<PAGE> 1
=================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------------
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
MAY 19, 1998
(Date of earliest event reported)
------------------------
Commission File Number: 0-18108
------------------------
FINET HOLDINGS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or jurisdiction of
incorporation or organization)
505 SANSOME STREET, #1420
SAN FRANCISCO, CA 94111
(Address of principal executive office)
94-3115180
(IRS Employer Identification Number)
Telephone Number: (415) 263-5420
(Registrant's telephone number, including area code)
This Amendment No. 1 to the Registrant's Report on Form 8-K dated May 19,
1998 regarding the Registrant's acquisition of MICAL Mortgage, Inc.
("MICAL") amends Item 7(a) to provide financial statements of MICAL and
Item 7(b)to provide certain required pro forma financial information which
were impracticable to provide at the time the related 8-K was filed.
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
As previously reported on May 27, 1998, on May 19, 1998, the Registrant
("Finet") acquired 100% of the issued and outstanding stock of MICAL from
its shareholders for a consideration of 552,430 shares of the Registrant's
common stock. 120,460 of the 552,430 shares are reserved for potential
adjustment for certain currently undeterminable contingencies. Three
individuals, John E. Railey, Harve L. Lubin and Joseph E. Gistaro, were the
shareholders of MICAL.
The purchase price and terms of this acquisition were arrived at only after
arms-length negotiations between the principals of the Registrant and
MICAL. The underlying principles used in determining the consideration for
the acquisition involved an unscientific analysis of past performance, the
perceived value of MICAL and the future potential of the combined entity.
The Registrant also entered into employment agreements with each of the
shareholders of MICAL.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
See Exhibit 20 for MICAL's audited balance sheets as of April 30, 1998 and
1997 and the related statements of operations, changes in shareholders'
equity, and cash flows for the years then ended.
(b) PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma condensed financial statements give
effect, for informational purposes only, to the acquisition of MICAL by the
Registrant in a transaction accounted for as a purchase.
The pro forma information is presented for illustrative purposes only and
is not necessarily indicative of the operating results or financial
position that would have occurred if the acquisition had been completed at
the beginning of the periods presented, nor is it necessarily indicative of
future operating results or financial position.
These pro forma condensed consolidated financial statements should be read
in conjunction with the historical consolidated financial statements and
the related notes thereto of the Registrant as reported on Registrant's
annual report on Form 10-KSB for the year ended April 30, 1998 and the
quarterly report on Form 10-QSB/A for the quarter ended July 31, 1998 and
of MICAL Mortgage, Inc. as attached as Exhibit 20.
<PAGE> 3
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JULY 31, 1998
(In thousands, except loss per PRO FORMA
share) --------------------
----
(May 1-
May18,
1998)
Finet Mical Adjustme Proforma
nts
-------- -------- -------- --------
-- - -- -
REVENUE
Gain/loss from sales of
mortgage loans and $ $ $ $
Servicing rights 3,662 16 - 3,678
Interest income 1,803 400 - 2,203
Other 1,703 88 - 1,791
-------- -------- -------- --------
-
Total revenue 7,168 504 - 7,672
-------- -------- -------- --------
-
EXPENSES
Compensation and employee 3,917 497 - 4,414
benefits
Interest expense -
2,792 442 3,234
Other operating expenses (1
3,007 513 72 ) 3,592
-------- -------- -------- --------
- - -- -
Total expenses
9,716 1,452 72 11,240
-------- -------- -------- --------
- - -- -
LOSS BEFORE INCOME TAXES (
(2,548) 948) (72) (3,568)
INCOME TAX EXPENSE - - -
-
-------- -------- -------- --------
- - -- -
NET LOSS $ $ $ $
(2,548) ( 948) (72) (3,568)
======== ======== ======== ========
= = == =
BASIC AND DILUTED NET LOSS PER $ $
COMMON SHARE (0.08) (0.11)
======== ========
= =
SHARES USED TO COMPUTE BASIC AND 87 (2
DILUTED SHARE DATA 32,489 ======== ) 32,576
========= == ========
=
See accompanying Notes to Unaudited Pro Forma Condensed Financial
Statements
<PAGE> 4
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED APRIL 30, 1998
(In thousands except loss per Pro Forma
share) ---------------------
---
Finet Mical Adjustment Pro
s Forma
-------- -------- ---------- -------
- - -- --
REVENUE
Gain/loss from sales of
mortgage loans and $ $ $ - $
servicing rights 7,543 6,375 13,918
Interest income 3,247 5,142 - 8,389
Other 1,771 106 - 1,877
-------- -------- -------- -------
- -
Total revenue 12,561 11,623 - 24,184
-------- -------- -------- -------
- -
EXPENSES
Compensation and employee -
benefits 9,403 3,623 13,026
Interest expense -
3,175 5,367 8,542
Other operating expenses 286 (1
9,136 5,347 ) 14,769
-------- -------- --------- -------
- - --
Total expenses
21,714 14,337 286 36,337
-------- -------- --------- -------
- - --
LOSS BEFORE INCOME TAXES AND
(9,153) (2,714) (286) (12,153
)
INCOME TAX EXPENSE (BENEFIT) (98) -
226 128
-------- -------- --------- -------
- - --
NET LOSS $ $ $ $
(9,379) (2,616) (286) (12,281
)
======== ======== ========= =======
= = ==
BASIC AND DILUTED NET LOSS
PER COMMON SHARE $ $
(0.31) (0.40)
======== =======
= ==
SHARES USED TO COMPUTE BASIC AND
DILUTED SHARE DATA 30,433 552 (2
======== ========= ) 30,985
= =======
==
See accompanying Notes to Unaudited Pro Forma Condensed Financial
Statements
<PAGE> 5
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
APRIL 30, 1998
(In thousands) Pro Forma
---------------------
----
Finet Mical Pro
Adjustment Forma
s
ASSETS: -------- -------- ---------- -------
-- - -- --
Cash and cash equivalents $ $ $ $
1,993 351 - 2,344
Mortgages held for sale, net of (3
allowance for losses 63,034 85,819 (42,494) ) 104,559
(3
(1,800) )
Accounts receivable from sales
of mortgage loans 23,008 - 23,008
Other assets 3,905 5,691 (4 22,743
13,433 )
(1
(286) )
-------- -------- --------- -------
- - --
Total Assets $ $ $ $
101,468 90,075 (38,889) 152,654
======== ======== ========= =======
= = ==
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Warehouse line of credit $ $ $ (3 $
85,659 83,411 (42,494) ) 126,576
Other liabilities (3
12,450 8,504 (1,800) ) 19,154
-------- -------- --------- -------
- - --
Total Liabilities
98,109 91,915 (44,294) 145,730
Stockholders' equity/(deficit): (4
3,359 (1,840) 5,691 ) 6,924
(1
(286) )
-------- -------- --------- -------
- - --
Total Liabilities and $ $ $ $
Stockholders' Equity 101,468 90,075 (38,889) 152,654
======== ======== ========= =======
= = ==
See accompanying Notes to Unaudited Pro Forma Condensed Financial
Statements
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
PERIODS
The pro forma condensed financial statements are based on the historical
financial statements and the notes thereto of the Registrant included in
its quarterly report on Form 10-QSB/A for the quarter ended July 31, 1998,
its annual report on Form 10-KSB for the year ended April 30, 1998, and the
historical financial statements of MICAL for the corresponding periods.
The Registrant and MICAL's historical financial statement data for the
three months ended July 31, 1998 and MICAL's historical financial statement
data for the year ended April 30, 1998 have been prepared on the same basis
as the audited financial statements of the Registrant, and in the opinion
of management, contain all adjustments necessary for the fair presentation
of results of operations for such periods.
The proforma condensed balance sheet combines the Registrant's April 30,
1998 condensed consolidated balance sheet with MICAL's April 30, 1998
condensed balance sheet, giving effect to the acquisition as if it had
occurred on April 30, 1998. A pro forma condensed balance sheet as of July
31, 1998 is not presented, as the Registrant's 10-QSB/A for that three
month period reflects both the Registrant's and MICAL's balance sheet
accounts.
For the three month period ended July 31, 1998, the pro forma condensed
statement of operations combines the Registrant's historical condensed
consolidated statement of operations, which includes the results of MICAL
since the acquisition date, May 19, 1998, with MICAL's condensed statement
of operations for the period prior to the acquisition, May 1 to May 18,
1998, giving effect to the acquisition as if it had occurred at the
beginning of the period. For the year ended April 30, 1998, the proforma
condensed statement of operations combines the Registrant's historical
condensed consolidated statement of operations with MICAL's corresponding
historical condensed statement of operations as if
<PAGE> 6
MICAL had been acquired at the beginning of the period.
PRO FORMA ADJUSTMENTS AND NOTES (In thousands)
(1) To amortize the goodwill ($5,691) associated with the acquisition over
an estimated life of 20 years. ($286 per year; $72 per three month period)
(2) To record issuance of 552 common shares associated with the
acquisition, weighted as appropriate.
(3) To eliminate intercompany loans and advances.
(4) To record the excess of the purchase price over fair value of assets
and liabilities (goodwill). The book value of tangible assets acquired and
liabilities assumed are assumed to approximate fair value.
PRO FORMA LOSS PER SHARE
Basic net loss per share is determined using net loss divided by the
weighted average shares of Finet's common stock outstanding during the
periods plus shares of common stock assumed to be issued as part of the
acquisition. Diluted net loss per share is computed by dividing net loss by
the weighted average shares outstanding. The effects of common stock
equivalents have not been included because they would have been anti-
dilutive during the periods reported.
(c ) EXHIBITS
EX-23 Consent of Independent Auditors
EX-20 MICAL audited balance sheets as of April 30, 1998 and 1997
and the related statements of operations,
changes in shareholders' equity, and cash flows
for the years then ended.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
FINET HOLDINGS CORPORATION
Date: December 7, 1998 /s/ MARK L. KORELL
------------------------------------
MARK L. KORELL
(CEO AND PRINCIPAL EXECUTIVE OFFICER)
Date: December 7, 1998 /s/ GEORGE P. WINKEL
------------------------------------
GEORGE P. WINKEL
(PRINCIPAL FINANCIAL OFFICER)
<PAGE> 7
Consent of Independent Auditors
Mical Mortgage, Inc:
We consent to the inclusion of our report dated July 24, 1998, with respect
to the balance sheets of Mical Mortgage, Inc. as of April 30, 1998 and
1997, and the related statements of operations, changes in shareholders'
equity and cash flows for the years then ended, which report appears in the
Form 8-K/A of Finet Holdings Corporation dated December 7, 1998.
Our report dated July 24, 1998 contains an explanatory paragraph that
states that the Company has suffered recurring losses from operations and
has a net capital deficiency that raise substantial doubt about its ability
to continue as a going concern.
KPMG Peat
Marwick LLP
San Diego, California
December 7, 1998
<//TEXT>
</DOCUMENT
<PAGE> 8
Independent Auditors' Report
The Board of Directors
Mical Mortgage, Inc.:
We have audited the accompanying balance sheets of Mical Mortgage,
Inc. (the "Company") as of April 30, 1998 and 1997 and the related
statements of operations, changes in shareholders' equity, and cash flows
for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standardsand Government Auditing Standards, issued by the Comptroller
General of the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Mical Mortgage,
Inc. as of April 30, 1998 and 1997, and the results of its operations and
its cash flows for the years then ended in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Notes 17 and
18 to the financial statements, the Company has suffered recurring losses
from operations and has a net capital deficiency that raise substantial
doubt about its ability to continue as a going concern. Management's plans
in regard to these matters are also described in Note 18 to the financial
statements. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
KPMG Peat Marwick LLP
In accordance with Government Auditing Standards, we have also issued
a report dated July 24, 1998 on our consideration of Mical Mortgage, Inc.'s
internal control over financial reporting and a report dated July 24, 1998
on our tests of its compliance with certain provisions of laws and
regulations.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplementary information
included in Schedules I, II and III are presented for purposes of
additional analysis and is not a required part of the basic financial
statements. Such information has been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
San Diego, California
July 24, 1998
<PAGE 9
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========== ==========
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See accompanying notes to financial statements.
<PAGE> 10
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s
t
I (98,000) (636,000)
n
c
o
m
e
t
a
x
b
e
n
e
f
i
t
(
n
o
t
e
1
5
)
---------- ----------
- -
L (2,616,000 (1,354,000
o ) )
s
s
b
e
f
o
r
e
m
i
n
o
r
i
t
y
i
n
t
e
r
e
s
t
W - 21,000
r
i
t
e-
o
f
f
o
f
m
i
n
o
r
i
t
y
i
n
t
e
r
e
s
t
---------- ----------
- -
Ne $ $
t (2,616,000 (1,375,000
lo ) )
ss
========== ==========
= =
See accompanying notes to financial statements.
<PAGE> 11
M
I
C
A
L
M
O
R
T
G
A
G
E
,
I
N
C
.
S
t
a
t
e
m
e
n
t
s
o
f
C
h
a
n
g
e
s
i
n
S
h
a
r
e
h
o
l
d
e
r
s
'
E
q
u
i
t
y
Y
e
a
r
s
e
n
d
e
d
A
p
r
i
l
3
0
,
1
9
9
8
a
n
d
1
9
9
7
Additional Retained
Capital paid-in earnings
Stock capital (deficit) Total
---------- ---------- ---------- ----------
B $ 127,000 218,000 1,806,000 2,151,000
a
l
a
n
c
e
a
t
A
p
r
i
l
3
0
,
1
9
9
6
N - - (1,375,000 (1,375,000
e ) )
t
l
o
s
s
---------- ---------- ---------- ----------
B 127,000 218,000 431,000 776,000
a
l
a
n
c
e
a
t
A
p
r
i
l
3
0
,
1
9
9
7
N - - (2,616,000 (2,616,000
e ) )
t
l
o
s
s
---------- ---------- ---------- ----------
B $ 127,000 218,000 (2,185,000 (1,840,000
a ) )
l
a
n
c
e
a
t
A
p
r
i
l
3
0
,
1
9
9
8
========== ========== ========== ==========
See accompanying notes to financial statements.
<PAGE> 12
M
I
C
A
L
M
O
R
T
G
A
G
E
,
I
N
C
.
S
t
a
t
e
m
e
n
t
s
o
f
C
a
s
h
F
l
o
w
s
Y
e
a
r
s
e
n
d
e
d
A
p
r
i
l
3
0
,
1
9
9
8
a
n
d
1
9
9
7
1998 1997
---------- ----------
-- --
C
a
s
h
f
l
o
w
s
f
r
o
m
o
p
e
r
a
t
i
n
g
a
c
t
i
v
i
t
i
e
s
:
N $ $
e (2,616,000 (1,375,000
t ) )
l
o
s
s
A
d
j
u
s
t
m
e
n
t
s
t
o
r
e
c
o
n
c
i
l
e
n
e
t
l
o
s
s
t
o
n
e
t
c
a
s
h
p
r
o
v
i
d
e
d
b
y
(
u
s
e
d
i
n
)
o
p
e
r
a
t
i
n
g
a
c
t
i
v
i
t
i
e
s
:
A 216,000 378,000
m
o
r
t
i
z
a
t
i
o
n
o
f
m
o
r
t
g
a
g
e
s
e
r
v
i
c
i
n
g
r
i
g
h
t
s
A (179,000) -
m
o
r
t
i
z
a
t
i
o
n
o
f
d
e
f
e
r
r
e
d
g
a
i
n
D 176,000 296,000
e
p
r
e
c
i
a
t
i
o
n
a
n
d
a
m
o
r
t
i
z
a
t
i
o
n
C (1,136,000 (1,195,000
a ) )
p
i
t
a
l
i
z
e
d
m
o
r
t
g
a
g
e
s
e
r
v
i
c
i
n
g
r
i
g
h
t
s
P 1,518,000 1,556,000
r
o
v
i
s
i
o
n
f
o
r
l
o
s
s
e
s
W - 21,000
r
i
t
e-
o
f
f
o
f
m
i
n
o
r
i
t
y
i
n
t
e
r
e
s
t
G (319,000) -
a
i
n
o
n
s
a
l
e
s
o
f
s
e
r
v
i
c
i
n
g
,
n
e
t
D (90,000) (301,000)
e
c
r
e
a
s
e
i
n
n
e
t
d
e
f
e
r
r
e
d
t
a
x
l
i
a
b
i
l
i
t
y
C
h
a
n
g
e
s
i
n
a
s
s
e
t
s
a
n
d
l
i
a
b
i
l
i
t
i
e
s
:
I (464,000) (625,000)
n
c
r
e
a
s
e
i
n
a
c
c
o
u
n
t
s
a
n
d
i
n
t
e
r
e
s
t
r
e
c
e
i
v
a
b
l
e
D 256,000 (243,000)
e
c
r
e
a
s
e
(
i
n
c
r
e
a
s
e
)
i
n
i
n
c
o
m
e
t
a
x
e
s
r
e
c
e
i
v
a
b
l
e
I (201,000) (34,000)
n
c
r
e
a
s
e
i
n
o
t
h
e
r
a
s
s
e
t
s
I 836,000 345,000
n
c
r
e
a
s
e
i
n
a
c
c
o
u
n
t
s
p
a
y
a
b
l
e
a
n
d
a
c
c
r
u
e
d
l
i
a
b
i
l
i
t
i
e
s
D (132,000) (33,000)
e
c
r
e
a
s
e
i
n
o
t
h
e
r
l
i
a
b
i
l
i
t
i
e
s
M (846,243,0 (876,997,0
o 00) 00)
r
t
g
a
g
e
l
o
a
n
s
o
r
i
g
i
n
a
t
e
d
a
n
d
p
u
r
c
h
a
s
e
d
,
n
e
t
P 823,057,00 889,094,00
r 0 0
o
c
e
e
d
s
f
r
o
m
m
o
r
t
g
a
g
e
l
o
a
n
s
s
o
l
d
,
n
e
t
B 841,675,00 859,985,00
o 0 0
r
r
o
w
i
n
g
s
u
n
d
e
r
l
i
n
e
s
o
f
c
r
e
d
i
t
R (822,001,0 (871,100,0
e 00) 00)
p
a
y
m
e
n
t
o
f
l
i
n
e
s
o
f
c
r
e
d
i
t
---------- ----------
-- --
Net cash used in operating (5,647,000 (228,000)
activities )
---------- ----------
-- --
C
a
s
h
f
l
o
w
s
f
r
o
m
i
n
v
e
s
t
i
n
g
a
c
t
i
v
i
t
i
e
s
:
P (112,000) (140,000)
u
r
c
h
a
s
e
o
f
f
u
r
n
i
t
u
r
e
a
n
d
e
q
u
i
p
m
e
n
t
n
e
t
o
f
s
a
l
e
s
C (64,000) (76,000)
a
p
i
t
a
l
i
z
e
d
c
o
m
p
u
t
e
r
s
o
f
t
w
a
r
e
P 491,000 -
r
o
c
e
e
d
s
f
r
o
m
s
a
l
e
o
f
r
e
a
l
e
s
t
a
t
e
o
w
n
e
d
P 3,584,000 -
r
o
c
e
e
d
s
f
r
o
m
s
a
l
e
o
f
l
a
n
d
,
b
u
i
l
d
i
n
g
a
n
d
i
m
p
r
o
v
e
m
e
n
t
s
P 1,871,000 -
r
o
c
e
e
d
s
f
r
o
m
s
a
l
e
o
f
s
e
r
v
i
c
i
n
g
---------- ----------
-- --
Net cash provided by (used 5,770,000 (216,000)
in) investing activities
---------- ----------
-- --
C
a
s
h
f
l
o
w
s
f
r
o
m
f
i
n
a
n
c
i
n
g
a
c
t
i
v
i
t
i
e
s
:
I 230,000 288,000
s
s
u
a
n
c
e
o
f
a
d
v
a
n
c
e
s
f
r
o
m
a
f
f
i
l
i
a
t
e
s
R (205,000) -
e
p
a
y
m
e
n
t
o
f
a
d
v
a
n
c
e
s
f
r
o
m
a
f
f
i
l
i
a
t
e
s
I 2,681,000 -
s
s
u
a
n
c
e
o
f
n
o
t
e
s
p
a
y
a
b
l
e
R (2,682,000 (72,000)
e )
p
a
y
m
e
n
t
o
f
n
o
t
e
s
p
a
y
a
b
l
e
I 7,000 317,000
n
c
r
e
a
s
e
i
n
a
m
o
u
n
t
s
d
u
e
t
o
b
a
n
k
s
---------- ----------
-- --
Net cash provided by 31,000 533,000
financing activities
---------- ----------
-- --
N 154,000 89,000
e
t
i
n
c
r
e
a
s
e
i
n
c
a
s
h
a
n
d
c
a
s
h
e
q
u
i
v
a
l
e
n
t
s
C 197,000 108,000
a
s
h
a
n
d
c
a
s
h
e
q
u
i
v
a
l
e
n
t
s
a
t
b
e
g
i
n
n
i
n
g
o
f
y
e
a
r
---------- ----------
-- --
C $ $
a 351,000 197,000
s
h
a
n
d
c
a
s
h
e
q
u
i
v
a
l
e
n
t
s
a
t
e
n
d
o
f
y
e
a
r
========== ==========
=== ===
<PAGE> 13
M
I
C
A
L
M
O
R
T
G
A
G
E
,
I
N
C
.
S
t
a
t
e
m
e
n
t
s
o
f
C
a
s
h
F
l
o
w
s
,
C
o
n
t
i
n
u
e
d
Y
e
a
r
s
e
n
d
e
d
A
p
r
i
l
3
0
,
1
9
9
8
a
n
d
1
9
9
7
1998 1997
---------- ----------
- -
S
u
p
p
l
e
m
e
n
t
a
l
d
i
s
c
l
o
s
u
r
e
o
f
c
a
s
h
f
l
o
w
i
n
f
o
r
m
a
t
i
o
n
:
C $ $
a 5,129,000 4,287,000
s
h
p
a
i
d
d
u
r
i
n
g
t
h
e
y
e
a
r
f
o
r
i
n
t
e
r
e
s
t
C $ $
a (249,000) 32,000
s
h
(
r
e
c
e
i
v
e
d
)
p
a
i
d
d
u
r
i
n
g
t
h
e
y
e
a
r
f
o
r
i
n
c
o
m
e
t
a
x
e
s
,
n
e
t
S
u
p
p
l
e
m
e
n
t
a
l
d
i
s
c
l
o
s
u
r
e
o
f
n
o
n
c
a
s
h
i
n
f
o
r
m
a
t
i
o
n
:
M $ $
o 135,000 326,000
r
t
g
a
g
e
l
o
a
n
s
h
e
l
d
f
o
r
s
a
l
e
t
r
a
n
s
f
e
r
r
e
d
t
o
r
e
a
l
e
s
t
a
t
e
o
w
n
e
d
D
e
f
e
r
r
e
d
g
a
i
n
o
n
s
a
l
e
a
n
d
l
e
a
s
e
b
a
c
k
o
f
b
u
i
l
d
i
n
g
,
l
a
n
d
a $ $
n 1,593,000 -
d
i
m
p
r
o
v
e
m
e
n
t
s
S
e
e
a
c
c
o
m
p
a
n
y
i
n
g
n
o
t
e
s
t
o
f
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
.
<PAGE> 14
MICAL MORTGAGE, INC.
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1998 AND 1997
(1) Summary of Significant Accounting Policies
(a) Organization
Mical Mortgage, Inc. (the "Company") is a California corporation
engaged in the business of originating, purchasing, selling and
servicing mortgage loans primarily in California. On May 19, 1998,
the Company entered into a sale agreement to sell the Company and all
its operations to FINET Holdings Corporation ("FINET").
(b) Cash and Cash Equivalents
For purposes of financial statement presentation, the Company
considers all highly liquid debt instruments with original maturities
of three months or less, to be cash equivalents. Cash equivalents
consist of cash on hand and in bank accounts.
(c) Office Premises, Equipment and Computer Software
Office premises, leasehold improvements and equipment are stated at
cost, less accumulated depreciation and amortization. Premises,
equipment and leasehold improvements are depreciated or amortized on a
straight-line basis over the estimated useful lives of the various
classes of assets, ranging from five to seven years, or over the
remaining lease term, whichever is shorter.
Certain computer software costs have been capitalized and are being
amortized using the straight-line method over five years.
(d) Loan Fees
Loan origination fees, net of the direct costs of underwriting and
closing the loans, are deferred until the loans are sold to a
permanent investor.
The Company receives fees for making commitments to purchase and fund
loans. These fees are recognized as revenue when the loans are sold
to permanent investors or when it becomes evident that the commitments
will not be used.
Commitment fees paid to investors to obtain loan sale commitments are
expensed when the loans are sold to investors or when it becomes
evident that the commitment will not be used.
Other loan fees, which represent income from the prepayment of loans,
delinquent payment charges, and miscellaneous loan services, are
recorded as revenue when collected.
(e) Mortgage Banking Activities
Loans held for sale are carried at the lower of cost or market on an
aggregate basis. Cost is the outstanding principal balance of the
mortgage notes increased by direct origination costs, net of deferred
fees, which are recognized upon sale. Commitments to purchase or sell
loans are included in determining market value. The Company has
established an allowance for repurchased loans based upon the
historical trends in delinquencies and losses. Upon repurchase of a
loan, an allowance for loan losses on these repurchased loans is
calculated on a loan-by-loan basis. Any valuation adjustments are
charged against operations.
Purchases and originations of mortgage loans with the intent to sell
or securitize those loans with the servicing rights retained, are
accounted for by allocating the total cost of the mortgage loans to
the mortgage servicing rights and the loans (without the mortgage
servicing rights) based on their relative fair values. The Company
assesses impairment of the capitalized mortgage servicing portfolio
based on the fair value of those rights on a stratum-by-stratum basis
with any impairment recognized through a valuation allowance for each
impaired stratum. These capitalized mortgage servicing rights are
stratified based upon one or more of the predominant risk
characteristics of the underlying loans such as loan type, size, note
rate, date of origination, term and/or geographic location.
(Continued)
<PAGE> 15
In order to determine the fair value of the servicing rights, the
Company uses market prices under comparable servicing sale contracts,
when available, or alternatively, it uses a valuation model that
calculates the present value of future cash flows. Assumptions used
in the valuation model include market discount rates and anticipated
prepayment speeds. The prepayment speeds are determined from market
sources for fixed-rate mortgages with similar coupons and prepayment
reports for comparable ARM loans. In addition, the Company uses
market comparables for estimates of the cost of servicing per loan,
float value, an inflation rate, ancillary income per loan and default
rates.
The Company amortizes the servicing rights in proportion to and over
the period of estimated future net servicing income.
Gains or losses resulting from the sales of servicing rights are
recognized when title and all risks and rewards are irrevocably passed
to the buyer.
On January 1, 1997, the Company adopted Statement of Financial
Accounting Standards No. 125 ("SFAS 125"), "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities."
Under SFAS 125, a transfer of financial assets in which control is
surrendered is accounted for as a sale to the extent that
consideration other than beneficial interests in the transferred
assets is received in the exchange. Liabilities and derivatives
incurred or obtained by the transfer of financial assets are required
to be measured at fair value, if practicable. Also, servicing assets
and other retained interests in the transferred assets must be
measured by allocating the previous carrying value between the asset
sold and the interest retained, if any, based on their relative fair
values at the date of transfer. The Company adopted SFAS 125 on
January 1, 1997, and there was no material impact on the Company's
financial statements.
(f) Allowance for Loan Losses and Repurchases
An allowance for loan losses and repurchases is maintained at a level
deemed appropriate by management to adequately provide for known and
inherent risks in the loan portfolio, other extensions of credit and
loan sale recourse provisions. The allowance is based upon a
continuing review of the portfolio, past loan loss experience, current
economic conditions which may affect the borrowers' ability to pay,
and the underlying collateral value of the loans. Loans which are
deemed to be uncollectible are charged off and deducted from the
allowance. The provision for loan losses and recoveries on loans
previously charged off are added to the allowance.
(g) Loan Administration
Fees for servicing loans are credited to income when earned. Costs of
servicing loans are expensed as incurred.
(h) Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that
includes the enactment date.
(i) Reclassifications
Certain prior year amounts have been reclassified to conform to the
current year's presentation.
(continued)
<PAGE> 16
(j) Errors and Omissions Policy
In connection with the Company's lending activities, the Company has
Fidelity Bond and Errors and Omissions insurance coverage of
$1,525,000 each at April 30, 1998
(k) Use of Estimates
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and
revenue and expenses and the disclosure of contingent assets and
liabilities to prepare these financial statements in conformity with
generally accepted accounting principles. Actual results could differ
from those estimates. Significant estimates at April 30, 1998 and
1997, include mortgage servicing rights and the allowance for loan
losses and repurchases.
(l) Financial Statement Presentation
The Company prepares its financial statements using an unclassified
balance sheet presentation as is customary in the mortgage banking
industry. A classified balance sheet presentation would have
aggregated current assets, current liabilities and net working capital
(deficit) as follows:
1998 1997
Current assets $ 88,345,000 66,377,000
Current liabilities 90,212,000 69,271,000
---------- ----------
Net working capital (deficit) $ (1,867,000 (2,894,000
) )
(2) Mortgage Loans Held for Sale, Pledged
Mortgage loans held for sale at April 30, 1998 and 1997 are summarized
as follows:
1998 1997
Mortgage loans receivable $ 84,110,000 63,238,000
Net deferred origination costs 2,363,000 1,234,000
Allowance for loan losses and (654,000) (187,000)
repurchases
---------- ----------
Total $ 85,819,000 64,285,000
Activity in the allowance for loan losses and repurchases for the
years ended April 30, 1998 and 1997 is as follows:
1998 1997
Beginning balance $ 187,000 195,000
Provision 1,518,000 1,556,000
Charge offs, net of recoveries (1,051,000 (1,564,000
) )
---------- ----------
Total $ 654,000 187,000
Included in mortgage loans held for sale are $835,000 of loans
repurchased as a result of normal representations and warranties as of
April 30, 1997. There were no repurchased loans on the balance sheet as of
April 30, 1998, but the Company has indemnity agreements to cover any
deficiencies or losses related to $6,400,000 in loans, which have been
accounted for in the allowance for loan losses and repurchases. During
fiscal 1998 and 1997, the Company repurchased approximately $2,394,000 and
$1,881,000 of loans, respectively, as a result of normal representations
and warranties.
(continued)
<PAGE> 17
At April 30, 1998 and 1997, the market value of the loans held for
sale approximated the carrying value.
The Company uses mandatory and optional delivery forward contracts to
buy and sell whole loans and mortgage securities. These commitments, which
are used as a hedge against loan originations, are included at the lower of
cost or market valuation in loans held for sale. Upon the consummation of
a sale of loans, any gains or losses from hedging are recognized and
included in the basis of loans sold.
At April 30, 1998 and 1997, mandatory delivery contracts were
outstanding with three dealers whose share of total contracts outstanding
with the Company exceeded 10%. In the event that such dealers were unable
to meet the terms of their contract, the Company would be subject to
interest rate risk.
The following is a summary of commitments to sell and fund loans at
April 30, 1998 and 1997:
1998 1997
Commitments to sell:
Mandatory $ 24,650,000 26,000,000
Optional $ 2,400,000 7,747,000
Commitments to fund - loan $ 31,134,000 50,135,000
applications in process
(3) Office Premises, Equipment and Computer Software
The components of office premises, equipment and computer software at
April 30, 1998 and 1997 are as follows:
1998 1997
Land and building $ - 1,860,000
Furniture and equipment 1,438,000 1,401,000
Leasehold improvements 33,000 251,000
Computer software 140,000 76,000
---------- ----------
1,611,000 3,588,000
Less accumulated depreciation and (1,096,000 (1,083,000
amortization ) )
---------- ----------
Office premises and equipment, $ 515,000 2,505,000
net
(4) Loan Administration
At April 30, 1998 and 1997, mortgage loans serviced for others
aggregated $74,530,000 and $211,253,000, respectively, a portion of which
were subserviced. Certain of these loans are securitized through Federal
National Mortgage Association ("FNMA"), Public Employees Retirement System
("PERS"), California Housing Financing Authority ("CHFA") or Federal Home
Loan Mortgage Corporation ("FHLMC") programs on a non-recourse basis,
whereby foreclosure losses are generally the responsibility of FNMA, PERS,
CHFA and FHLMC, rather than the Company. Included in loans serviced for
others at April 30, 1998 and 1997 were $5,276,000 and $16,927,000,
respectively, of loans securitized through the Government National Mortgage
Association. Certain foreclosure losses pertaining to these loans are the
responsibility of the Company.
On March 31, 1998, the Company and the California Department of Real
Estate ("DRE") entered into a Stipulation and Order Agreement, whereby, the
Company has been issued a restricted broker's license. The Company is
subject to penalties (including the revocation of its broker license) if
any further violations are found. Also, the Company is required to pay for
a DRE audit during fiscal year 1999 at a cost of approximately $3,000 to
$4,000.
(continued)
<PAGE> 18
The Company maintains segregated bank accounts in trust for investors
and mortgagors. Such accounts amounted to $757,000 and $1,436,000 at
April 30, 1998 and 1997, respectively. These cash funds and the related
liabilities are excluded from the balance sheets.
(5) Mortgage Servicing Rights
Changes in mortgage servicing rights during the years ended April 30,
1998 and 1997 were as follows:
1998 1997
Beginning balance $ 1,478,000 661,000
Sale of servicing (1,553,000 -
)
Additions 1,136,000 1,195,000
Amortization (216,000) (378,000)
---------- ----------
Ending balance $ 845,000 1,478,000
(6) Other Assets
Other assets at April 30, 1998 and 1997 consist of the following:
1998 1997
Real estate owned, net $ - 356,000
Capitalized debt issuance costs - 63,000
Prepaid expenses 42,000 50,000
Investments 30,000 30,000
Investment in real estate 333,000 -
Security deposits 15,000 30,000
Other 25,000 72,000
---------- ----------
Total $ 445,000 601,000
<PAGE> 19
(7) Lines of Credit
Lines of credit consist of the following:
1998 1997
Dryson Acceptance Corporation
A $40 million revolving credit
and security agreement secured by
mortgage loans held for sale,
bearing interest based on Prime $ 18,058,000 -
(8.5% at April 30, 1998) expiring
May 1, 1999
Federal National Mortgage
Association
A mortgage financing facility
secured by mortgage loans held
for sale, bearing interest at 100 5,317,000 -
basis points over Fed Funds (5.5%
at April 30, 1998)
Matrix Capital Bank
A $10 million revolving credit
and security agreement secured by
mortgage loans held for sale,
bearing interest based on 9,074,000 -
New York Prime (8.5% at April 30,
1998)
Miami Valley Bank
A $10 million revolving credit
and security agreement secured by
mortgage loans held for sale,
bearing interest based on 8,468,000 -
New York Prime (8.5% at April 30,
1998)
Residential Funding Corporation
A $75 million revolving subline
of credit and security agreement
entered into with a subsidiary of
FINET secured by mortgage loans
held for sale, bearing interest
based on 125 or 200 basis points 42,494,000 -
over LIBOR depending upon the
collateral (5.688% at April 30,
1998)
Residential Funding Corporation
A $60 million revolving credit
and security agreement expiring
on April 30, 1997 secured by
mortgage loans held for sale,
bearing interest based on 200 - - 41,341,000
250 basis points over 30-day
LIBOR depending upon the
collateral (5.704% at April 30,
1998)
The Company had available two
uncommitted lines of credit.
Interest on borrowings under
these lines ranged from LIBOR - 22,396,000
plus 0.75% to Prime plus 1.75%.
---------- ----------
Total $ 83,411,000 63,737,000
(continued)
<PAGE> 20
At April 30, 1998 and 1997, the outstanding aggregate amount on the
mortgage warehouse facility and the uncommitted lines of credit was
$83,411,000 and $63,737,000, respectively, and the weighted-average
interest rate was 7.60% and 7.22%, respectively. The weighted-average rate
during the year ended April 30, 1998 and 1997 was 7.40% and 7.26%,
respectively.
Management believes these agreements will be renewed in the normal
course of business. Future operations depend on the Company maintaining
its mortgage warehouse facility and uncommitted lines of credit.
Fees and costs associated with debt issuance are capitalized and
amortized to interest expense over the related terms of the agreements
using the interest method. Recurring facility and agents' fees are
capitalized and amortized to interest expense over the period to which they
relate, using the interest method.
The line of credit agreements contain certain requirements and other
restrictive covenants which require the Company to, among other
requirements, restrict dividends and maintain compliance with regulatory
and investor requirements. At April 30, 1998, the Company believes that it
was in compliance with the requirements of these line of credit agreements,
except as noted in Note 17.
(8) Notes Payable
The Company had a $2 million note payable for the refinancing of their
office building. The note accrued interest at 9.50%, and was secured by
the office building. The Company was required to make monthly principal
and interest payments of approximately $23,000 until January 2010. This
note was paid off during fiscal year 1998 when the building was sold.
In February 1997, the Company obtained a short-term note payable of
$238,000 to finance operating activities. The note accrued interest at
10.25%, and was also secured by the office building and was subordinate to
the note described above. This note was paid off during fiscal year 1998
when the building was sold.
(9) Subordinated Note to Affiliate
In March 1995, the Company issued a $200,000 note payable to the
pension plan of an affiliate. The note bears interest at 15%, payable
monthly and is due in May 31, 1999. The outstanding balance of the note at
April 30, 1998 and 1997 was $200,000 and is subordinated to the mortgage
warehouse facility.
(10) Transactions with Affiliates
During fiscal year 1997, one of the Company's shareholders advanced
the Company $50,000 with an interest rate of prime plus 1%. The advance
was paid off in March 1998. During fiscal year 1998, one of the Company's
shareholders advanced the Company $70,000 with an interest rate of 10%.
This advance is due on May 1, 1999. In addition, a shareholder advanced
$155,000 with an interest rate of 10%. This advance was paid off in
March 1998.
During the current year, the Company purchased a principal residence
on behalf of one of its officers. The building has been accounted for as a
long-term investment and has been included in other assets. The
corresponding salary for this officer has been reduced to cover the costs
of the related mortgage. The Company's investment in real estate is
$333,000, which is offset by the note payable of $277,000.
In April 1998, the Company obtained, from an affiliate, a secured
demand note of up to $2,000,000 to finance operating activities. The note
accrues interest at 12% and is payable upon demand. This note is secured
by all the assets of the Company. As of April 30, 1998, the outstanding
balance on this note is approximately $1,800,000.
(continued)
<PAGE> 21
(11) Deferred Loan Expenses
Expenses and the gain on sale of loans have been reduced in the
accompanying statements of operations for the loan origination costs as
follows:
1998 1997
Personnel $ 6,221,000 6,951,000
General and administrative 1,118,000 1,344,000
---------- ---------
$ 7,339,000 8,295,000
Total loan fees received were $3,712,000 and $4,164,000 during the
years ended April 30, 1998 and 1997, respectively.
(12) Leases
The Company leases office space and equipment under noncancelable
operating leases expiring at various dates through April 2001. Total rent
expenditures under these leases were approximately $519,000 and $529,000
for the years ended April 30, 1998 and 1997, respectively. Minimum
noncancelable future lease payments are approximately as follows:
Year ended
April 30,
1999 $ 636,000
2000 600,000
2001 482,000
2002 450,000
2003 455,000
Thereafter 674,000
---------
Total minimum lease payments $ 3,297,000
In September 1997, the Company sold its headquarters, including the
building, land and related leasehold improvements and leased back two-
thirds of the building for five years. The gain on sale of the building of
$1,593,000 has been deferred and is being amortized over the lease term.
(13) Rental Income
The Company was the lessor of office space and a cell site for a phone
company under noncancelable leases which expire through July 2006. These
leases were assigned to the new owner upon the sale of the building in
September 1997. Total rental income for the years ended April 30, 1998 and
1997 was approximately $104,000 and $264,000, respectively.
(14) Retirement Plan
The Company adopted a defined contribution plan, pursuant to Internal
Revenue Code Section 401(k), effective January 1, 1993. Eligible
employees, generally those who have completed more than ninety days of
service, may elect to contribute from 1% to 15% of their pre-tax
compensation, subject to certain limitations. Discretionary Company
contributions to the plan are allocated based on 25% of employee
contributions up to 1.25% of employee compensation, as defined in the plan
document. The plan may be terminated by the Company at any time. There
were no employer contributions to the plan during the years ended April 30,
1998 and 1997.
(continued)
<PAGE> 22
(15) Income Taxes
The components of income taxes (benefit) consist of the following:
1998 1997
Federal:
Current $ (9,000) (336,000)
Deferred (733,000) (239,000)
---------- ----------
(742,000) (575,000)
State:
Current 1,000 1,000
Deferred (109,000) (62,000)
---------- ----------
(108,000) (61,000)
---------- ----------
Change in valuation allowance 752,000 -
---------- ----------
Total $ (98,000) (636,000)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
April 30, 1998 and 1997 are presented below:
1998 1997
Deferred tax assets:
Net operating losses $ 613,000 430,000
AMT credit carryforwards 70,000 70,000
Mark-to-market 378,000 78,000
Accrued expenses 42,000 49,000
Allowance for losses not 307,000 171,000
currently deductible
Deferred gain 640,000 -
---------- ---------
2,050,000 798,000
---------- ---------
Valuation allowance (752,000) -
---------- ---------
1,298,000 798,000
---------- ---------
Deferred tax liabilities:
Capitalized mortgage servicing (348,000) (400,000)
rights
Deferred expenses (973,000) (511,000)
Depreciation (41,000) (41,000)
---------- ---------
(1,362,000 (952,000)
)
---------- ---------
Net deferred tax liabilities $ (64,000) (154,000)
(continued)
<PAGE> 23
A valuation allowance for deferred tax assets as of April 30, 1998 was
$752,000. The net change in the total valuation allowance for the year
ended April 30, 1998 was an increase of $752,000. In assessing the
realizability of deferred tax assets, management considers whether it is
more likely than not that some portion or all of the deferred tax assets
will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods
in which those temporary differences become deductible. Management
considers the scheduled reversal of deferred tax liabilities, projected
future taxable income, and tax planning strategies in making this
assessment. Based upon the level of historical taxable income and
projections for future taxable income over the periods which the deferred
tax assets are deductible, management believes it is more likely than not
that the Company will realize the benefits of these deductible differences,
net of the existing valuation allowance at April 30, 1998. The amount of
the deferred tax asset considered realizable, however, could be reduced in
the near term if estimates of future taxable income during the carryforward
period are reduced.
Income taxes (benefit) attributable to income (loss) before income
taxes and minority interest differed from the amounts computed by applying
the federal income tax rate of 34% to pretax income (loss) as a result of
the following:
1998 1997
Computed "expected" income tax $ (923,000) (677,000)
benefit
State tax benefit, net of federal (108,000) (148,000)
benefit
Loss of California NOL - 164,000
Increase in valuation allowance 752,000 -
Other 181,000 25,000
---------- ----------
$ (98,000) (636,000)
At April 30, 1998, the Company has net operating loss carryforwards of
approximately $1,329,000 and $2,244,000 for federal and state franchise tax
purposes, respectively, which are available to offset future taxable income
through 2003 for state and 2013 for federal tax purposes.
In connection with the sale of the Company described in Note 1, the
Company has undergone a change in ownership within the meaning of the
Internal Revenue Code for both federal income and California franchise tax
purposes subsequent to year end. As a consequence, the use of net
operating loss and carryforwards to absorb taxable income and reduce tax
liability may be restricted.
(16) Commitments and Contingencies
The Company is a defendant in a suit that alleges, among other things,
the illegal use of yield spread premiums in the loan origination process.
A motion for class certification has not yet been filed. The plaintiff is
seeking damages in the amount of $3,000. Management and legal counsel for
the Company are of the opinion that the plaintiff's claim is without merit
and the Company will prevail in defending the suit.
The Company is involved in various claims and legal actions arising in
the ordinary course of business. In the opinion of management, the
ultimate disposition of these matters will not have a material adverse
effect on the Company.
(17) Regulatory Requirements and Subsequent Events
As of April 30, 1998, the Company does not meet the minimum $1,000,000
net worth requirement of the U.S. Department of Housing and Urban
Development ("HUD"). The Company's net worth, as calculated in accordance
with the August 1997 Consolidated Audit Guide for Audits of HUD Programs
(the Guide), is deficient by $2,776,000.
On May 19, 1998, the Company finalized a purchase and sale agreement with
FINET, tendering all the shares of its outstanding common stock in exchange
for shares of the common stock of FINET. FINET is listed on NASDAQ under
the symbol FNHC.
(continued)
<PAGE> 24
Prior to April 30, 1998, FINET had invested approximately $2,000,000
in the Company. This amount is classified as a loan payable on the
accompanying balance sheet of the Company.
Prior to the association with FINET and on its own merits, the
Company's net worth fell below the FHA and GNMA and other investor net
worth requirements. After the May 19, 1998 sale of stock to FINET, the
Company became a division of FINET and cured its net worth deficiencies by
virtue of its being merged into an entity with substantial net worth. The
Company will function in the future as a production entity with all agency
approvals being held in the name of FINET.
(18) Liquidity
The Company's viability as a going concern is dependent upon reducing
operating expenses, meeting regulatory net worth requirements and
ultimately, a return to profitability. The Company's problems were greatly
exaggerated by the losses caused by the downturn in the economy in prior
years, which led to significant repurchases of loans. Management does not
expect to incur the same level of losses in 1999. The Company has
implemented a plan which includes a lower cost of financing and a more
efficient execution of loan sales. These items plus successful
implementation of FINET's overall business plan are expected to result in
profitable operations. Achieving and maintaining full compliance with the
minimum net worth regulatory requirements depends on future events and
circumstances as explained above. At this time, the financial impact, if
any, of the Company's failure to meet these requirements cannot be
determined. Nevertheless, management believes, at this time, the Company
will meet the minimum net worth requirements.
Schedule I
MICAL MORTGAGE, INC.
Computation of Adjusted Net Worth and HUD Minimum Net Worth Requirement
April 30, 1998
FHA Servicing Portfolio FYE $ 13,000,000
Add:
FHA Originations $ 130,000,00
0
FHA Purchase from Loan Correspondents 354,000,00
0
----------
484,000,00
0
Less: Servicing Retained 8,000,000
----------
