SAXON CAPITAL, INC.
(Exact name of Registrant as specified in its charter)
OR
For the Transition Period from ____________ to ______________
Commission File Number: 000-33485
SAXON CAPITAL, INC.
(Exact name of
Registrant as specified in its charter)
| Delaware | 54-2036376 | |
| (State or other jurisdiction | (IRS Employer Identification No.) | |
| of incorporation) |
4860 COX ROAD, SUITE 300
GLEN ALLEN, VIRGINIA
(Address of principal executive offices)
23060
(Zip Code)
(804) 967-7400
(Registrant’s
telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all documents and reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes X No
As of April 30, 2004 there were 28,690,794 shares of our common stock, par value $0.01 per share, outstanding.
| March 31, 2004 |
December 31, 2003 | |||||||
|---|---|---|---|---|---|---|---|---|
| Assets: | ||||||||
| Cash | $ | 6,795 | $ | 5,245 | ||||
| Accrued interest receivable | 52,743 | 54,080 | ||||||
| Trustee receivable | 89,797 | 74,614 | ||||||
| Mortgage loan portfolio | 4,940,909 | 4,723,416 | ||||||
| Allowance for loan loss | (33,837 | ) | (43,369 | ) | ||||
| Net mortgage loan portfolio | 4,907,072 | 4,680,047 | ||||||
| Restricted cash | 470,300 | 1,257 | ||||||
| Servicing related advances | 90,789 | 98,588 | ||||||
| Mortgage servicing rights, net | 39,042 | 41,255 | ||||||
| Real estate owned | 23,524 | 23,787 | ||||||
| Other assets | 67,764 | 79,959 | ||||||
| Total assets | $ | 5,747,826 | $ | 5,058,832 | ||||
| Liabilities and shareholders' equity: | ||||||||
| Liabilities: | ||||||||
| Accrued interest payable | $ | 9,576 | $ | 8,602 | ||||
| Warehouse financing | 426,368 | 427,969 | ||||||
| Securitization financing | 4,898,181 | 4,237,375 | ||||||
| Note payable | 25,000 | 25,000 | ||||||
| Deferred tax liability | 2,161 | 907 | ||||||
| Other liabilities | 25,889 | 13,933 | ||||||
| Total liabilities | 5,387,175 | 4,713,786 | ||||||
| Commitments and contingencies - Note 9 | — | — | ||||||
| Shareholders' equity: | ||||||||
| Common stock, $0.01 par value per share, 100,000,000 shares | ||||||||
| authorized; shares issued and outstanding: 28,690,794 as of March | ||||||||
| 31, 2004 and 28,661,757 as of December 31, 2003 | 287 | 287 | ||||||
| Additional paid-in capital | 264,564 | 264,030 | ||||||
| Other comprehensive loss, net of tax of $(6,442) and $(3,500) | (10,118 | ) | (5,497 | ) | ||||
| Retained earnings | 105,918 | 86,226 | ||||||
| Total shareholders' equity | 360,651 | 345,046 | ||||||
| Total liabilities and shareholders' equity | $ | 5,747,826 | $ | 5,058,832 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
| Three Months Ended March 31, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2004 |
2003 | |||||||
| Revenues: | ||||||||
| Interest income | $ | 90,999 | $ | 75,255 | ||||
| Interest expense | (33,167 | ) | (26,661 | ) | ||||
| Net interest income | 57,832 | 48,594 | ||||||
| Provision for mortgage loan losses | (3,878 | ) | (8,614 | ) | ||||
| Net interest income after provision for | ||||||||
| mortgage loan losses | 53,954 | 39,980 | ||||||
| Servicing income, net of amortization and | ||||||||
| impairment | 4,892 | 7,580 | ||||||
| Gain on sale of mortgage assets | 2,551 | 6 | ||||||
| Total net revenues | 61,397 | 47,566 | ||||||
| Expenses: | ||||||||
| Payroll and related expenses | (15,644 | ) | (14,278 | ) | ||||
| General and administrative expenses | (12,758 | ) | (11,058 | ) | ||||
| Depreciation | (1,494 | ) | (666 | ) | ||||
| Other expense | (1,143 | ) | (659 | ) | ||||
| Total operating expenses | (31,039 | ) | (26,661 | ) | ||||
| Income before taxes | 30,358 | 20,905 | ||||||
| Income tax expense | (10,666 | ) | (8,021 | ) | ||||
| Net income | $ | 19,692 | $ | 12,884 | ||||
| Earnings per common share: | ||||||||
| Average common shares - basic | 28,671,464 | 28,283,640 | ||||||
| Average common shares - diluted | 31,406,522 | 29,059,078 | ||||||
| Basic earnings per common share | $ | 0.69 | $ | 0.46 | ||||
| Diluted earnings per common share | $ | 0.63 | $ | 0.44 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
| Common Shares Outstanding |
Common Stock |
Additional Paid-in Capital |
Accumulated Other Comprehensive Loss |
Retained Earnings |
Total | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance at January 1, 2004 | 28,661,757 | $ | 287 | $ | 264,030 | $ | (5,497 | ) | $ | 86,226 | $ | 345,046 | ||||||||
| Issuance of common stock | 29,037 | — | 327 | — | — | 327 | ||||||||||||||
| Compensation expense on restricted stock units | — | — | 207 | — | — | 207 | ||||||||||||||
| Comprehensive income: | ||||||||||||||||||||
| Net income | — | — | — | — | 19,692 | 19,692 | ||||||||||||||
| Add: change in unrealized loss on mortgage | ||||||||||||||||||||
| securities | — | — | — | 199 | — | 199 | ||||||||||||||
| Add: reclassification adjustment for | ||||||||||||||||||||
| unrealized gain on mortgage securities | — | — | — | 290 | — | 290 | ||||||||||||||
| Less: tax effect of above unrealized gain on | ||||||||||||||||||||
| mortgage securities | — | — | — | (190 | ) | — | (190 | ) | ||||||||||||
| Less: loss on cash flow hedging instruments | — | — | — | (8,125 | ) | — | (8,125 | ) | ||||||||||||
| Add: reclassification adjustment for gain on | ||||||||||||||||||||
| cash flow hedging instruments | — | — | — | 72 | — | 72 | ||||||||||||||
| Add: tax effect of loss on cash flow hedging | ||||||||||||||||||||
| instruments | — | — | — | 3,133 | — | 3,133 | ||||||||||||||
| Total comprehensive loss | — | — | — | (4,621 | ) | 19,692 | 15,071 | |||||||||||||
| Balance at March 31, 2004 | 28,690,794 | $ | 287 | $ | 264,564 | $ | (10,118 | ) | $ | 105,918 | $ | 360,651 | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
| Three Months Ended March 31, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2004 |
2003 | |||||||
| Operating Activities: | ||||||||
| Net income from operations | $ | 19,692 | $ | 12,884 | ||||
| Adjustments to reconcile net income to net cash provided | ||||||||
| by operating activities: | ||||||||
| Depreciation and amortization | 9,989 | 5,222 | ||||||
| Deferred income taxes | 1,254 | (2,622 | ) | |||||
| Impairment of assets | 3,715 | 500 | ||||||
| (Gain) loss from sale of assets | (2,551 | ) | 439 | |||||
| Provision for loan losses | 3,878 | 8,614 | ||||||
| (Recovery) provision for advanced interest losses | (60 | ) | 440 | |||||
| Decrease (increase) in servicing related advances | 7,799 | (2,584 | ) | |||||
| Decrease (increase) in accrued interest receivable | 1,337 | (4,956 | ) | |||||
| Increase in accrued interest payable | 974 | 1,800 | ||||||
| Increase in trustee receivable | (15,183 | ) | (7,693 | ) | ||||
| Net change in other assets and other liabilities | 22,109 | 4,649 | ||||||
| Net cash provided by operating activities | 52,953 | 16,693 | ||||||
| Investing Activities: | ||||||||
| Purchase and origination of mortgage loans | (795,543 | ) | (726,057 | ) | ||||
| Principal payments on mortgage loan portfolio | 424,978 | 248,075 | ||||||
| Proceeds from the sale of mortgage loans | 111,665 | 10,766 | ||||||
| Proceeds from the sale of real estate owned | 14,057 | 4,389 | ||||||
| (Increase) decrease in restricted cash | (469,043 | ) | 300,631 | |||||
| Purchase of mortgage bonds | — | (3,000 | ) | |||||
| Principal payments received on mortgage bonds | 3,584 | 973 | ||||||
| Acquisition of mortgage servicing rights | (3,824 | ) | (8,697 | ) | ||||
| Net capital expenditures | (1,944 | ) | (1,783 | ) | ||||
| Net cash used in investing activities | (716,070 | ) | (174,703 | ) | ||||
| Financing Activities: | ||||||||
| Proceeds from issuance of securitization financing | 1,115,475 | 770,396 | ||||||
| Bond issuance costs | (4,121 | ) | (2,587 | ) | ||||
| Principal payments on securitization financing | (443,400 | ) | (250,994 | ) | ||||
| Repayment of warehouse financing, net | (1,601 | ) | (354,545 | ) | ||||
| Purchases of derivative instruments | (2,013 | ) | (8,743 | ) | ||||
| Proceeds received from issuance of stock | 327 | 1,597 | ||||||
| Net cash provided by financing activities | 664,667 | 155,124 | ||||||
| Net increase (decrease) in cash | 1,550 | (2,886 | ) | |||||
| Cash at beginning of period | 5,245 | 8,098 | ||||||
| Cash at end of period | ||||||||