<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
Commission File Number: 000-23283
[LOGO OF FMAC]
Franchise Mortgage Acceptance Company
(Exact name of registrant as specified in its charter)
DELAWARE 95-4649104
- ----------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
1888 Century Park East, Third Floor
Los Angeles, California 90067
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 229-2600
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(b) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest possible date:
<TABLE>
<CAPTION>
Class Shares Outstanding at April 30, 1999
------------------------------ ------------------------------------
<S> <C>
Common Stock, $0.001 par value 28,781,552
</TABLE>
<PAGE>
FRANCHISE MORTGAGE ACCEPTANCE COMPANY
FORM 10-Q
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Part I - Financial Information Page
------------------------------ ----
<C> <S> <C>
Item 1 Consolidated Financial Statements
---------------------------------
Consolidated Balance Sheets - March 31, 1999 and December 31, 1998.......................... 3
Consolidated Statements of Income - Three months ended March 31, 1999 and 1998.............. 4
Consolidated Statements of Cash Flows - Three months ended March 31, 1999 and 1998.......... 5
Notes to Consolidated Financial Statements.................................................. 6
Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations............. 11
-------------------------------------------------------------------------------------
Item 3 Quantitative and Qualitative Disclosures About Market Risk........................................ 16
----------------------------------------------------------
Part II - Other Information
---------------------------
Items 1-6 Not Applicable
--------------
Signatures........................................................................................ 18
----------
</TABLE>
Forward-Looking Statements
Certain statements in this Form 10-Q constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of the Company to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. These forward-looking statements were based on various factors and
were derived utilizing numerous important assumptions and other important
factors that could cause actual results to differ materially from those in the
forward-looking statements, including, but are not limited to: regional and
national economic conditions, substantial changes in levels of market interest
rates, credit and other risks of lending and investment activities and
competitive and regulatory factors, competition in the Company's existing and
potential future lines of business, the ability of the Company to complete, on a
timely basis, the necessary actions with respect to Year 2000 computer issues
and other factors. Other factors and assumptions not identified above were also
involved in the derivation of these forward-looking statements, and the failure
of such other assumptions to be realized as well as other factors may also cause
actual results to materially differ from those projected. The Company does not
undertake, and specifically disclaims any obligation, to update any forward-
looking statements to reflect occurrences or unanticipated events or
circumstances after the date of such statements.
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
FRANCHISE MORTGAGE ACCEPTANCE COMPANY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
--------- ------------
1999 1998
---- ----
<S> <C> <C>
ASSETS
Cash and cash equivalents......................................................... $ 54,989 $ 33,425
Interest bearing deposits - restricted............................................ 6,365 5,757
Securities available for sale..................................................... 16,664 16,818
Loans and leases held for sale.................................................... 251,225 325,727
Loans and leases held for investment.............................................. 154,329 162,928
Retained interest in loan securitizations......................................... 30,037 29,952
Servicing rights.................................................................. 32,545 29,905
Premises and equipment, net....................................................... 6,968 6,854
Goodwill.......................................................................... 49,670 37,353
Accrued interest receivable....................................................... 2,351 2,587
Other assets...................................................................... 26,982 25,008
-------- --------
Total assets................................................................. $632,125 $676,314
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Borrowings........................................................................ $422,669 $483,763
Current income taxes payable...................................................... 1,365 1,661
Deferred income taxes............................................................. 21,221 18,045
Other liabilities................................................................. 34,903 26,140
-------- --------
Total liabilities............................................................ 480,158 529,609
-------- --------
Commitments and contingencies
Minority interest in subsidiary................................................... 59 (8)
Stockholders' equity:
Preferred stock, $.001 par value; 10,000,000 shares authorized; none
issued and outstanding.......................................................... -- --
Common stock, $.001 par value; 100,000,000 shares authorized;
28,760,557 shares issued and outstanding at March 31, 1999 and
28,715,625 shares issued and outstanding at December 31, 1998................... 29 29
Additional paid-in capital...................................................... 126,041 118,330
Employee stock awards........................................................... (7,631) --
Retained earnings............................................................... 33,469 28,354
-------- --------
Total stockholders' equity................................................... 151,908 146,713
-------- --------
Total liabilities and stockholders' equity................................... $632,125 $676,314
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
FRANCHISE MORTGAGE ACCEPTANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except income per share)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------
1999 1998
---- ----
<S> <C> <C>
Revenue:
Gain on sale of loans and leases............................. $11,210 $16,741
------- -------
Interest income.............................................. 8,986 10,567
Interest expense............................................. 6,337 6,365
------- -------
Net interest income....................................... 2,649 4,202
------- -------
Loan servicing income........................................ 6,512 1,254
Trading income............................................... 1,641 --
Insurance services income.................................... 1,127 --
Other income (loss).......................................... 191 (42)
------- -------
Total revenue............................................. 23,330 22,155
------- -------
Expense:
Personnel.................................................... 8,455 5,165
Professional services........................................ 492 596
Travel. .................................................... 844 567
Business promotion........................................... 845 657
Provision for losses......................................... 262 1
Occupancy.................................................... 823 356
Goodwill amortization........................................ 702 115
General and administrative................................... 2,315 2,261
------- -------
Total expense............................................. 14,738 9,718
------- -------
Income before income taxes and minority interest in
subsidiary.................................................... 8,592 12,437
Minority interest in subsidiary............................... 67 --
Income taxes.................................................. 3,410 5,223
------- -------
Net income............................................... $ 5,115 $ 7,214
======= =======
Basic income per share........................................ $ 0.18 $ 0.25
======= =======
Weighted average shares outstanding........................... 28,734 28,716
======= =======
Diluted income per share...................................... $ 0.18 $ 0.25
======= =======
Weighted average shares outstanding........................... 28,737 28,805
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
FRANCHISE MORTGAGE ACCEPTANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income......................................................................... $ 5,115 $ 7,214
Adjustments to reconcile net income to net cash provided (used) by
operating activities:
Depreciation and amortization................................................ 1,689 338
Decrease in accrued interest receivable...................................... 236 655
Provision for deferred income taxes.......................................... 3,176 5,223
Decrease in current income taxes payable..................................... (296) (869)
Increase (decrease) in other liabilities and accrued interest payable........ 8,763 (643)
(Increase) decrease in other assets.......................................... (1,974) 6,583
Increase in originated mortgage servicing rights............................. (3,518) --
Loan and lease operations
Loans and leases originated.............................................. (450,992) (342,681)
Loans sold to affiliates................................................. 248,049 19,038
Provision for loan and lease losses...................................... 188 1
Principal reductions..................................................... 15,651 4,862
Cash proceeds from loan sales and securitizations........................ 270,040 183,324
--------- ---------
Net cash provided (used) by operating activities................................... 96,127 (116,955)
--------- ---------
Cash flows from investing activities:
Purchases of premises and equipment.......................................... (756) (945)
Decrease (increase) in interest bearing deposits............................. (608) 221
Sale of securities available for sale........................................ -- 22,870
Proceeds from securities available for sale.................................. 154 --
Increase in retained interests in securitizations............................ -- (283)
Proceeds from retained interests in securitizations.......................... 613 621
Increase in Goodwill due to Bankers Mutual earn-out.......................... (13,019) --
Increase in minority interest................................................ 67 --
--------- ---------
Net cash provided (used) by investing activities................................... (13,549) 22,484
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of common stock....................................... 80 --
Increase (decrease) in borrowings............................................ (61,094) 148,262
--------- ---------
Net cash provided (used) by financing activities................................... (61,014) 148,262
--------- ---------
Net change in cash.................................................................. 21,564 53,791
Cash at beginning of period......................................................... 33,425 7,335
--------- ---------
Cash at end of period............................................................... $ 54,989 $ 61,126
========= =========
</TABLE>
See accompanying notes to consolidated financial statements
5
<PAGE>
FRANCHISE MORTGAGE ACCEPTANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Organization
Unless the context indicates otherwise, all references hereinafter to the
Company refer to Franchise Mortgage Acceptance Company, along with all its
predecessor entities, including Franchise Mortgage Acceptance Company LLC
("Franchise Mortgage LLC").
On November 18, 1997, the Company completed its initial public offering (the
"Offering") pursuant to which 10,000,000 shares of common stock were sold to the
public at a price of $18.00 per share. On November 28, 1997, and December 3,
1997, 890,625 and 609,378 additional shares of common stock were sold to the
public, respectively, at the sale price of $18.00 per share. Net proceeds to the
Company after offering costs of $1.7 million were $112.6 million.
Immediately prior to the Offering, Franchise Mortgage LLC merged into
Franchise Mortgage Acceptance Company, a Delaware corporation which was
incorporated in August 1997 for the purpose of succeeding to the business of
Franchise Mortgage LLC. As part of the Offering, Imperial Credit Industries,
Inc. ("ICII") and FLRT, Inc. collectively sold to the public 4,062,500 shares of
Company common stock at $18.00 per share. Subsequent to the sales of common
stock described above, ICII owned 38.4% and FLRT, Inc. owned 21.6% of the
Company's outstanding shares of common stock. On February 24, 1999, the Company
issued an additional 44,932 shares of common stock to former employees of the
Company.
On March 10, 1999, Bay View Capital Corporation ("Bay View") and the Company
executed an Agreement and Plan of Merger and Reorganization providing for the
merger of the Company and Bay View. Following the merger, the Company will
operate as a subsidiary of Bay View Bank. Consummation of the merger is subject
to a number of closing conditions, including approval by both Bay View's and the
Company's stockholders, obtaining necessary regulatory approvals and other
closing conditions.
(2) Basis of Presentation
The consolidated financial statements have been prepared in conformity with
generally accepted accounting principles. The consolidated financial statements
include the financial statements of Franchise Mortgage Acceptance Company and
FMAC Golf Finance Group LLC. All significant intercompany balances and
transactions have been eliminated in consolidation. In preparing the
consolidated financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities as of the
dates of the balance sheet and revenues and expenses for the periods presented.
Significant balance sheet accounts which could be materially affected by such
estimates include securities available for sale, loans and leases held for sale,
loans and leases held for investment, retained interest in loan securitizations
and servicing rights. Actual results could differ significantly from those
estimates. Certain reclassifications were made to the prior year balances to
conform with the current year presentation.
(3) Supplemental Disclosure of Cash Flow Information
Cash paid for interest for the three months ended March 31, 1999 and 1998 was
$9.0 million and $6.5 million, respectively. Cash paid for taxes for the three
months ended March 31, 1999 and 1998 was $0.5 million and $0.9 million,
respectively.
6
<PAGE>
(4) Securities Available for Sale
Securities available for sale consist of asset-backed securities issued by the
Company. For the three months ended March 31, 1999 and the year ended December
31, 1998, activity in securities available for sale was as follows:
<TABLE>
<CAPTION>
(In thousands) For the Three Months Ended March 31, 1999
-----------------------------------------
Beginning Face Cash Hedging Ending
Balance Amount Discount Received (Gain) Loss Sold Balance
------- ------ -------- -------- ----------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1998-CE(2).......... $10,388 $ - $ - $ - $ - $ - $10,388
1998-CF(2).......... 3,547 - - - - - 3,547
1998-1(3)........... 2,883 - - (154) - - 2,729
------- ------- ------- ----- ----------- -------- -------
Totals.............. $16,818 $ - $ - $(154) $ - $ - $16,664
======= ======= ======= ===== =========== ======== =======
<CAPTION>
For the Year Ended December 31, 1998
------------------------------------
Beginning Face Cash Hedging Ending
Balance Amount Discount Received (Gain) Loss Sold Balance
------- ------ -------- -------- ----------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1997-B(1)........... $22,870 $ - $ - $ - $ - $(22,870) $ -
1998-CE(2).......... - 13,090 (2,702) - - - 10,388
1998-CF(2).......... - 5,610 (2,063) - - - 3,547
1998-1(3)........... - 3,301 (283) (135) - - 2,883
------- ------- ------- ----- ----------- -------- -------
Totals.............. $22,870 $22,001 $(5,048) $(135) $ - $(22,870) $16,818
======= ======= ======= ===== =========== ======== =======
</TABLE>
_____
(1) 1997-B is an interest-only strip that was purchased from CS First Boston in
December 1997 and was subsequently sold in March 1998.
(2) 1998-CE and 1998-CF represent the Class E and F certificates that were
purchased by the Company as part of the 1998-C securitization.
(3) 1998-1 is the Class C certificate that was purchased by the Company as part
of the 1998-1 equipment finance securitization.
(5) Loans and Leases Held for Sale
The Company offers permanent commercial loans, multi-family and equipment
loans and leases to those sectors in which it operates. Substantially all of the
Company's permanent commercial loans are self-amortizing, long-term fixed or
adjustable rate loans provided for purposes other than development and
construction of business units. Multi-family loans are generally fixed rate
loans amortized over 30 years. Equipment loans are fixed rate products tied to
U.S. Treasury rates that generally have a maximum term of up to 10 years. The
Company's equipment leases generally range in term from 5 to 7 years and are
substantially made up of "direct financing" leases. Loans and leases held for
sale were pledged as collateral for the borrowings of the Company.
At March 31, 1999 and December 31, 1998, loans and leases held for sale
consisted of the following:
<TABLE>
<CAPTION>
(In thousands) March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Permanent commercial loans............................................... $142,392 $149,222
Multi-family loans....................................................... 43,950 119,599
Loans in process......................................................... 2,772 7,410
Equipment loans and leases............................................... 81,339 63,671
Unearned lease income.................................................... (21,058) (17,834)
Allowance for loan and lease losses...................................... (588) (445)
Net deferred loan costs.................................................. 1,302 2,198
Margin and deferred net losses on futures contracts used to hedge
loans and leases held for sale(1)...................................... 1,116 1,906
-------- --------
Loans and leases held for sale........................................ $251,225 $325,727
======== ========
</TABLE>
- -----
(1) The deferred hedge loss is related to loans financed as part of FMAC Golf
Finance Group LLC.
7
<PAGE>
Activity in valuation allowances for loans and leases held for sale for the
three months ended March 31, 1999 and the year ended December 31, 1998 was as
follows:
<TABLE>
<CAPTION>
(In thousands) March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Balance, beginning of period....... $ 445 $ 998
Provisions......................... 143 1,699
Charge-offs........................ - -
Transfer of allowance to loans
held for investment.............. - (2,252)
----- -------
Balance, end of period............. $ 588 $ 445
===== =======
</TABLE>
(6) Loans and Leases Held for Investment
The Company offers short-term commercial loans (DEVCO and Seasoning loans) to
those sectors in which it operates. DEVCO loans are short-term, interest-only
loans offered to fund the development and construction of new business units.
Seasoning loans are short-term, interest-only loans offered to fund the
acquisition of new business units or the conversion of existing business units
into a different franchise concept. The Company's permanent commercial loans,
multi-family loans, and equipment loans and leases that are classified as held
for investment are classified as such because they are not immediately salable
for reasons such as unique loan terms or delinquency status. The Company had no
loans and leases held for investment at December 31, 1997.
At March 31, 1999 and December 31, 1998, loans and leases held for investment
consisted of the following:
<TABLE>
<CAPTION>
(In thousands) March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Permanent commercial loans............. $ 10,311 $ 9,639
Short-term commercial loans............ 121,134 130,357
Multi-family loans..................... 25,167 25,233
Equipment loans and leases............. 598 598
Allowance for loan and lease losses.... (2,988) (2,988)
Net deferred loan costs................ 107 89
-------- --------
Loans and leases held for sale...... $154,329 $162,928
======== ========
</TABLE>
Non-accrual loans, including impaired loans, totaled $17.7 million and $17.1
million at March 31, 1999 and December 31, 1998, respectively.
Activity in valuation allowances for loans and leases held for investment for
the three months ended March 31, 1999 and the year ended December 31, 1998 was
as follows:
<TABLE>
<CAPTION>
(In thousands) March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Balance, beginning of period........ $2,988 $ -
Provisions (1)...................... 45 736
Charge-offs......................... (45) -
Transfer of allowance from loans
held for sale..................... - 2,252
------ ------
Balance, end of period.............. $2,988 $2,988
====== ======
- ------------
(1) Does not include provisions for recourse liabilities for sold loans.
</TABLE>
8
<PAGE>
(7) Retained Interest in Loan Securitizations
Activity in retained interest in loan securitizations was as follows for the
three months ended March 31, 1999 and the year ended December 31, 1998:
<TABLE>
<CAPTION>
(In thousands) For the Three Months Ended March 31, 1999
-----------------------------------------
Beginning Bond Cash Discount Valuation Ending
Balance Amount Received Accretion(2) Allowance Balance
------- ------ -------- ------------ --------- -------
<S> <C> <C> <C> <C> <C> <C>
1994-A.................. $ 1,281 $ - $ (99) $ 50 $ - $ 1,232
1995-A.................. 754 - - 27 - 781
1996-A.................. 6,196 - (3) - - 6,193
1996-B.................. 331 - - - - 331
1997-A.................. 379 - - 10 - 389
1997-B.................. 338 - - 9 - 347
1997-C.................. 295 - - 7 - 302
1998-A.................. 305 - - 8 - 313
1998-B.................. 3,628 - (231) 177 - 3,574
1998-C.................. 5,806 - (280) 290 - 5,816
1998-1(1)............... 2,423 - - - - 2,423
1998-D.................. 9,666 - - 120 - 9,786
Valuation Allowance..... (1,450) - - - - (1,450)
------- ------- -------- ------ ------- --------
Totals................ $29,952 $ - $ (613) $ 698 $ - $ 30,037
======= ======= ======== ====== ======= ========
<CAPTION>
For the Year Ended December 31, 1998
------------------------------------
Beginning Bond Cash Discount Valuation Ending
Balance Amount Received Accretion(2) Allowance Balance
------- ------ -------- ------------ --------- -------
<S> <C> <C> <C> <C> <C> <C>
1994-A.................. $ 1,599 $ - $ (541) $ 223 $ - $ 1,281
1995-A.................. 876 - (241) 119 - 754
1996-A.................. 6,626 - (430) - - 6,196
1996-B.................. 331 - - - - 331
1997-A.................. 344 - - 35 - 379
1997-B.................. 306 - - 32 - 338
1997-C.................. 266 - - 29 - 295
1997-1(1)............... 11,704 - (11,704) - - -
1998-A.................. - 283 - 22 - 305
1998-B.................. - 3,652 (386) 362 - 3,628
1998-C.................. - 5,796 (280) 290 - 5,806
1998-1(1)............... - 2,423 - - - 2,423
1998-D.................. - 9,666 - - - 9,666
Valuation Allowance..... (400) - - - (1,050) (1,450)
------- ------- -------- ------ ------- --------
Totals................ $21,652 $21,820 $(13,582) $1,112 $(1,050) $ 29,952
======= ======= ======== ====== ======= ========
</TABLE>
- ------------
(1) Equipment Finance transaction.
(2) The weighted average discount rate on retained interests was 19.2% and
18.0% at March 31, 1999 and December 31, 1998, respectively.
(8) Servicing Rights
Activity in servicing rights for the three months ended March 31, 1999 and the
year ended December 31, 1998 was as follows:
<TABLE>
<CAPTION>
(In thousands) March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Balance, beginning of period..................................... $29,905 $ 2,213
Originated....................................................... 3,546 8,190
Purchased........................................................ - 6
Amortization..................................................... (906) (2,291)
Acquired as a result of Bankers Mutual acquisition............... - 21,787
------- -------
Balance, end of period........................................... $32,545 $29,905
======= =======
</TABLE>
9
<PAGE>
(9) Borrowings
Borrowings consisted of the following at March 31, 1999 and December 31, 1998:
<TABLE>
<CAPTION>
(dollars in thousands)
Expiration
Lender Date Index
------ ---- -----
<S> <C> <C>
Credit Suisse First Boston(1)(2)........... 12/31/99 One-month LIBOR plus 130 to 150 basis points
Morgan Stanley(1).......................... 12/30/99 One-month LIBOR plus 150 to 175 basis points
Banco Santander(1)......................... 08/31/99 One-month LIBOR plus 175 basis points
Sanwa Bank(1).............................. 06/30/99 One-month LIBOR plus 160 basis points
Goldman Sachs Mortgage Company(1).......... 04/30/99 One-month LIBOR plus 100 basis points
Residential Funding Corporation(3)......... 09/30/99 One-month LIBOR plus 100 basis points
Bank of America(1)(4)...................... 05/28/99 Fixed rate
Residential Funding Corporation(5)......... 05/31/99 One-month LIBOR plus 225 basis points
Other borrowings(6)........................
Totals...................................
<CAPTION>
(dollars in thousands) March 31, 1999 December 31, 1998
-------------- -----------------
Interest Commitment Principal Interest Commitment Principal
Lender Rate(7) Amount Outstanding Rate(7) Amount Outstanding
------ ------- ------ ----------- ------- ------ -----------
<S> <C> <C> <C> <C> <C> <C>
Credit Suisse First Boston(1)(2)........... 6.24% to $300,000 $ 72,199 6.38% to $ 300,000 $122,356
6.44% 6.58%
Morgan Stanley(1).......................... 6.44% to 300,000 - 6.58% to 300,000 -
6.69% 6.83%
Banco Santander(1)......................... 6.69% 50,000 37,983 6.83% 50,000 34,669
Sanwa Bank(1).............................. 6.54% 25,000 24,839 6.68% 25,000 14,369
Goldman Sachs Mortgage Company(1).......... 5.94% 100,000 46,342 6.08% 100,000 46,989
Residential Funding Corporation(3)......... 5.94% 100,000 52,867 6.08% 200,000 124,763
Bank of America(1)(4)...................... 1.00% 35,000 15,092 1.00% 35,000 18,776
Residential Funding Corporation(5)......... 7.19% 50,000 31,432 7.33% 50,000 31,432
Other borrowings(6)........................ - - 141,915 - - 90,409
-------- -------- ---------- --------
Totals................................... $960,000 $422,669 $1,060,000 $483,763
======== ======== ========== ========
</TABLE>
- ---------
(1) The above borrowings are collateralized by franchise loans and leases held
for sale and investment.
(2) The agreement with Credit Suisse First Boston requires the Company to
obtain a capital infusion of $100 million by May 31, 1999. The Company is
currently in the process of obtaining a temporary waiver of this covenant
from CSFB until the Bay View merger is completed.
(3) The Residential Funding Corporation line of credit was temporarily
increased from $100,000 to $200,000 until January 31,1999.
(4) The Bank of America line of credit has a fixed interest rate of 1.00% when
the Company maintains minimum deposit requirements.
(5) The Residential Funding Corporation line of credit is collateralized by the
Company's loan servicing portfolio.
(6) As of March 31, 1999, other borrowings includes $26.5 million of sold loans
that have been accounted for as a financing, $50.1 million dollars of loans
that have been financed through FMAC Star Fund, LLP, a $7.3 million
repurchase agreement with Deutsche Bank for which the 1998-CE and 1998-CF
certificates were pledged as collateral, $57.1 million related to a
participation agreement with Bay View Bank, and a $0.8 million loan with
Far East Bank. As of December 31, 1998, other borrowings includes $55.3
million of sold loans that have been accounted for as a financing at, $29.0
million dollars of loans that have been financed through FMAC Star Fund,
LLP, and a $6.1 million repurchase agreement with Deutsche Bank for which
the 1998-CE and 1998-CF certificates were pledged as collateral.
(7) The weighted average interest rate on borrowings was 6.10% and 6.96% at
March 31, 1999 and December 31, 1998, respectively.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company is a commercial finance company engaged in the business of
originating and servicing loans and equipment leases to small businesses, with a
primary focus on established national and regional franchise concepts and such
other branded concepts such as service stations or convenience stores. The
Company also engages in the business of originating and servicing multi-family
income producing property loans. Additionally, the Company's insurance services
subsidiary offers insurance products to businesses nationwide.
Unless the context indicates otherwise, all references hereinafter to the
Company refer to Franchise Mortgage Acceptance Company, along with all its
predecessor entities, including Franchise Mortgage Acceptance Company LLC
("Franchise Mortgage LLC").
On March 10, 1999, Bay View Capital Corporation ("Bay View") and the Company
executed an Agreement and Plan of Merger and Reorganization providing for the
merger of the Company and Bay View. Following the merger, the Company will
operate as a subsidiary of Bay View Bank. Consummation of the merger is subject
to a number of closing conditions, including approval by both Bay View's and the
Company's stockholders, obtaining necessary regulatory approvals and other
closing conditions.
Results of Operations
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998
Total revenues increased 5.3% to $23.3 million for the three months ended
March 31, 1999 from $22.2 million for the comparable period in 1998. During the
same periods, the Company's total expenses increased 51.7% to $14.7 million from
$9.7 million. As a result, net income decreased 29.1% to $5.1 million for the
three months ended March 31, 1999 as compared to $7.2 million in 1998.
The increase in revenues was primarily attributable to a $5.3 million increase
in servicing income, a $1.6 million increase in trading income, a $1.1 million
increase in insurance brokerage fees, offset by a $5.5 million decrease in gain
on sale of loans and leases, and a $1.6 million decrease in net interest income.
For the three months ended March 31, 1999, the Company sold approximately
$270.0 million of loans in four whole loan sales for a gain on sale of $9.2
million (of which $9.2 million was cash) as compared to $183.3 million of loans
and leases sold in one securitization for a gain on sale of $14.5 million (of
which $14.2 million was cash) for the three months ended March 31, 1998.
Additionally, $2.0 million in net loan fees was recognized in the three months
ended March 31, 1999 as compared to $2.2 million in 1998. The decreased gain on
sale of loans was due to several factors, including the composition of loans in
the securitizations and whole loan sales, the structure of the securitizations,
as well as market conditions at the time of the securitization transactions.
Net interest income decreased 37.0% to $2.6 million for the three months ended
March 31, 1999 as compared to $4.2 million for the same period in 1998. This
decrease is primarily due to the addition of the Multi-Family lending group
which originates its loan products at a lower net interest spread than the
Company's other lending groups.
Loan servicing income increased 419.3% to $6.5 million for the three months
ended March 31, 1999 as compared to $1.3 million for the same period in 1998.
This was due to an increase in loans and leases serviced which resulted from the
securitizations and whole loan sales 1998 with servicing rights retained by the
Company as well as an increase of serviced loans directly related to the
addition of Multi-Family Finance Group.
Trading income for the three months ended March 31, 1999 was $1.6 million.
This income is recorded directly through operations as the Company's financial
instruments used to hedge its loans and leases are classified as trading. Prior
to December 31, 1998, the Company deferred its hedge gains and losses and
recorded them as an addition or reduction to the gain on sale.
11
<PAGE>
The Company also recorded $1.1 million in insurance brokerage fee income for
the three months ended March 31, 1999. There was no insurance brokerage fee
income for the same period of 1998 because the Company did not begin marketing
insurance products until the third quarter of 1998.
Total expenses increased 51.7% to $14.7 million for the year ended March 31,
1999 as compared to $9.7 million for the same period of the prior year primarily
due to infrastructure additions needed to fund increased loan and lease
originations as well as the addition of the Multi-Family Finance Group.
Personnel expenses increased 63.7% to $8.5 million due to the aforementioned as
well as the amortization of the employee stock awards, professional services
decreased 17.4% to $0.5 million, travel increased 48.9% to $0.8 million,
business promotion increased 28.5% to $0.8 million, provision for losses
increased $0.3 million, occupancy increased 131.1% to $0.8 million, goodwill
amortization increased 510.8% to $0.7 million and general and administrative
expenses increased 2.4% to $2.3 million for the three months ended March 31,
1999 as compared to the same period in 1998.
Liquidity and Capital Resources
The Company requires access to short-term warehouse lines of credit and
repurchase facilities in order to fund loan and lease originations pending sale
or securitization of such loans and leases. Warehouse lines of credit,
repurchase facilities and working capital lines of credit at March 31, 1999 and
December 31, 1998 consisted of the following:
<TABLE>
<CAPTION>
(In thousands) March 31, 1999 December 31, 1998
-------------- -----------------
Expiration Commitment Principal Commitment Principal
Lender Date Amount Outstanding Amount Outstanding
------ ---- ------ ----------- ------ -----------
<S> <C> <C> <C> <C> <C>
Credit Suisse First Boston(1)(2)............. 12/31/99 $300,000 $ 72,199 $ 300,000 $122,356
Morgan Stanley(1)............................ 12/30/99 300,000 - 300,000 -
Banco Santander(1)........................... 08/31/99 50,000 37,983 50,000 34,669
Sanwa Bank(1)................................ 06/30/99 25,000 24,839 25,000 14,369
Goldman Sachs Mortgage Company(1)(3)......... 04/30/99 100,000 46,342 100,000 46,989
Residential Funding Corporation(1)(4)........ 09/30/99 100,000 52,867 200,000 124,763
Bank of America(1)........................... 05/28/99 35,000 15,092 35,000 18,776
Residential Funding Corporation.............. 05/31/99 50,000 31,432 50,000 31,432
Other Borrowings(5).......................... - 141,915 - 90,409
-------- -------- ---------- --------
Totals..................................... $960,000 $422,669 $1,060,000 $483,763
======== ======== ========== ========
</TABLE>
_____
(1) The above borrowings are collateralized by the Company's loans and leases
held for sale and investment.
(2) The agreement with Credit Suisse First Boston ("CSFB") requires the Company
to obtain a capital infusion of $100 million by May 31, 1999. The Company
is currently in the process of obtaining a temporary waiver of this
covenant from CSFB until the Bay View merger is completed.
(3) The warehouse line of credit with Goldman Sachs Mortgage Company is used to
fund loans through FMAC Golf Finance Group LLC.
(4) The Residential Funding Corporation line of credit was temporarily
increased from $100 million to $200 million until January 31,1999.
(5) As of March 31, 1999, other borrowings includes $26.5 million of sold loans
that have been accounted for as a financing, $50.1 million dollars of loans
that have been financed through FMAC Star Fund, LLP, a $7.3 million
repurchase agreement with Deutsche Bank for which the 1998-CE and 1998-CF
certificates were pledged as collateral, $57.1 million related to a
participation agreement with Bay View Bank, and a $0.8 million loan with
Far East Bank. As of December 31, 1998, other borrowings includes $55.3
million of sold loans that have been accounted for as a financing at, $29.0
million dollars of loans that have been financed through FMAC Star Fund,
LLP, and a $6.1 million repurchase agreement with Deutsche Bank for which
the 1998-CE and 1998-CF certificates were pledged as collateral.
The above facilities, with the exception of Bank of America, have variable
interest rates based on London Interbank Offered Rate ("LIBOR") plus a spread.
The line of credit with Bank of America has a fixed interest rate of 1.00% when
minimum deposit requirements are maintained. The weighted average interest rate
on the outstanding principal balances of these facilities was 6.10% and 6.96%
at March 31, 1999 and December 31, 1998, respectively.
The Company also has a master purchase and sale agreement with Southern
Pacific Bank (''SPB"), a wholly owned subsidiary of Imperial Credit Industries,
Inc. ("ICII") to originate loans for SPB under mutual agreement, and subject to
SPB underwriting each such loan prior to sale of such loans. Under this
agreement, the Company also has the ability to repurchase loans, under mutual
agreement with SPB. There is no specified commitment by either party, and each
individual sale is negotiated separately as to pricing. This agreement has no
expiration date. For the three
12
<PAGE>
months ended March 31, 1999 and year ended December 31, 1998, loans originated
for SPB (and not repurchased), including participations, totaled approximately
$0 and $26.5 million, respectively.
The Company's sources of operating cash flow include: (i) loan origination
income and fees; (ii) net interest income on loans and leases held for sale and
investment; (iii) cash servicing income; (iv) premiums obtained in sales of
whole loans and (v) cash proceeds from loan securitization. Cash from loan
origination fees, net interest income on loans held for sale and loan servicing
fees, as well as available borrowings generally provide adequate liquidity to
fund current operating expenses, excluding the difference between the amount
funded on loans originated and the amount advanced under the Company's current
warehouse facilities.
For the three months ended March 31, 1999, net cash provided by operating
activities was $179.0 million. This excludes cash provided by net loan
origination activities of $82.9 million, which was primarily attributable to the
sale of $518.1 million of the Company's loans. For the three months ended March
31, 1998, net cash provided by operating activities was $18.5 million, exclusive
of cash used in net loan origination activities of $135.5 million.
For the three months ended March 31, 1999, net cash used in investing
activities was $13.5 million, which was primarily attributable to payment of
$13.0 million to Bankers Mutual and Bankers Mutual Mortgage Inc. (together
"Bankers") according to the earn-out clause of the Asset Purchase Agreement
dated March 9, 1998 by and among the Company, Bankers, and the holders of the
outstanding shares of Bankers. For the three months ended March 31, 1998, net
cash provided by investing activities was $22.3 million, which was primarily
attributable to the sale of a $22.9 million security, which was related to the
Company's 1997-B securitization.
For the three months ended March 31, 1999, net cash used in financing
activities was $61.0 million, which was primarily attributable to decreased
amounts of warehouse line borrowings resulting from the above referenced sales
of loans during the period. For the three months ended March 31, 1998, net cash
provided by financing activities was $148.3 million, which was primarily
attributable to an increase in borrowings from warehouse lines of credit to
finance loan originations during the period.
The Company anticipates that its current cash, together with cash generated
from operations and funds available under its credit facilities, will be
sufficient to fund its operations for at least the next 12 months if the
Company's future operations are consistent with management's expectations.
However, the Company is dependent upon its ability to sell and securitize its
loans as well as access warehouse lines of credit and repurchase facilities to
fund new loan originations. The Company currently expects to be able to maintain
existing warehouse lines of credit and repurchase facilities as current
arrangements expire or become fully utilized; however, there can be no assurance
that such financing will be available on favorable terms, if at all.
Year 2000 Computer Issue
The Year 2000 ("Y2K") computer issue affects virtually all companies and
organizations. Many currently installed computer systems were designed to use
only a two-digit date field. This can cause problems in the systems
distinguishing a 21st century date (i.e. 20--) from a 20th century date (i.e.
19--). Until the date fields are updated, systems or programs could fail or give
erroneous results when referencing dates following December 31, 1999.
The Company is committed to ensuring that all of its computer systems and
operations are Y2K ready. Further, the Company is making such efforts, as it
deems appropriate, to determine that its value chain participants will also be
Y2K ready. The Company has established its Year 2000 Readiness and Compliance
Project ("Y2K Project") as a major project internally, and as such has full
support from the Company's senior management and Board of Directors. Project
awareness is continuously being performed through meetings and documented
communications. The Company is committing the necessary internal and external
resources along with the necessary budgets to ensure successful completion of
the Y2K Project.
The Company has organized a Y2K Project Steering Committee that includes
members of all Company operations groups. There is a dedicated Y2K Project Core
Team made up of full time internal and external resources to perform all
necessary project tasks. In addition, the Company has retained the services of
an outside independent
13
<PAGE>
consulting firm to assist on the project and provide objective guidance. Both
the Y2K Project Steering Committee and the Y2K Project Core Team meet regularly
to review progress.
The Company has developed a comprehensive strategic plan for its Y2K Project.
The plan consists of the following three major phases: Phase I covers awareness
and impact assessment of all internal systems, which commenced in September 1998
and will continue until the Y2K Project is completed; Phase II covers testing
and remediation of all mission critical systems, which commenced in January 1999
and concluded in April 1999; Phase III covers testing and remediation of all
non-mission critical systems, which commenced in December 1998 and is projected
to conclude in June 1999.
The Company's plan is comprehensive, including an assessment and compliance
review of the following:
. Internal hardware and software systems, including data interchange with
external systems
. Value chain participants
. Business infrastructure
. Customers, including Y2K readiness of potential new customers
Borrower assessments are currently underway, with the mission critical
borrower assessments to be completed by May 1999 and all others by September
1999. Currently, the Company has not identified any critical Y2K issues with
either its value chain participants or its borrowers.
The Company has established dedicated budgets for its Y2K Project. Currently,
the projected total cost of the Y2K Project is approximately $1.0 million but is
subject to change if any unanticipated situations arise. Any expenses related to
Y2K issues are being expensed as incurred. As of April 30, 1999, the Company has
incurred approximately $327,000 in Y2K Project related expenditures.
The Company has completed a preliminary assessment of internal computer
systems and believes that there is an effective program in place to resolve the
Y2K issue in an accurate and timely manner. Consequently, the Company
anticipates that the costs associated with Y2K compliance of internal systems
will not be material. However, the Company has not yet determined the
materiality of its relations with third parties and therefore cannot yet
determine costs that will result as a consequence of the Company's external
operations.
Subject to completion of final assessments, the risks associated with the
Company's internal Y2K issues do not appear to be material due to the current
compliance status of most all hardware and the vendor assurances on the third-
party supplied software systems. Risks related to third-party business partners
and borrowers are not completely known at this time. The Company's ongoing
Awareness and Impact Assessment phase will result in the identification of
substantially all Y2K related risks in these areas. There can be no guarantee
that the systems of other organizations on which the Company's systems rely will
be Y2K compliant or will be compatible with the Company' systems, each of which
could have a material adverse effect on the Company.
The Company is currently building specific contingency plans as they relate to
the Y2K issues. A formal process is currently underway to address all determined
business risks in a comprehensive contingency plan. This plan will address all
system, facilities, business partner and borrower areas as they specifically
relate to the Y2K risks that are identified.
The Company is working to identify and analyze the most reasonably likely
worst case scenarios for third-party relationships affected by the Y2K issues.
These scenarios could include possible infrastructure collapse, unforeseen
product shortages, major transportation disruptions, any one of which could have
major and material effects on the Company's business. While the Company is
developing contingency plans to address most issues under its control, an
infrastructure problem outside of its control could result in a delay in the
Company's delivering its products and services depending on the nature and
severity of the problems.
Although the Company is dedicating substantial resources towards obtaining Y2K
readiness, there is no assurance that it will be successful in its efforts to
identify and address all Y2K issues. Even if the Company acts in a
14
<PAGE>
timely manner to complete all of its assessments, identify, develop and
implement remediation plans believed to be adequate, and develop contingency
plans, some problems may not be identified or corrected in time to prevent
material adverse consequences to the Company. The estimates and conclusions
herein are forward-looking statements and are based on management's best
estimates of future events. Risks of completing the plan include the
availability of resources, the ability to discover and correct potential Y2K
sensitive problems which could have a serious impact on certain operations and
the ability of the Company's service providers to bring their systems into Y2K
compliance. As the Company continues to progress with its Y2K initiatives, it
may discover that actual results will differ materially from these estimates.
The Company's Y2K efforts are continual and the Y2K Project will evolve, as new
information becomes available.
Inflation
The impact of inflation is reflected in the increased costs of the Company's
operations. Unlike industrial companies, nearly all of the assets and
liabilities of the Company's operations are monetary in nature. As a result,
interest rates have a greater impact on the Company's operations' performance
than do the effects of general levels of inflation. Inflation affects the
Company's operations primarily through its effect on interest rates, since
interest rates normally increase during periods of high inflation and decrease
during periods of low inflation. During periods of significantly increasing
interest rates, demand for loans may be adversely affected.
15
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk Management
Quantitative Information about Interest Rate Risk
The following table presents the Company's financial instruments that are
sensitive to changes in interest rates, categorized by expected maturity and the
instruments' fair values at March 31, 1999:
<TABLE>
<CAPTION>
Total Fair
(Dollars in thousands) 1999 2000 2001 2002 2003 Thereafter Balance Value
---- ---- ---- ---- ---- ---------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-sensitive assets:
Loans held for sale
Permanent commercial loans.... $ 16,935 $ 147 $ 5,083 $ - $ 246 $119,981 $142,392 $142,392
Average interest rate..... 9.93% 8.75% 9.43% - 11.60% 9.45% 9.51%
Multi-family loans............ - - - - - 43,950 43,950 43,950
Average interest rate..... - - - - - 6.94% 6.94%
Equipment loans and leases.... - 33 727 3,069 6,011 50,441 60,281 60,281
Average interest rate..... - 10.69% 11.52% 12.30% 11.99% 11.03% 11.20%
Loans held for investment
Permanent commercial loans.... 1,000 2,500 - - - 6,330 9,830 9,830
Average interest rate..... 10.69% 9.47% - - - 10.67% 10.37%
Short-term commercial loans... 98,018 17,838 - - - 3,786 119,642 119,642
Average interest rate..... 9.43% 8.66% - - - 9.36% 9.31%
Multi-family loans............ - - - - - 25,167 25,167 25,167
Average interest rate..... - - - - - 6.81% 6.81%
Equipment loans and leases.... - - - 114 126 176 416 416
Average interest rate..... - - - 12.75% 10.75% 14.49% 13.09%
Securities available for sale(1). 1,722 2,047 1,746 1,411 1,330 8,408 16,664 16,664
Retained interest in loan
securitizations(2).............. 3,638 3,309 2,956 1,980 1,453 16,701 30,037 30,037
Servicing rights................. 3,006 3,866 3,521 3,207 3,086 15,859 32,545 32,545
-----------------------------------------------------------------------------------------------
Total interest-sensitive assets.. $124,319 $29,740 $14,033 $9,781 $12,252 $290,799 $480,924 $480,924
===============================================================================================
Interest-sensitive liabilities:
Borrowings....................... $422,669 $ - $ - $ - $ - $ - $422,669 $422,669
Average interest rate..... 6.10% - - - - - 6.10%
-----------------------------------------------------------------------------------------------
Total interest-sensitive
liabilities..................... $422,669 $ - $ - $ - $ - $ - $422,669 $422,669
===============================================================================================
</TABLE>
- --------
(1) As of March 31, 1999, the weighted average interest rate on securities held
for sale was 8.82%.
(2) Future cash flows from retained interest are dependent upon actual credit
losses and prepayment speed of the loans underlying the security. The
Company applies a discount rate to the expected cash flows of each retained
interest which includes estimated credit losses, prepayment speed and time
value of money. As of March 31, 1999, the weighted average discount rate
used on the retained interests was 19.19% with 8.96% weighted average
accretion of income.
Financial instruments include loans and leases held for sale, loans and leases
held for investment, securities available for sale, retained interest in loan
securitizations, servicing rights and borrowings. Fair value estimates are
subjective in nature and involve uncertainties and matters of judgment and
therefore cannot be determined with precision. Changes in assumptions could
significantly affect the estimates. In addition, the fair value estimates
16
<PAGE>
presented do not include the value of anticipated future business and the value
of assets and liabilities that are not considered financial instruments.
The carrying values of interest-bearing deposits approximate fair value due to
their short-term nature. The fair value of securities available for sale was
based on discounted cash flow. The fair value of loans and leases held for sale
and loans and leases held for investment are estimated by discounting expected
future cash flows at an estimated market rate of interest. A market rate of
interest is estimated based on the AAA Corporate Bond Rate, adjusted for credit
risk and the Company's cost to administer such loans. The fair value of retained
interest in loan securitizations was estimated by discounting future cash flows
using rates that an unaffiliated third-party purchaser would require on
instruments with similar terms and remaining maturities. The fair values of
borrowings were estimated by discounting cash flows at interest rates for debt
having similar credit ratings and maturities.
Qualitative Information about Interest Rate Risk
The following discussion about the Company's risk management activities
includes "forward-looking statements" that involve risk and uncertainties.
The Company's profits depend, in part, on the difference, or ''spread,''
between the effective rate of interest received by the Company on the loans it
originates or purchases and the interest rates payable by the Company under its
warehouse financing facilities or for securities issued in its securitizations.
The spread can be adversely affected because of interest rate increases during
the period from the date the loans are originated or purchased until the closing
of the sale or securitization of such loans.
The Company is required by its warehouse lending facilities to hedge all of
its fixed-rate principal loan balances securing such facilities. The Company's
hedging strategy normally includes selling U.S. Treasury futures in such amounts
and maturities as to effectively hedge the interest rate volatility of its
portfolio. The Company does not maintain naked or leveraged hedge positions.
In addition, the Company from time to time may use various other hedging
strategies to provide a level of protection against interest rate risks on its
fixed-rate loans. These strategies may include forward sales of loans or loan-
backed securities, interest rate caps and floors and buying and selling of
futures and options on futures. The Company's management determines the nature
and quantity of hedging transactions based on various factors, including market
conditions and the expected volume of loan originations and purchases. While the
Company believes its hedging strategies are cost-effective and provide some
protection against interest rate risks, no hedging strategy can completely
protect the Company from such risks. Further, the Company does not believe that
hedging against the interest rate risks associated with variable-rate loans is
cost-effective, and does not utilize the hedging strategies described above with
respect to its variable-rate loans.
17
<PAGE>
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, thereunto duly authorized.
FRANCHISE MORTGAGE ACCEPTANCE COMPANY
Date: May 12, 1999 By: /s/ Raedelle Walker
--------------------------------------------
Raedelle Walker
Executive Vice President and Chief Financial
Officer
(Principal Financial Officer and
Principal Accounting Officer)
18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 61,354
<SECURITIES> 46,701
<RECEIVABLES> 407,905
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 516,260
<PP&E> 10,591
<DEPRECIATION> (3,623)
<TOTAL-ASSETS> 632,125
<CURRENT-LIABILITIES> 458,936
<BONDS> 0
0
0
<COMMON> 29
<OTHER-SE> 151,879
<TOTAL-LIABILITY-AND-EQUITY> 632,125
<SALES> 11,210
<TOTAL-REVENUES> 23,330
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 14,476
<LOSS-PROVISION> 262
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 8,525
<INCOME-TAX> 3,410
<INCOME-CONTINUING> 5,115
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,115
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0.18
</TABLE>
