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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 24, 1997
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CITYSCAPE FINANCIAL CORP.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-27314 11-2994671
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State or Other Jurisdiction Commission (IRS Employer
of Incorporation File Number Identification No.)
565 Taxter Road, Elmsford, New York 10523-5200
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(Address of Principal Executive Offices) Zip Code
Registrant's telephone number, including area code: (914) 592-6677
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Former name or former address,
if changed since last report
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Item 5. Other Events.
On April 24, 1997, Cityscape Financial Corp. issued a press release
announcing earnings for the quarter ended March 31, 1997. A copy of this
press release, dated April 24, 1997, has been filed with this Form 8-K as
Exhibit 99.1 and is hereby incorporated by reference.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
99.1 Press Release, dated April 24, 1997
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
CITYSCAPE FINANCIAL CORP.
(Registrant)
By: /s/ Robert C. Patent
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Name: Robert C. Patent
Title: Executive Vice President
Dated: April 30, 1997
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INDEX TO EXHIBITS
Exhibits Description Page
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99.1 Press Release, dated April 24, 1997
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NEWS RELEASE
(BW)(CITYSCAPE)(CTYS) Cityscape Financial Reports 81 Percent Jump in First
Quarter Earnings
Business Editors
Note to Editors: In the program name, Sav-A-Loan, which appears throughout
the release, there is an "asterisk" symbol after "Sav," which may not appear
correctly in all systems.
ELMSFORD, N.Y. -- (BUSINESS WIRE) -- April 24, 1997 --
US and UK Originations Up Sharply
Cityscape Financial Corp. (NASDAQ: CTYS) today reported an 80.6 percent
increase in earnings on a 193.4 percent increase in revenues for the first
quarter ended March 31, 1997, compared to the same period in 1996.
Net earnings for the first quarter of 1997 rose to $16.8 million or 50
cents per fully diluted share (54 cents primary earnings per share), from $9.3
million or 31 cents primary earnings per share in the first quarter of 1996.
Revenues increased to $84.5 million for the quarter, from $28.8 million during
the same period in 1996. There were 36.4 million weighted average fully diluted
common shares and common stock equivalents during the quarter, compared to 29.8
million primary shares in the first quarter of 1996.
Domestic loan originations totaled $388.1 million, up 132.8 percent over
the $166.7 million originated in the first quarter of 1996, and up 6.7 percent
over the $363.6 million originated during the fourth quarter of 1996. UK loan
originations totaled $99.2 million, up 262.0 percent over the $27.4 million
originated in the first quarter of 1996, and up 15.8 percent over the $85.7
million originated during the fourth quarter of 1996.
Robert Grosser, Cityscape's president and chief executive officer, stated,
"The first quarter results underscore the Company's commitment to the
fundamentals of our business, sound underwriting practices and aggressive
servicing. We are pleased that our US delinquencies declined to 7.97% at the end
of the quarter from the year-end level of 8.92%, a direct result of our
standards for credit quality and the increased capabilities of our servicing
operations."
Grosser added, "Our performance during the quarter reflects the continued
growth of our new products and the strength of our core business, both in the US
and in the UK. In particular, we are benefiting from our strategy of growing our
broker and correspondent networks. We also continue to benefit from the
introduction of our new products, such as Sav*-A-Loan(R), which was introduced
last year." The company's Sav*-A-Loan(R) program offers loans to homeowners who
may have little or no equity in their property but possess a favorable credit
profile and debt-to-income ratio.
Regarding originations, Grosser noted that broker originations in the US
increased 82.7 percent during the quarter to $191.7 million from $104.9 million
in the first quarter of 1996, while the
[MORGEN-WALKE ASSOCIATES, INC. LETTERHEAD]
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wholesale business increased 217.8 percent to $196.4 million from $61.8 million
in the first quarter of 1996. Broker originations increased to 49.4 percent of
total originations in the first quarter of 1997 compared to 47.0 percent during
the fourth quarter of 1996. This represents a decrease from 62.9 percent in the
first quarter of 1996, at which time the company's wholesale origination
channel was in an earlier stage of development.
Operating Results
Total revenues increased $55.7 million or 193.4 percent to $84.5
million in the first quarter of 1997 from $28.8 million in the same period in
1996. This increase was due primarily to higher gains on the sale of loans
resulting from the combined US and UK increased loan origination and purchase
volume and volume of loans sold compared to the prior period.
Gain on sale of loans increased $36.6 million or 151.9 percent to $60.7
million in the first quarter of 1997 from $24.1 million in the same period in
1996. This increase was due primarily to the company's UK gain on sale of loans
of $33.9 million, representing a 28.9 percent gain on $117.4 million of loan
sales in the first quarter of 1997 compared to gain on sale of loans of $12.2
million, representing a 44.5 percent gain on the $27.4 million of loan sales in
the first quarter of 1996. The increase was also due to the increased volume of
US loan sales at higher average gains ($364.2 million of loan sales at a
weighted average gain of 7.4 percent ($26.8 million) in the first quarter of
1997, compared to $175.9 million of loan sales at a weighted average gain of
6.8 percent ($11.9 million) in the same period in 1996).
The decrease in the UK gain on sale margin was a result of the
company's introduction of new loan products targeting higher credit quality
borrowers as well as new loan products with lower prepayment fees. The increase
in the US gain on sale margin was primarily a result of higher average gains
recognized on the company's sale of its Sav*-A-Loan(R) product of $128.8
million at an average net gain of 10.0 percent.
The Sav*-A-Loan(R) product sold represented 35.4 percent of the
company's US loans sales and 48.1 percent of the US gain on sale of loans
during the first quarter of 1997. This increase in the US gain on sale was
offset by higher premiums paid on the company's core home equity product
wholesale originations, increasing from an average of 4.6 percent for the first
quarter of 1996 to 6.2 percent for the first quarter of 1997.
The average premiums paid during the first quarter represent a decrease
from the 6.4 percent average premium paid on the fourth quarter 1996 core home
equity wholesale originations. Consistent with its policy, the company does not
pay a yield spread premium on its US broker originations. The average premiums
paid as a percentage of total US originations were 1.7 percent for the first
quarter of 1996, 2.9 percent for the fourth quarter of 1996 and 2.7 percent for
the first quarter of 1997.
Servicing
Cityscape's credit quality showed improvement during the quarter. US
delinquencies declined to 7.97 percent, compared to 8.92 percent at December
31, 1996. UK delinquencies increased to 16.87 percent, compared to 15.41
percent at December 31, 1996. At March 31, 1997, the company had a reserve for
possible loan losses of $66.5 million or 2.8 percent of total loans serviced,
compared to $51.3 million or
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2.6 percent at December 31, 1996.
As part of its continuing efforts to improve its servicing during the
quarter, Cityscape started using an automated predictive dialing system, which
is well-known for its effectiveness in increasing collection productivity.
To further enhance its servicing operations and facilitate the growth of
its servicing portfolio, the company increased its servicing staff, including
the formation of a "Loss Mitigation Department" to focus specifically on the
company's 90 day and over delinquent loans.
Other Highlights
-- In April the company announced the appointment of Peter S. Kucma to the
position of senior vice president and chief operating officer. Kucma,
formerly the vice president and general manager of GE Capital Home Equity
Services, brings to Cityscape over 15 years of experience in the mortgage
banking business.
-- In the first quarter, there were four securitizations of the company's US
loan products totaling $492.2 million. The company has retained the
servicing rights on all of the underlying loans.
-- During the first quarter, the company completed two UK securitizations
totaling $169.8 million. These securities were rated either "AA" or "BBB"
by Standard & Poor's, Fitch and Duff & Phelps. These transactions were
arranged by Greenwich Capital Markets. The company will continue to
service all of the underlying loans.
-- In April the company announced that it had completed a private placement
of $50.0 million of 6 percent Convertible Preferred Stock.
Cityscape Financial Corp. is a consumer finance company that, through its
wholly owned subsidiaries, Cityscape Corp. and City Mortgage Corp. Ltd., is
engaged in the business of originating, purchasing, selling and servicing
mortgage loans in the United States and the United Kingdom, secured primarily
by one- to four-family residences.
Cityscape was founded in 1985 and is headquartered in Elmsford, with
regional processing offices in California, Georgia, Illinois and Virginia.
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CITYSCAPE FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
<S> <C> <C>
REVENUES:
Gain on sale of loans $60,663 $24,093
Mortgage origination income 784 836
Interest 19,421 3,017
Servicing income 669 561
Other 2,998 272
Total Revenues 84,535 28,779
EXPENSES:
Salaries and benefits 15,383 5,382
Interest expense 16,455 1,698
Selling expenses 11,204 1,363
Other operating expenses 12,345 4,045
Amortization of goodwill 1,157 494
Total expenses 56,544 12,982
Earnings before income
taxes 27,991 15,797
Provision for income taxes 11,196 6,525
Net earnings 16,795 9,272
Earnings per share(1):
Primary $0.54 $0.31
Fully diluted $0.50 N/A
Weighted average number of
shares and common stock
equivalents outstanding(1):
Primary 30,880 29,806
Fully diluted 36,355 N/A
</TABLE>
(1) All amounts have been restated to reflect the 100 percent stock dividend
paid in July 1996.
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CITYSCAPE FINANCIAL CORP.
SELECTED OPERATING DATA
(Dollars in millions)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
<S> <C> <C>
Origination and Sale
Data:
Loans originated and
purchased:
US(1) $388.1 $166.7
UK(2) 99.2 27.4
Total 487.3 194.1
Loan originations by
channel: (US only)
Wholesale 196.4 61.8
Broker 191.7 104.9
Total 388.1 166.7
Weighted average coupon:
US:
Core products:(3)
Fixed rate 11.8% 11.4%
Adjustable rate 10.4% N/A
Specialty products(4) 14.1% 14.4%
Other products(5) 8.5% 7.6%
UK 15.3% 16.4%
Loans sold:
US $364.2 $175.9
UK 117.4 27.4
Total 481.6 203.3
</TABLE>
<TABLE>
<CAPTION>
Portfolio Data: As of As of
March 31, Dec. 31,
1997 1996
<S> <C> <C>
Loan serviced portfolio:
US(6) $1,775.8 $1,470.3
UK 567.5 511.1
Total $2,343.3 1,981.4
Total delinquencies:
US 7.97% 8.92%
UK(7) 16.87% 15.41%
</TABLE>
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(1) As of March 31, 1997 and 1996, the company was licensed or registered in 42
states and the District of Columbia, and 35 states and the District of Columbia,
respectively.
(2) England, Scotland and Wales, excluding Northern Ireland.
(3) Fixed and adjustable rate residential mortgage loans for refinancing,
educational, home improvement and debt consolidation purposes, fixed and
adjustable rate purchase money mortgage loans and mortgage loans on multi-family
and mixed-use properties.
(4) Conventional home improvement loans, Sav*-A-Loans(R) and Title I home
improvement loans.
(5) Jumbo and conventional loans.
(6) Excludes loans serviced pursuant to contract servicing and master servicing
agreements.
(7) The Company has only been servicing loans in the UK since May 1995;
accordingly, the UK loans serviced portfolio is unseasoned.
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CITYSCAPE FINANCIAL CORP.
SELECTED BALANCE SHEET DATA
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
March 31, Dec. 31
1997 1996
<S> <C> <C>
Total assets $777,480 $810,202
Mortgage servicing receivables 252,128 242,895
Trading securities 155,049 103,200
Mortgage loans held for sale, net 109,281 102,222
Goodwill 44,939 47,467
Total debt 435,230 382,523
Total liabilities 627,670 671,370
Total stockholders' equity $149,810 $138,832
*T
</TABLE>
--30--rg/ng*
CONTACT: Robert C. Patent, EVP
Tim S. Ledwick, CFO
Cityscape Financial Corp.
(914) 592-6677
or
Michele Katz/Geoffrey Buscher/Jason Langer
Press: Stan Froelich/Elisabeth Philippe
Morgen-Walke Associates
(212) 850-5600
(END)
