UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2004
Commission File Number 000-24051
UNITED PANAM FINANCIAL CORP.
(Exact name of Registrant as specified in its charter)
| California | 95-3211687 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
3990 Westerly Place, Suite 200
Newport Beach, CA 92660
(Address of principal executive offices) (Zip Code)
(949) 224-1917
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all 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 Exchange Act). Yes ¨ No x
The number of shares outstanding of the Registrant’s Common Stock as of April 30, 2004 was 16,144,098 shares.
FORM 10-Q
MARCH 31, 2004
INDEX
| Page | ||||
| PART I. |
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| Item 1. |
||||
| Consolidated Statements of Financial Condition as of March 31, 2004 and December 31, 2003 |
1 | |||
| Consolidated Statements of Operations for the three months ended March 31, 2004 and March 31, 2003 |
2 | |||
| 3 | ||||
| Consolidated Statements of Cash Flows for the three months ended March 31, 2004 and March 31, 2003 |
4 | |||
| 6 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
9 | ||
| Item 3. |
23 | |||
| Item 4. |
23 | |||
| PART II. |
||||
| Item 1. |
24 | |||
| Item 2. |
24 | |||
| Item 3. |
24 | |||
| Item 4. |
24 | |||
| Item 5. |
24 | |||
| Item 6. |
24 | |||
United PanAm Financial Corp. and Subsidiaries
Consolidated Statements of Financial Condition
(Unaudited)
| (Dollars in thousands) | March 31, 2004 |
December 31, 2003 |
||||||
| Assets |
||||||||
| Cash and due from banks |
$ | 7,981 | $ | 8,376 | ||||
| Short term investments |
44,702 | 5,833 | ||||||
| Cash and cash equivalents |
52,683 | 14,209 | ||||||
| Securities available for sale, at fair value |
1,115,915 | 1,202,444 | ||||||
| Loans |
478,574 | 440,992 | ||||||
| Less unearned discount |
(17,857 | ) | (14,368 | ) | ||||
| Less allowance for loan losses |
(21,347 | ) | (20,384 | ) | ||||
| Loans, net |
439,370 | 406,240 | ||||||
| Premises and equipment, net |
3,265 | 3,163 | ||||||
| Federal Home Loan Bank stock, at cost |
11,563 | 11,563 | ||||||
| Accrued interest receivable |
10,732 | 9,849 | ||||||
| Other assets |
21,242 | 23,248 | ||||||
| Total assets |
$ | 1,654,770 | $ | 1,670,716 | ||||
| Liabilities and Shareholders’ Equity |
||||||||
| Deposits |
$ | 526,030 | $ | 498,389 | ||||
| Repurchase Agreements |
1,004,536 | 1,052,205 | ||||||
| Accrued expenses and other liabilities |
5,237 | 6,795 | ||||||
| Junior subordinated debentures/Trust preferred securities |
10,300 | 10,000 | ||||||
| Total liabilities |
1,546,103 | 1,567,389 | ||||||
| Common stock (no par value): |
||||||||
| Authorized, 30,000,000 shares |
||||||||
| Issued and outstanding, 16,132,758 at March 31, 2004 and 16,100,204 at December 31, 2003 |
66,306 | 66,109 | ||||||
| Retained earnings |
41,884 | 37,089 | ||||||
| Unrealized gain on securities available for sale, net |
477 | 129 | ||||||
| Total shareholders’ equity |
108,667 | 103,327 | ||||||
| Total liabilities and shareholders’ equity |
$ | 1,654,770 | $ | 1,670,716 | ||||
See notes to consolidated financial statements
1
United PanAm Financial Corp. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
| (In thousands, except per share data) | Three Months Ended March 31, | |||||
| 2004 |
2003 | |||||
| Interest Income |
||||||
| Loans |
$ | 27,076 | $ | 16,803 | ||
| Short term investments |
5,074 | 3,714 | ||||
| Total interest income |
32,150 | 20,517 | ||||
| Interest Expense |
||||||
| Deposits |
3,519 | 3,692 | ||||
| Repurchase agreements |
2,859 | 1,596 | ||||
| Junior subordinated debentures |
120 | — | ||||
| Total interest expense |
6,498 | 5,228 | ||||
| Net interest income |
25,652 | 15,229 | ||||
| Provision for loan losses |
6,714 | 535 | ||||
| Net interest income after provision for loan losses |
18,938 | 14,694 | ||||
| Non-interest Income |
||||||
| Services charges and fees |
256 | 230 | ||||
| Loan related charges and fees |
86 | 92 | ||||
| Gain on sale of securities |
499 | — | ||||
| Other income |
438 | 898 | ||||
| Total non-interest income |
1,279 | 1,220 | ||||
| Non-interest Expense |
||||||
| Compensation and benefits |
7,713 | 6,011 | ||||
| Occupancy |
1,243 | 1,031 | ||||
| Other |
3,206 | 2,279 | ||||
| Total non-interest expense |
12,162 | 9,321 | ||||
| Income before income taxes |
8,055 | 6,593 | ||||
| Income taxes |
3,260 | 2,683 | ||||
| Net Income |
$ | 4,795 | $ | 3,910 | ||
| Earnings per share-basic: |
||||||
| Net income |
$ | 0.30 | $ | 0.25 | ||
| Weighted average shares outstanding |
16,118 | 15,868 | ||||
| Earnings per share-diluted: |
||||||
| Net Income |
$ | 0.25 | $ | 0.22 | ||
| Weighted average shares outstanding |
19,153 | 17,796 | ||||
See notes to consolidated financial statements
2
United PanAm Financial Corp. and Subsidiaries
Consolidated Statements of Comprehensive Income
(Unaudited)
| (In thousands) | Three Months Ended March 31, |
||||||
| 2004 |
2003 |
||||||
| Net income |
$ | 4,795 | $ | 3,910 | |||
| Other comprehensive income, net of tax Unrealized gain (loss) on securities |
348 | (264 | ) | ||||
| Comprehensive income |
$ | 5,143 | $ | 3,646 | |||
See notes to consolidated financial statements
3
United PanAm Financial Corp. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
| (Dollars in thousands) | Three Months Ended March 31, |
|||||||
| 2004 |
2003 |
|||||||
| Cash Flows from Operating Activities |
||||||||
| Net income |
$ | 4,795 | $ | 3,910 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Gain of sale of investment securities |
(499 | ) | — | |||||
| Provision for loan losses |
6,714 | 535 | ||||||
| Depreciation and amortization |
323 | 248 | ||||||
| FHLB stock dividend |
— | (51 | ) | |||||
| (Increase) decrease in accrued interest receivable |
(883 | ) | 50 | |||||
| Decrease in other assets |
1,835 | 4,602 | ||||||
| Accretion of discount on loans |
(2,486 | ) | — | |||||
| Decrease in accrued expenses and other liabilities |
(1,558 | ) | (2,671 | ) | ||||
| Amortization of premiums on investment securities |
506 | 978 | ||||||
| Net cash provided by operating activities |
8,747 | 7,601 | ||||||
| Cash Flows from Investing Activities |
||||||||
| Purchase of investment securities |
(265,254 | ) | (464,509 | ) | ||||
| Proceeds from maturities of investment securities |
119,932 | 261,407 | ||||||
| Proceeds from sale of investment securities |
232,428 | — | ||||||
| Originations, net of repayments, of non-mortgage loans |
(37,358 | ) | (26,397 | ) | ||||
| Purchase of premises and equipment |
(425 | ) | (262 | ) | ||||
| Purchase of FHLB stock |
— | (5,680 | ) | |||||
| Net cash provided by (used in) investing activities |
49,323 | (235,441 | ) | |||||
| Cash Flows from Financing Activities |
||||||||
| Net increase in deposits |
27,641 | 2,573 | ||||||
| (Repayment) proceeds of repurchase agreements |
(47,669 | ) | 240,553 | |||||
| Deconsolidation of trust preferred securities |
300 | — | ||||||
| Exercise of stock options |
132 | 4 | ||||||
| Net cash (used in) provided by financing activities |
(19,596 | ) | 243,130 | |||||
| Net increase in cash and cash equivalents |
38,474 | 15,290 | ||||||
| Cash and cash equivalents at beginning of period |
14,209 | 13,554 | ||||||
| Cash and cash equivalents at end of period |
$ | 52,683 | $ | 28,844 | ||||
See notes to consolidated financial statements
4
United PanAm Financial Corp. and Subsidiaries
Consolidated Statements of Cash Flows, Continued
(Unaudited)
| (Dollars in thousands) | Three Months Ended March 31, | |||||
| 2004 |
2003 | |||||
| Supplemental Disclosures of Cash Flow Information |
||||||
| Cash paid for: |
||||||
| Interest |
$ | 7,010 | $ | 5,338 | ||
| Income taxes |
$ | 941 | $ | 642 | ||
See notes to consolidated financial statements
5
United PanAm Financial Corp. and Subsidiaries
Notes to Consolidated Financial Statements
Three Months Ended March 31, 2004 and 2003
(Unaudited)
1. Organization
United PanAm Financial Corp. (the “Company”) was incorporated in California on April 9, 1998 for the purpose of reincorporating its business in that state, through the merger of United PanAm Financial Corp., a Delaware corporation (the “Predecessor”), into the Company. Unless the context indicates otherwise, all references herein to the “Company” include the Predecessor.
The Company was originally organized as a holding company for Pan American Financial, Inc. (“PAFI”) and Pan American Bank, FSB (the “Bank”) to purchase certain assets and assume certain liabilities of Pan American Federal Savings Bank from the Resolution Trust Corporation (the “RTC”) on April 29, 1994. The Company, PAFI and the Bank are considered to be Hispanic owned. PAFI is a wholly owned subsidiary of the Company, and the Bank is a wholly owned subsidiary of PAFI.
2. Basis of Presentation
The accompanying unaudited consolidated financial statements include the accounts of United PanAm Financial Corp., Pan American Financial, Inc. and Pan American Bank, FSB. Substantially all of the Company’s revenues are derived from the operations of the Bank and they represent substantially all of the Company’s consolidated assets and liabilities as of March 31, 2004 and December 31, 2003. Significant inter-company accounts and transactions have been eliminated in consolidation.
These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company’s financial condition and results of operations for the interim periods presented in this Form 10-Q have been included. Operating results for the interim periods are not necessarily indicative of financial results for the full year. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
3. Earnings Per Share
Basic EPS and diluted EPS are calculated as follows for the three months ended March 31, 2004 and March 31, 2003:
| Three Months Ended March 31, | ||||||
| (In thousands, except per share amounts) | 2004 |
2003 | ||||
| Earnings per share – basic: |
||||||
| Net income |
$ | 4,795 | $ | 3,910 | ||
| Average common shares outstanding |
16,118 | 15,868 | ||||