White River Capital, Inc. Announces Results For 2011

White River Capital, Inc. (NYSE Amex: RVR) (“White River”) today announced net income for the fourth quarter 2011 was $2.0 million, or $0.57 per diluted share, compared to fourth quarter 2010 net income of $2.0 million, or $0.52 per diluted share. The net income results for the fourth quarter of 2011 and 2010 are due to the following:
  • $4.3 million of earnings from operations contributed by the Coastal Credit LLC (“Coastal Credit”) subsidiary for the fourth quarter of 2011, compared to $3.6 million of earnings from operations for the fourth quarter of 2010, and
  • $1.0 million of operating expenses at the holding company, and an income tax expense of $1.3 million for the fourth quarter of 2011, compared to $0.4 million of operating expenses and $1.2 million of income tax expense for the fourth quarter of 2010..

ANNUAL RESULTS

Net income for 2011 was $9.5 million, or $2.64 per diluted share, compared to 2010 net income of $7.1 million, or $1.84 per diluted share. The net income results for 2011 and 2010 are due to the following:
  • $17.1 million of earnings from operations contributed by the Coastal subsidiary for 2011, compared to $13.4 million of earnings from operations for 2010, and
  • $2.4 million of operating expenses at the holding company, and an income tax expense of $5.2 million for 2011, compared to $2.0 million of operating expenses and $4.3 million of income tax expense for 2010.

Martin Szumski, Chief Financial Officer, stated, “Coastal Credit’s portfolio performance continues to perform remarkably well considering the continued economic conditions. Coastal Credit’s 30+ day delinquency was 2.0% at December 31, 2011 compared to 1.6% at September 30, 2011 and 1.9% at December 31, 2010. The increase in delinquency from September 2011 to December 2011 is attributable to seasonality that occurs with this portfolio. Coastal Credit’s allowance for loan losses as a percentage of finance receivables, net of unearned finance charges was 5.68% at December 31, 2011 compared to 5.83% at September 30, 2011 and 6.92% at December 31, 2010.”

Mr. Szumski continued, “Shareholders’ equity was $71.7 million or $20.29 per common share, as of December 31, 2011.”

DIVIDEND

As previously announced, White River paid a quarterly dividend of $0.25 per share on its common stock on November 21, 2011 in addition to a special dividend of $4.00 per share on its common stock on December 22, 2011.

On February 3, 2012, White River announced that its Board of Directors had declared a quarterly cash dividend of 25 cents per share on its common stock to be paid February 24, 2012 to shareholders of record on February 13, 2012.

STOCK REPURCHASE PROGRAM

White River is authorized to repurchase up to 250,000 shares of its outstanding common stock, from time to time and subject to market conditions, on the open market or in privately negotiated transactions. As of December 31, 2011, White River has repurchased 62,829 shares of its outstanding common stock under the program at an average price per share of $19.40.

PROVISION FOR LOAN LOSSES

The consolidated provision for loan losses was $1.3 million for both of the quarters ended December 31, 2011 and 2010.

The following table documents the quarterly provision, allowance for loan losses and net charge offs at Coastal Credit for the fourth quarter 2009 through the fourth quarter 2011:
           

 

Quarter
   

Provision (in millions)
   

Allowance for Loan Losses as a Percent of Finance Receivables
   

Annualized Net Charge-offs as a Percent of Finance Receivables
4 th 2011 $1.3 5.68% 3.87%
3 rd 2011 $0.9 5.83% 2.81%
2 nd 2011 $0.7 6.07% 2.99%
1 st 2011 $1.1 6.59% 4.14%
4 th 2010 $1.3 6.92% 5.40%
3 rd 2010 $1.6 7.19% 5.21%
2 nd 2010 $1.6 7.33% 5.54%
1 st 2010 $1.9 7.42% 6.27%
4 th 2009 $2.3 7.44% 7.40%
 

This provision for loan losses at Coastal Credit reflects management’s assessment of the reserves necessary for the current credit environment.

CREDIT QUALITY

The following tables set forth delinquency, charge-off and allowance levels for the Coastal Credit portfolio:
Coastal Credit LLC
Delinquency Rates Experienced - Finance Receivables
(in thousands except percentages)
               
December 31,
2011 2010
$ % $ %
 
Finance receivables - gross balance $ 137,277 $ 119,788
 
Delinquencies:
30-59 days $ 1,317 1.0 % $ 1,209 1.0 %
60-89 days 689 0.5 % 538 0.4 %
90+ days   697 0.5 %   354 0.3 %
Total delinquencies $ 2,703 2.0 % $ 2,101 1.8 %
 
Coastal Credit LLC
Allowance for Loan Losses - Finance Receivables
(in thousands except percentages)
           
Years Ended December 31,
2011 2010
Balance at beginning of period $ 8,153 $ 8,085
Charge-offs (6,964 ) (8,488 )
Recoveries 2,526 2,130
Provision for loan losses   3,988     6,426  
 
Balance at the end of the period $ 7,703   $ 8,153  
 
Finance receivables, net of unearned finance charges $ 135,514 $ 117,837
 
Allowance for loan losses as a percent of finance receivables, net of unearned finance charges 5.68 % 6.92 %
 
Net charge-offs as a percent of finance receivables, net of unearned finance charges 3.27 % 5.40 %
 
Allowance for loan losses as a percent of net charge-offs 173.57 % 128.23 %
 
 

ABOUT WHITE RIVER, COASTAL CREDIT AND UAC

Founded in 2004, White River is the holding company for Coastal Credit.

Coastal Credit LLC is a specialized auto finance company, headquartered in Virginia Beach, Virginia, engaged in acquiring sub-prime auto receivables from both franchised and independent automobile dealers which have entered into contracts with purchasers of typically used, but some new, cars and light trucks. Coastal Credit then services the receivables it acquires. Coastal Credit commenced operations in Virginia in 1987 and conducts business in 27 states – Alaska, California, Colorado, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, Mississippi, Missouri, Nevada, New Mexico, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia and Washington – through its 15 branch locations. The Coastal Credit receivables portfolio, net of unearned finance charges, was $135.5 million at December 31, 2011.

ADDITIONAL INFORMATION AND WHERE TO FIND IT

Additional information about White River is available at White River’s web site located at: www.WhiteRiverCap.com.

This site includes financial highlights, stock information, public filings with the U.S. Securities and Exchange Commission (the "SEC"), and corporate governance documents.

The SEC public filings available for review include but are not limited to:
  • its Annual Report on Form 10-K for the year ended December 31, 2010,
  • its Proxy Statement on Schedule 14A dated April 1, 2011, and
  • its Quarterly Report on Form 10-Q for the quarter ended September 30, 2011.

White River’s public filings with the SEC can also be viewed on the SEC’s website at: www.sec.gov.

FORWARD-LOOKING STATEMENTS

This press release contains certain forward-looking information about White River that is intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. Such information includes forward-looking statements above regarding the future financial performance of Coastal Credit and also White River's prospects for future earnings, earnings volatility and the likelihood of recognizing future value from its deferred tax assets. All statements other than statements of historical fact are forward-looking statements. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of White River. White River cautions readers that a number of important factors could cause actual results to differ materially from those expressed in, implied or projected by, such forward-looking statements. Risks and uncertainties include, but are not limited to:
  • losses and prepayments on our receivable portfolios;
  • general economic, market, or business conditions;
  • changes in interest rates, the cost of funds, and demand for our financial services;
  • changes in our competitive position;
  • our ability to manage growth and integrate acquired businesses;
  • the opportunities that may be presented to and pursued by us;
  • competitive actions by other companies;
  • changes in laws or regulations;
  • changes in the policies of federal or state regulators and agencies.

If any of these risks or uncertainties materializes or if any of the assumptions underlying such forward-looking statements proves to be incorrect, White River's results could differ materially from those expressed in, implied or projected by such forward-looking statements. White River assumes no obligation to update such forward-looking statements.
           
 
WHITE RIVER CAPITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
 
ASSETS December 31, 2011 December 31, 2010
 
Cash and cash equivalents $ 3,244 $ 3,287
Finance receivables—net 114,716 96,723
Deferred tax assets—net 36,489 40,914
Other assets   861     684  
 
TOTAL $ 155,310   $ 141,608  
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
LIABILITIES:
Line of credit $ 81,000 $ 56,000
Accrued interest 183 130
Other payables and accrued expenses   2,398     2,449  
 
Total liabilities   83,581     58,579  
 
COMMITMENTS AND CONTINGENCIES
 
SHAREHOLDERS’ EQUITY:

Preferred Stock, without par value, authorized 3,000,000 shares; none issued and outstanding
- -

Common Stock, without par value, authorized 20,000,000 shares; 3,534,480 and 3,706,759 issued and outstanding at December 31, 2011 and 2010, respectively
174,328 177,403
Accumulated deficit   (102,599 )   (94,374 )
 
Total shareholders’ equity   71,729     83,029  
 
TOTAL $ 155,310   $ 141,608  
 
           
 
WHITE RIVER CAPITAL, INC. AND SUBSIDIARIES
Book Value per Share and Equity Ratios
(Unaudited)
(in thousands except share related values and percents)
 
December 31,
2011 2010
 
Total shareholders’ equity $ 71,729 $ 83,029
Assets $ 155,310 $ 141,608
Shares outstanding 3,534,480 3,706,759
 
Book value per share $ 20.29 $ 22.40
Equity/ assets 46.2 % 58.6 %
 
   
 
WHITE RIVER CAPITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share and share amounts)
           
Quarters Ended December 31,

 

Years Ended December 31,
2011 2010 2011 2010
INTEREST:
Interest on receivables $ 9,107 $ 8,477 $ 35,189 $ 32,810
Accretion and other interest - - 2 15
 
Total interest income 9,107 8,477 35,191 32,825
 
Interest expense (510) (394) (1,895) (1,492)
 
Net interest margin 8,597 8,083 33,296 31,333
 
Provision for loan losses (1,312) (1,266) (3,994) (6,354)
 
Net interest margin after provision for loan losses 7,285 6,817 29,302 24,979
 
OTHER REVENUES (EXPENSES):
Salaries and benefits (2,383) (2,527) (9,396) (8,997)
Other operating expenses (1,528) (1,082) (4,889) (4,607)
Change in fair market valuation of creditor notes payable - 44 43 179
Gain from deficiency account sale - - - 37
Other expense (69) (58) (382) (177)
 
Total other expenses (3,980) (3,623) (14,624) (13,565)
 
INCOME BEFORE INCOME TAXES 3,305 3,194 14,678 11,414
 
INCOME TAX EXPENSE (1,261) (1,229) (5,149) (4,335)
 
NET INCOME $ 2,044 $ 1,965 $ 9,529 $ 7,079
 
NET INCOME PER COMMON SHARE (BASIC) $ 0.58 $ 0.52 $ 2.64 $ 1.84
 
NET INCOME PER COMMON SHARE (DILUTED) $ 0.57 $ 0.52 $ 2.64 $ 1.84
 
BASIC WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING 3,533,371 3,743,472 3,605,675 3,838,894
 
DILUTED WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING 3,560,323 3,744,330 3,616,171 3,839,218
 

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