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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 25, 1998
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FIRST ALLIANCE CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 333-44585-02 33-0721183
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(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
17305 VON KARMAN AVENUE, IRVINE, CA 92614
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(Address of principal executive offices)
Registrant's telephone number, including area code: (949) 224-8500
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ITEM 5. OTHER EVENTS.
See Press Release attached as Exhibit 7(c).
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) ADDITIONAL EXHIBIT. Press Release issued June 25, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST ALLIANCE CORPORATION
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(Registrant)
Date: June 25, 1998 By: /s/ Brian Chisick
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Brian Chisick
President and Chief Executive Officer
EXHIBIT 7(c)
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COMPANY CONTACT: STOCKBROKER & INDIVIDUAL INVESTORS:
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Lynn Brainard Shannon T. Squyres, President
Investor Relations Greg Facktor, Director
(949) 224-8403 Market Pathways
(949) 955-1860
ANALYSTS & INSTITUTIONAL INVESTORS:
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Roger S. Pondel, President
Cecilia A. Wilkinson, Senior VP
Pondel Parsons & Wilkinson
(310) 207-9300
For Immediate Release
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FIRST ALLIANCE ANNOUNCES $4.5 MILLION
WRITEDOWN OF RESIDUAL INTERESTS
IRVINE, Calif., (June 25, 1998) - First Alliance Corporation (Nasdaq: FACO)
today announced that it will record in the second quarter a writedown of
approximately $4.5 million in the value of its securitization residual
interests. Last month the Company announced that unexpected significant
increases in prepayments of its adjustable rate loans might result in such a
reduction.
During the second quarter, the weighted average Constant Prepayment
Rate ("CPR") of the Company's servicing portfolio of adjustable rate loans
increased approximately 20%. The following table provides information regarding
the Company's prepayment experience and assumptions and its residual interests:
<TABLE>
<CAPTION>
1998 First 1998 Second
Quarter Quarter
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(dollars in thousands)
<S> <C> <C>
CPR assumptions used to value residual interest created in the period:
Fixed rate loans 25 26
Adjustable rate loans 40 48
Weighted average CPR used to value existing residual interests:
Fixed rate loans 28 27
Adjustable rate loans 45 50
Residual interests:
Balance at beginning of the quarter $50,238 $52,680
Collections during the quarter $5,744 $5,279
Writedown of residual interests $4,500
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The CPR assumptions used by the Company are based on the experience
of the mortgages in the individual trusts or the total portfolio over the last 6
to 12 months. This writedown relates primarily to the payoff speeds. It should
be noted that the delinquency and loan loss experience of mortgages in the
Company's servicing portfolio continues to be among the lowest in the sub-prime
sector.
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The Company also announced the appointment of Richard Taylor as Legal
Counsel and Corporate Secretary. Prior to joining the Company earlier this year,
Mr. Taylor's 19-year professional experience included general counsel and
corporate secretary responsibilities with thrift and mortgage institutions and
an electronic funds transfer company. Ed Summers resigned as Vice President,
General Counsel and Corporate Secretary effective June 30, 1998 to take a
position as Vice President, General Counsel with an NYSE-traded manufacturing
firm.
The Company hopes to announce the appointment of a new Chief
Financial Officer in the near future. John Michel, Vice President of Finance,
has resigned effective June 26, 1998 to take a position as Senior Vice President
of Strategic Planning for Bank Plus Corp.
First Alliance is a consumer finance company with headquarters in
Irvine, California. The Company originates, purchases, sells and services
non-conventional mortgages through 35 retail branch offices, 32 of which are in
the United States and three of which are in the United Kingdom.
