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EXHIBIT 99.1
[AAMES LOGO]
Financial Corporation
Contact: James Huston
Investor Relations Department
Aames Financial Corporation
(323) 210-5311
FOR IMMEDIATE RELEASE
AAMES FINANCIAL CORPORATION REPORTS POSITIVE
SEPTEMBER RESULTS FROM OPERATIONS
LOS ANGELES, CALIFORNIA, OCTOBER 31, 2000 - AAMES FINANCIAL CORPORATION
(NYSE: AAM), a leader in subprime home equity lending, today reported results of
operations for the three months ended September 30, 2000, announcing net income
of $693,000 compared to net income of $791,000 during the comparable period a
year ago. After the accrual for the convertible preferred stock dividend
requirement of $3.2 million and $1.5 million for the three months ended
September 30, 2000 and 1999, respectively, the net loss to common shareholders
was $2.5 million and $750,000, respectively, or a net loss per common share of
$0.40 and $0.12 for the three months ended September 30, 2000 and 1999,
respectively.
In making the announcement, A. Jay Meyerson, Aames' Chief Executive
Officer, stated, "I believe the quarterly results reflect our efforts over the
past year in executing our turnaround plan resulting in increasing core retail
and broker production, reducing noninterest expense, accessing the
securitization markets and selling the residuals to increase our cash gain on
sale. Meyerson added, "The Company will continue to focus on core retail and
broker loan originations, including Internet originations, closely manage
operating costs and credit quality at all levels throughout the organization,
and sell loans through both securitizations and whole loan sales to maximize
cash flow and profitability."
SUMMARY OF FINANCIAL RESULTS
TOTAL REVENUES
Total revenue during the three months ended September 30, 2000 declined
$1.0 million to $59.9 million from $60.9 million during the comparable three
month period a year ago. The decrease in total revenues during the three months
ended September 30, 2000 from the comparable three month period a year ago is
attributable primarily to decreased gain on sale and interest income partially
offset by increases in origination fees and loan servicing. Gain on sale for the
three months ended September 30, 2000 was $19.9 million, a decline of $1.9
million compared to $21.8 million of gain on sale for the comparable quarter a
year ago. Mr. Meyerson stated, "Although the total gain on sale decreased, the
Company realized substantially higher cash gains on sale during the September
2000 quarter over a year ago through the sale for cash of the residual asset
created in the $460.0 million securitization under the Company's residual
forward sale facility."
TOTAL EXPENSES
Total expenses during the three months ended September 30, 2000
declined $400,000 to $59.2 million from $59.6 million reported during the three
months ended September 30, 1999. The decrease in total expenses during the three
months ended September 30, 2000 from the comparable three month period a year
ago was primarily attributable to decreases in production and general and
administrative expenses, partially offset by increases in
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compensation and interest expense. Mr. Meyerson noted, "The Company is beginning
to realize the benefits of expense management initiatives implemented in the
later half of the fiscal year ended June 30, 2000. I believe these expense
reduction initiatives will continue to benefit the Company in the coming
quarters."
LOAN PRODUCTION
During the three months ended September 30, 2000 the Company originated
$518.1 million of mortgage loans, down $5.4 million from the $523.5 million of
mortgage loans originated during the three months ended September 30, 1999. Mr.
Meyerson remarked, "Although total loan production declined from last year's
quarter, I'm pleased that the Company's core retail and broker production
increased $3.2 million to $514.0 million during the quarter, from $510.8 million
during last year's quarter." Included in the Company's core retail and broker
production is $23.8 million of loans originated from the Internet, through
affiliations with certain lending sites, and from other electronic sourcing.
Correspondent production declined by $8.7 million, to $4.1 million during the
September 2000 quarter from $12.8 million during the comparable period a year
ago. This decline reflects the Company's previously announced decision to reduce
correspondent loan purchases and to focus its production efforts on its core
retail and broker loan origination channels.
LOANS SECURITIZED AND SOLD
During the three months ended September 30, 2000, the Company sold
$667.9 million of mortgage loans, consisting of $460.0 million of loans pooled
and sold in a securitization and $207.9 million of whole loan sales for cash. In
comparison, during the three months ended September 30, 1999, the Company sold
an aggregate of $692.7 million of mortgage loans comprised of $400.0 million in
a securitization and $292.6 million of whole loan sales for cash.
LOAN SERVICING
At September 30, 2000, the Company's servicing portfolio was $3.4
billion, of which $3.1 billion, or 91.2%, was serviced in-house. At June 30,
2000, the Company's servicing portfolio was $3.6 billion, of which $3.3 billion,
or 91.7% was serviced in-house. Mr. Meyerson commented, "While the Company's
strategy is to generally retain the servicing on the loans in its
securitizations, the Company sold for cash its servicing rights and the rights
to prepayment fees in the recent securitization because of the favorable cash
price offered by the purchaser."
Aames Financial Corporation is a leading home equity lender, and at
September 30, 2000 operated 97 retail Aames Home Loan offices and 5 wholesale
loan centers nationwide.
From time to time the Company may publish forward-looking statements
relating to such matters as anticipated financial performance, business
prospects and similar matters. The Private Securities Litigation Reform Act of
1995 provides a safe harbor for forward-looking statements. In order to comply
with the terms of the safe harbor, the Company notes that a variety of factors
could cause the Company's actual results and experience to differ materially
from the anticipated results or other expectations expressed in the Company's
forward-looking statements. The risks and uncertainties that may affect the
operations, performance and results of the Company's business include the
following: negative cash flow and continued access to outside sources of cash to
fund operations; dependence on funding sources; third party rights to terminate
mortgage servicing; high delinquencies and losses in the Company's
securitization trusts; prepayment risk; changes in interest rates; basis risk;
prolonged interruptions or reductions in the secondary market for mortgage
loans; timing of loan sales; dependence on broker network; competition;
concentration of operations in California and Florida; economic conditions;
contingent risks on loans sold; government regulation; changes in federal income
tax laws; ability to pay dividends and the concentrated ownership of the
Company's controlling stockholder. For a more complete discussion of these risks
and uncertainties, see "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations - Risk Factors" in the Company's
Annual Report on Form 10-K for the year ended June 30, 2000, the quarterly
reports on Form 10-Q filed by the Company during the remainder of fiscal 2001,
and any current reports on From 8-K and subsequent filings by the Company.
FINANCIAL TABLES FOLLOW
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AAMES FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
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<CAPTION>
SEPTEMBER 30, JUNE 30,
2000 2000
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(UNAUDITED) (AUDITED)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 28,656 $ 10,179
Loans held for sale, at lower of cost or market 249,444 398,921
Accounts receivable 69,066 52,713
Residual interests, at estimated fair value 281,535 290,956
Mortgage servicing rights, net 10,605 12,346
Other assets 26,845 25,249
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Total assets $666,151 $790,364
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LIABILITIES AND STOCKHOLDERS' EQUITY
Borrowings $275,470 $275,470
Revolving warehouse and repurchase facilities 236,300 375,015
Other liabilities 66,515 65,401
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Total liabilities 578,285 715,886
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Stockholders' equity 87,866 74,478
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Total liabilities and stockholders' equity $666,151 $790,364
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AAMES FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS
(UNAUDITED)
(DOLLARS, EXCEPT PER SHARE DATA, AND SHARES IN THOUSANDS)
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<CAPTION>
THREE MONTHS ENDED
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SEPTEMBER 30,
2000 1999
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<S> <C> <C>
REVENUE:
Gain on sale of loans $ 19,921 $ 21,797
Origination fees 12,332 11,388
Loan servicing 4,306 3,755
Interest 23,354 23,998
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Total revenue 59,913 60,938
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EXPENSES:
Compensation 26,072 23,112
Production 4,514 8,641
General and administrative 13,589 14,271
Interest 15,009 13,548
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Total expenses 59,184 59,572
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Income before income taxes 729 1,366
Provision for income taxes 36 575
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Net income $ 693 $ 791
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Net (loss) per common share:
Basic $ (0.40) $ (0.12)
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Diluted $ (0.40) $ (0.12)
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Weighted average number of shares outstanding:
Basic 6,211 6,202
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Diluted 6,211 6,202
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AAMES FINANCIAL CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
ORIGINATION VOLUMES:
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<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
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(IN THOUSANDS)
<S> <C> <C>
Broker network (1) $ 281,814 $ 331,546
Retail (2) 232,201 179,216
Correspondent 4,123 12,762
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Total $ 518,138 $ 523,524
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(1) Includes $15.6 million of production from the internet and other
electronic sourcing.
(2) Includes $8.2 million of production from the internet.
LOAN SALES:
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THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
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(IN THOUSANDS)
<S> <C> <C>
Loans pooled and sold $ 460,002 $ 400,065
in securitizations
Whole loan sales 207,939 292,601
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$ 667,941 $ 692,666
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SERVICING PORTFOLIO:
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<CAPTION>
SEPTEMBER 30, SEPTEMBER 30, JUNE 30,
2000 1999 2000
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(IN THOUSANDS)
<S> <C> <C> <C>
Total servicing portfolio $ 3,399,000 $ 3,870,000 $ 3,560,000
Serviced in-house 3,132,000 3,495,000 3,296,000
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