<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: April 30, 1997
WFS FINANCIAL INC
(Exact name of registrant as specified in its charter)
CALIFORNIA 33-93068 33-0291646
(State or other jurisdiction Commission File IRS Employer
of incorporation) Number Identification Number
23 PASTEUR 92618-3816
IRVINE, CALIFORNIA
(Address of principal executive offices) (Zip Code)
714-727-1000
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 5: Other Events
On Tuesday, April 29, 1997, WFS Financial Inc, the auto finance
subsidiary of Western Financial Bank, F.S.B., announced the departure of Lee
Thyer, Senior Executive Vice President - Branch Division, and Director of WFS
Financial Inc.
ITEM 7: Financial Statements and Exhibits
a. List of documents filed as a part of this report Exhibit 20.
WFS Financial Inc's News Release of April 29, 1997
WFS FINANCIAL INC
a California Corporation
Dated: April 30, 1997 /s/ LEE A. WHATCOTT
------------------------------------
Lee A. Whatcott
Executive Vice President, WFS Financial Inc
<PAGE> 1
NEWS RELEASE
RELEASE DATE: April 29, 1997
Joy Schaefer
(714) 727-1065
CONTACT: Cecilia A. Wilkinson
Pondel Parsons & Wilkinson
(310) 207-9300
[WFS FINANCIAL LOGO]
- -------------------------------------------------------------------------------
WFS FINANCIAL INC ANNOUNCES FIRST QUARTER RESULTS AND OTHER RECENT DEVELOPMENTS
Irvine, CA: WFS Financial Inc (Nasdaq: WFSI), a leading national
automobile finance company, today announced net income of $8.6 million, or
$0.34 per share, for the quarter ended March 31, 1997 compared with $9.3
million, or $0.36 per share, for the first quarter of 1996.
Loss experience was 3.04% of serviced contracts during the first
quarter of 1997 compared with 2.17% reported for the first quarter a year
earlier, but was lower than the 3.25% reported for the fourth quarter of 1996.
Contracts 30 days or more delinquent also declined to 1.44% at March 31, 1997
compared with 1.80% at December 31, 1996.
"We have seen some improvement in credit quality from the previous
quarter as we continue to take aggressive actions to address our higher loss
experience and delinquency rate issues to ensure that credit quality returns to
acceptable levels," said Joy Schaefer, WFS President and Chief Operating
Officer.
"We are continuing to strengthen our approach to asset quality by
developing a centralized credit review function. This group will set credit
policy, reunderwrite credit and direct the implementation of a credit score
card. Coupled with additional collections staff and centralized asset
recovery and remarketing functions, these initiatives will help us more
effectively monitor our nationwide production and we anticipate realizing the
full benefit of these efforts in the second half
<PAGE> 2
April 29, 1997
WFS Financial Inc First Quarter Results
Page 2
of 1997," Schaefer said. "The high level of allowances we continue to
maintain for credit losses both on and off the balance sheet underscores our
confidence in the financial strength of the company," Schaefer added.
During the first quarter of 1997, WFS adopted Statement of Financial
Accounting Standards No. 125 ("SFAS 125") which requires that servicing rights
be recorded separately from excess retained interests in securitizations. With
the adoption of SFAS 125, off balance sheet reserves as a percent of contracts
sold through securitization were 7.9% at March 31, 1997. Had SFAS 125 been in
effect at December 31, 1996, the off balance sheet allowance for losses as a
percent of contracts sold through securitizations would have been 8.0%. "While
SFAS 125 did not create additional off balance sheet reserves, it clarified the
accounting for such reserves so that our disclosure is now more consistent with
how others have historically disclosed reserves." stated Schaefer.
Servicing income, which is earned as WFS services contracts that have
been securitized and sold, increased to $38.6 million for the quarter ended
March 31, 1997 from $23.6 million for the same period a year earlier. Net
interest income, which is earned before loans are securitized, increased to
$12.8 million for the quarter from $11.6 million for the 1996 first quarter.
Provision for credit losses for the quarter ended March 31, 1997
totaled $3.3 million compared with $5.2 million for the prior year period. The
decline was due primarily to a smaller on balance sheet portfolio rather than a
decline in the allowance for credit losses, which remained at 3.1% for the same
respective periods.
For the quarter ended March 31, 1997, originations of retail
installment contracts totaled $552 million compared with $504 million a year
earlier, a 10% increase. As a result, WFS' portfolio of serviced contracts
increased to $3.2 billion at March 31, 1997 compared with $3.0 billion at the
end of 1996.
<PAGE> 3
April 29, 1997
WFS Financial Inc First Quarter Results
Page 3
WFS continued its program of issuing auto loan asset-backed securities
by securitizing $500 million of contracts during the first quarter of 1997.
Since 1985, WFS has securitized $8.3 billion of automobile contracts. The
company recorded $7.3 million of gain on sale of contracts in the first quarter
of 1997 compared with $12.3 million in the first quarter of 1996 on $485
million of securitizations. The locked-in gross interest spread on the first
quarter securitization declined to 8.83% from 9.22% for the securitization in
the first quarter of 1996.
Operating expenses for the quarter ended March 31, 1997 totaled $40.5
million compared with $39.1 million for the fourth quarter and $26.2 million
for the same period a year earlier. "Our financial performance reflects the
residual impact of our ambitious expansion program during 1996 and the
continued aggressive automation and centralization programs designed to
position our company with the capacity for sustained, more profitable future
growth," Schaefer said. "We expect to see improvement in operating expenses
during the second half of 1997 as our automation and centralization programs
are completed and redundant systems are eliminated."
In other matters, WFS announced that the Board of Directors of its
parent company, Western Financial Bank, has authorized its Investment Committee
to repurchase up to 800,000 shares of WFS stock. WFS also announced the
departure of Lee Thyer, Senior Executive Vice President, Branch Division, and a
Director. The Branch Division will now report directly to the President, Joy
Schaefer.
WFS is a consumer finance company specializing in the purchase,
securitization and service of prime credit quality automobile contracts. WFS
currently purchases contracts in California and 31 other states from 141 office
locations.
This news release contains forward-looking statements including, but
not limited to, estimates of the impact of future losses and operating costs to
future periods that are subject to certain risks and uncertainties that could
cause actual results to differ materially from those projected, including that
the systems and initiatives, which the company is undertaking, do not achieve
their intended results. Additional risks which may affect the company's future
performance are detailed under the
<PAGE> 4
April 29, 1997
WFS Financial Inc First Quarter Results
Page 4
caption "Forward-Looking Statements" in the business section in the company's
annual report on Form 10-K for the year ended December 31, 1996, which was
filed with the Securities and Exchange Commission.
# # #
<PAGE> 5
WFS FINANCIAL INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
Short term investments $134,239,766 $109,237,133
Contracts receivable (1) 46,426,596 53,287,645
Contracts held for sale (1) 222,955,599 186,302,823
Allowance for credit losses (8,260,560) (7,647,986)
------------ ------------
Contracts receivable, net 261,121,635 231,942,482
Amounts due from trusts 217,109,496 191,469,153
Retained interest on securitized assets 135,113,266 121,597,461
Furniture, fixture and equipment 18,685,185 16,904,239
Accrued interest receivable 1,368,515 1,517,682
Other assets 3,482,217 2,903,507
------------ ------------
$771,120,080 $675,571,657
============ ============
LIABILITIES
Senior note payable $125,000,000 $125,000,000
Amounts held on behalf of trustee 476,934,494 393,449,007
Other liabilities 13,480,985 9,431,124
------------ ------------
615,415,479 527,880,131
SHAREHOLDERS' EQUITY
Common stock, no par value; authorized 50,000,000 shares;
issued and outstanding 25,684,168 shares in 1997 and 1996 73,123,054 73,123,054
Additional paid-in capital 4,000,000 4,000,000
Retained earnings 79,200,162 70,568,472
Unrealized loss on securities available for sale, net of tax (618,615)
------------ ------------
155,704,601 147,691,526
------------ ------------
$771,120,080 $675,571,657
============ ============
</TABLE>
(1) Net of unearned discount
<PAGE> 6
WFS FINANCIAL INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------------
1997 1996
----------- -----------
<S> <C> <C>
REVENUES:
Servicing income $38,646,975 $23,590,739
Net interest income 12,827,351 11,640,904
Gain on sale of contracts 7,344,187 12,287,362
----------- -----------
TOTAL REVENUES 58,818,513 47,519,005
EXPENSES:
Provision for credit losses 3,304,023 5,187,000
Operating expenses 40,505,251 26,176,593
----------- -----------
TOTAL EXPENSES 43,809,274 31,363,593
----------- -----------
INCOME BEFORE INCOME TAXES 15,009,239 16,155,412
Income taxes 6,377,549 6,835,791
----------- -----------
NET INCOME $ 8,631,690 $ 9,319,621
=========== ===========
NET INCOME PER COMMON SHARE $0.34 $0.36
=========== ===========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 25,684,168 25,684,168
=========== ===========
</TABLE>
<PAGE> 7
WFS FINANCIAL INC AND SUBSIDIARIES
OTHER SELECTED FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------------
1997 1996
------------ ------------
<S> <C> <C>
CONTRACT ORIGINATIONS $552,305,883 $504,122,456
============ ============
CONTRACT SECURITIZATIONS $500,000,000 $485,000,000
============ ============
SERVICED DELINQUENCY MARCH 31, 1997 DECEMBER 31, 1996
------------------------------- -------------------------------
NUMBER OF NUMBER OF
CONTRACTS AMOUNT CONTRACTS AMOUNT
------------ -------------- ------------ --------------
358,659 $3,215,105,123 341,486 $3,046,584,858
============ ============== ============ ==============
Serviced Portfolio (1)
Period of delinquency
31-59 days 3,409 $29,211,256 4,511 $38,173,395
60-89 days 1,248 11,025,201 1,305 11,469,637
90 days or more 667 5,954,619 567 5,144,451
------------ -------------- ------------ --------------
Total contracts delinquent 5,324 $46,191,076 6,383 $54,787,483
============ ============== ============ ==============
Delinquencies as a percentage of
number and amount of contracts
outstanding 1.48% 1.44% 1.87% 1.80%
============ ============== ============ ==============
SERVICED CONTRACT LOSS THREE MONTHS ENDED
EXPERIENCE MARCH 31,
---------------------------------
1997 1996
-------------- --------------
Average contracts serviced during the
period $3,111,682,315 $2,297,590,290
============== ==============
Gross charge offs $31,421,963 $18,424,666
Recoveries 7,798,167 5,942,772
-------------- --------------
Net charge offs $23,623,796 $12,481,894
============== ==============
Net charge offs as a percentage of
contracts outstanding during period 3.04% 2.17%
============== ==============
</TABLE>
(1) At end of period, net of unearned discount and includes contracts held for
sale.
