related activities will contribute to the Company’s revenues and earnings,” concluded Johnson.
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 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.
