SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly report pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934
FOR THE QUARTERLY PERIOD ENDED March 31, 2002.
OR
[_] Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the Transition Period From _______ to _______
COMMISSION FILE NUMBER 0-23381
BINGHAM FINANCIAL SERVICES CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Michigan 38-3313951
(State of Incorporation) (I.R.S. Employer Identification No.)
260 East Brown Street
Suite 200
Birmingham, Michigan 48009
(Address of Principal Executive Offices, Including Zip Code)
(248) 644-8838
(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 [ ]
Number of shares of Common Stock, no par value,
outstanding as of April 30, 2002: 2,476,321
BINGHAM FINANCIAL SERVICES CORPORATION
INDEX
PAGES
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheet as of March 31, 2002 (unaudited) and
December 31, 2001 4
Consolidated Statement of Operations (unaudited) for the Three
Months Ended March 31, 2002 and 2001 5
Consolidated Statement of Cash Flows (unaudited) for the Three Months
Ended March 31, 2002 and 2001 6
Notes to Consolidated Financial Statements 7-11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12-19
Item 3. Quantitative and Qualitative Disclosures About Market Risk 20-21
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 22
Item 6.(a) Exhibits Required by Item 601 of Regulation S-K 22
Item 6.(b) Reports on Form 8K 22
Signatures 23
2
As the context requires, references made in this quarterly report to "we", "us",
"our", the "Company" and similar references refer to Bingham Financial Services
Corporation and its subsidiaries, including Origen Financial, L.L.C., and its
subsidiaries.
PART I - FINANCIAL INFORMATION
ITEM I - FINANCIAL STATEMENTS
3
BINGHAM FINANCIAL SERVICES CORPORATION
CONSOLIDATED BALANCE SHEET
MARCH 31, 2002 AND DECEMBER 31, 2001
----------------
March 31, December 31,
2002 2001
--------- ---------
(Unaudited)
ASSETS (In thousands, except shares)
Cash and equivalents $ 265 $ 440
Restricted cash 62 1,739
Loans receivable, net 16,152 126,591
Servicing rights 7,687 6,855
Servicing advances 7,936 9,940
Furniture, fixtures and equipment, net 1,922 1,801
Deferred federal income taxes 6,995 7,000
Loan sale proceeds receivable 5,345 5,723
Residual interest in loans sold 7,917 --
Other assets 7,240 7,003
--------- ---------
Total assets $ 61,521 $ 167,092
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Liabilities:
Accounts payable and accrued expenses $ 4,894 $ 5,709
Recourse liability 6,660 7,860
Advances under repurchase agreements 6,301 105,564
Notes payable 14,098 17,435
--------- ---------
Total liabilities 31,953 136,568
--------- ---------
Non-controlling members' interest in subsidiary 39,026 39,766
--------- ---------
Stockholders' deficit:
Preferred stock, no par value, 10,000,000 shares
authorized; no shares issued and outstanding -- --
Common Stock, no par value, 10,000,000 shares authorized;
2,476,321 and 2,542,988 shares issued and outstanding at
March 31, 2002 and December 31, 2001, respectively 26,478 26,478
Paid-in capital 96 322
Accumulated deficit (36,032) (36,042)
--------- ---------
Total stockholders' deficit (9,458) (9,242)
--------- ---------
Total liabilities and stockholders' deficit $ 61,521 $ 167,092
========= =========
The accompanying notes are an integral part of the financial statements.
4
BINGHAM FINANCIAL SERVICES CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001
----------------
Three Months Ended March 31,
--------------------------
2002 2001
----------- -----------
REVENUES (In thousands, except per share data)
Interest income on loans $ 3,135 $ 3,513
Loan servicing fees 1,965 2,651
Mortgage origination fees -- 570
Gain on sale and securitization of loans 2,677 3,922
Other income 33 311
----------- -----------
Total revenues 7,810 10,967
----------- -----------
COSTS AND EXPENSES
Interest expense 1,409 2,914
Provision for credit losses and recourse liability 1,108 790
General and administrative 4,702 5,025
Loss on interest rate swap -- 510
Other operating expenses 412 417
----------- -----------
Total costs and expenses 7,631 9,656
----------- -----------
Income before income tax expense and allocation
of subsidiary net income in non-controlling
members' interests 179 1,311
Allocation of subsidiary net income in non-controlling
members' interests (164) --
----------- -----------
Income before income tax expense 15 1,311
Federal income tax expense 5 446
----------- -----------
Net income $ 10 $ 865
=========== ===========
Weighted average common shares outstanding,
Basic 2,497,803 2,626,293
=========== ===========
Diluted 2,497,803 2,626,293
=========== ===========
Earnings per share,
Basic $ 0.00 $ 0.33
=========== ===========
Diluted $ 0.00 $ 0.33
=========== ===========
The accompanying notes are an integral part of the financial statements.
5
BINGHAM FINANCIAL SERVICES CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001
----------------
Three Months Ended March 31,
----------------------------
2002 2001
--------- ---------
(In thousands)
Cash flows from operating activities:
Net cash provided by operating activities $ 102,757 $ 60,923
--------- ---------
Cash flows from investing activities:
Proceeds from sale of investment securities -- 1,782
Capital expenditures (332) (96)
--------- ---------
Net cash provided by (used in) investing activities (332) 1,686
--------- ---------
Cash flows from financing activities:
Advances under repurchase agreements 19,947 44,636
Repayment of advances under repurchase agreements (119,210) (98,715)
Advances on note payable 57,162 74,139
Repayment of note payable (60,499) (86,082)
--------- ---------
Net cash used in financing activities (102,600) (66,022)
--------- ---------
Net change in cash and cash equivalents (175) (3,413)
Cash and cash equivalents, beginning of period 440 3,521
--------- ---------
Cash and cash equivalents, end of period $ 265 $ 108
========= =========
The accompanying notes are an integral part of the financial statements.
6
BINGHAM FINANCIAL SERVICES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
----------------
1. BASIS OF PRESENTATION:
The unaudited consolidated financial statements reflect all adjustments,
consisting only of normal recurring items, which are necessary to present
fairly the Company's financial condition and results of operations on a
basis consistent with that of the Company's prior audited consolidated
financial statements. Pursuant to rules and regulations of the Securities
and Exchange Commission applicable to quarterly reports on Form 10-Q,
certain information and disclosures normally included in financial
statements prepared in accordance with accounting principles generally
accepted in the United States ("GAAP") have been condensed or omitted. 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, as amended, for the
fiscal year ended December 31, 2001. Results for interim periods are not
necessarily indicative of the results that may be expected for a full year.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts and transactions
of the Company and its subsidiaries. Significant intercompany accounts and
transactions have been eliminated in consolidation.
In July 2001, the Company entered into an investment agreement with three
investors - SUI TRS, Inc., Shiffman Family LLC and Woodward Holding, LLC -
under which the Company agreed to recapitalize its operating subsidiaries.
Under the investment agreement and a merger agreement entered into on
December 18, 2001, SUI TRS, Shiffman Family LLC and Woodward Holding made
capital contributions totaling $40 million in Origen Financial, LLC ("Origen
LLC"), a newly formed limited liability company. The Company merged Origen
Financial, Inc ("Origen Inc.") and its other wholly-owned operating
subsidiaries into Origen LLC and its subsidiaries. The mergers were
completed April 25, 2002.
The Company retained an initial 20% ownership interest in Origen LLC and the
three investors received an initial 80% aggregate interest in Origen LLC.
These interests are subject to dilution resulting from (a) grants of up to
11.5% of the membership interests to key employees of the recapitalized
subsidiaries, and (b) potential future issuance of additional membership
interests in the recapitalized subsidiaries in connection with the raising
of additional capital.
The above transactions have been accounted for as a recapitalization of the
Company's operating subsidiaries and, accordingly, there is no adjustment to
the historical cost basis carrying amounts of the assets and liabilities
transferred to Origen LLC by the Company. Although the Company retains only
a 20% interest (33.33% voting interest) in Origen LLC, the recapitalization
has not resulted in a change in control of Origen LLC for accounting
purposes and the financial position and results of operations of Origen LLC
continue to be presented on a consolidated basis in the accompanying
financial statements. An allocation of income or losses attributable to the
non-controlling members under the provisions of the Origen LLC operating
agreement is accounted for in a manner similar to the minority interest.
RECLASSIFICATIONS
Certain prior period amounts have been reclassified to conform to the
current period's presentation.
2. EARNINGS PER SHARE:
Basic earnings (loss) per share is computed by dividing net income (loss)
available to common shareholders by the number of weighted average common
shares outstanding. At March 31, 2002 and 2001 there were approximately 0
and 908,100 potential shares of common stock from stock options and warrants
outstanding, respectively.
7
BINGHAM FINANCIAL SERVICES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
----------------
The following table presents a reconciliation of the numerator (income
(loss) available to common shareholders) and denominator (weighted average
common shares outstanding) for the basic and diluted income (loss) per share
calculation:
Three Months Ended March 31,
-----------------------------------------
2002 2001
----------------------------------------
Earnings Earnings
Shares per share Shares per share
----- -------- ----- -------
(Shares in thousands)
Basic earnings per share before 2,498 $ 0.00 2,626 $ .33
Net dilutive effect of:
Options -- -- -- --
Warrants -- -- -- --
----- -------- ----- -------
Diluted earnings per share 2,498 $ 0.00 2,626 $ .33
===== ======== ===== =======
3. OTHER COMPREHENSIVE INCOME:
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income," establishes standards for reporting comprehensive
income. Other comprehensive income refers to revenues, expenses, gains and
losses that under GAAP have previously been reported as separate components
of equity in the Company's consolidated financial statements.
Three Months Ended March 31,
----------------------------
2002 2001
---- ----
(In thousands)
Net income $ 10 $ 865
Other comprehensive income net of tax:
Unrealized gain on securities:
Unrealized holding gain during period, net
of tax of $0 and $27, respectively -- 53
Less reclassification adjustment for realized gains
included in net income, net of tax of $86 -- (168)
----- -----
Comprehensive income
$ 10 $ 750
===== =====
4. ALLOWANCE FOR CREDIT LOSSES:
The allowance for possible credit losses is maintained at a level believed
to be adequate by management to absorb potential losses in the Company's
loan portfolio. The Company's loan portfolio is comprised of homogenous
manufactured home loans with average loan balances of less than $50,000. The
allowance for credit losses is determined at a portfolio level and computed
by applying loss rate factors to the loan portfolio on a stratified basis
using current portfolio performance and delinquency levels (0-30 days, 31-60
days, 61-90 days and more than 90 days delinquent). The Company's loss rate
factors are based on the Company's historical loan loss experience and are
adjusted for economic conditions and other trends affecting borrowers'
ability to repay and estimated collateral value. The allowance for credit
losses represents an unallocated allowance. There are no elements of the
allowance allocated to specific individual loans or to impaired loans.
8
BINGHAM FINANCIAL SERVICES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
----------------
Changes in the allowance for credit losses are summarized as follows:
Three Months Ended March 31,
----------------------------
2002 2001
------- -------
(In thousands)
Balance at beginning of period $ 1,764 $ 2,168
Provision for loan losses 1,108 790
Transfers from recourse liability 1,200 999
Gross charge-offs (4,883) (4,102)
Recoveries 2,253 1,539
------- -------
Balance at end of period $ 1,442 $ 1,394
======= =======
The Company periodically sells portions of its manufactured home loan
portfolio with recourse whereby it is required to repurchase loans that meet
certain delinquency or default criteria. The Company maintains a separate
liability to absorb potential losses on these loans. As of March 31, 2002,
the outstanding principal balance on manufactured home loans the Company had
sold with recourse totaled $120.8 million. During the three months ended
March 31, 2002, there were approximately $1.2 million in charges against the
recourse liability. The balance of that liability was approximately $6.7
million at March 31, 2002.
5. DEBT:
The Company currently has a $21.25 million line of credit extended by Sun
Communities Operating Limited Partnership to Origen LLC. The line of credit
will terminate on December 18, 2002 and the outstanding balance bears
interest at a rate of LIBOR plus 700 basis points, with a minimum interest
rate of 11% and a maximum interest rate of 15%. The line of credit is
secured by a security interest in substantially all of Origen LLC's assets.
Sun Communities Operating Limited Partnership and Woodward Holding, a member
of Origen LLC, have entered into a participation agreement under which Sun
Communities Operating Limited Partnership will loan up to approximately 59%
of the borrowing limit (or $12.5 million) and Woodward Holding will loan up
to approximately 41% of the borrowing limit (or $8.75 million) under the
line of credit. Sun Communities Operating Limited Partnership and Woodward
Holding jointly administer the line of credit. Bingham has guaranteed the
obligations of Origen LLC under the line of credit and has granted the
lenders a security interest in substantially all of its assets as security
for the guaranty. At March 31, 2002, the outstanding balance on the line of
credit was approximately $10.2 million.
Bingham and Origen LLC are borrowers under a revolving credit facility with
Standard Federal Bank (as successor to Michigan National Bank). Under this
facility, Bingham and Origen LLC may borrow up to $10.0 million. Interest at
a rate of 30-day LIBOR plus a spread is payable on the outstanding balance.
The outstanding principal balance on this credit facility as of March 31,
2002 was approximately $3.9 million. To secure the loan from Standard
Federal Bank, Origen LLC and Bingham have granted Standard Federal Bank a
security interest in their rights under three servicing agreements under
which Origen LLC services manufactured home loans. This facility will
terminate on June 30, 2002. Based on discussions with Standard Federal Bank
and other lenders, the Company expects this facility to be extended or
replaced at the end of its current term.
In December 2001, Credit Suisse First Boston Mortgage Capital and Origen
LLC, through its special purpose subsidiary Origen Special Holdings, LLC
entered into a master repurchase agreement. Under the agreement, Origen LLC
contributes manufactured home loans it originates or purchases to Origen
Special Holdings, Origen Special Holdings then transfers the manufactured
home loans to Credit Suisse First Boston against the transfer of funds from
Credit Suisse First Boston and Origen Special Holdings transfers the funds
to Origen LLC for operations. Bingham guaranteed the obligations of Origen
Special Holdings under this agreement. The maximum financing limit on the
facility is $150.0 million. The annual interest rate on the facility is a
variable rate equal to LIBOR plus a spread. The loans are financed on the
facility at varying advance rates on the lesser of the then current face
value or market value of the loans. The advance rates depend on the
characteristics of the loans financed. The facility will terminate on May
28, 2002, but may be terminated earlier upon an event of default under the
master repurchase agreement. Based on discussions with Credit Suisse First
Boston, we expect the term of this agreement will be extended. At March 31,
2002, the aggregate amount advanced by Credit Suisse First Boston under the
facility was $6.3 million.
9
BINGHAM FINANCIAL SERVICES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
----------------
At March 31, 2002 and December 31, 2001 total debt outstanding was as
follows:
March 31, 2002 December 31, 2001
-------------- -----------------
(In thousands)
Loans sold under agreements to repurchase $ 6,301 $105,564
Revolving credit facility 3,921 6,250
Demand loans -- --
Term loan 10,177 11,185
-------- --------
Total debt $20,399 $122,999
======== ========
6. RESIDUAL INTEREST IN LOANS SOLD AND SECURITIZED:
The Company through Origen LLC securitizes manufactured home loans. Under
the current legal structure of the securitization program, the Company sells
manufactured home loans it originates and purchases to a trust for cash. The
trust sells asset-backed bonds secured by the loans to investors. The
Company records certain assets and income based upon the difference between
all principal and interest received from the loans sold and the following
factors: (i) all principal and interest required to be passed through to the
asset-backed bond investors, (ii) all excess contractual servicing fees,
(iii) other recurring fees and (iv) an estimate of losses on loans. The
Company continues to service the securitized loans.
The Company retains the right to service the loans it securitizes. Fees for
servicing the loans are based on a contractual percentage per annum of the
unpaid principal balance of the associated loans. The Company recognizes a
servicing asset in addition to its gain on sale of loans. The servicing
asset is calculated as the present value of the expected future net
servicing income in excess of adequate compensation for a substitute
servicer, based on common industry assumptions and the company's historical
experience. These factors include default and prepayment speeds.
The Company follows the provisions of SFAS 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities in the
valuation of its residual interests. The key economic assumptions used in
measuring the initial retained interests resulting from the securitization
completed in the quarter ended March 31, 2002 were as follows:
Prepayment speed 175.00% MHP
Weighted average life (months) 311
Discount rate 15.00%
Expected credit losses 8.25%
The Company will assess the carrying value of the residual receivables for
impairment on a monthly basis. There can be no assurance that the Company's
estimates used to determine the residual receivable and the servicing asset
valuations will remain appropriate for the life of the securitization. If
actual loan prepayments or defaults exceed the Company's estimates, the
carrying value of the Company's residual receivable and/or servicing asset
may decrease through a charge against earnings in the period management
recognizes the disparity.
7. RECENT ACCOUNTING PRONOUNCEMENTS:
During July 2001, Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets" ("SFAS 142") was issued. The
statement provides the accounting and reporting standards for goodwill. SFAS
142 will not impact the Company's financial position or results of
operations because the Company had no goodwill on its balance sheet at March
31, 2002.
8. SUBSEQUENT EVENTS:
On April 25, 2002, Bingham caused its wholly-owned subsidiary Origen Inc. to
be merged with and into Origen LLC. Origen Inc.'s operating subsidiaries
were also merged into limited liability company subsidiaries of Origen LLC.
10
BINGHAM FINANCIAL SERVICES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
----------------
The mergers were part of Bingham's recapitalization of its operating
subsidiaries, which was approved by the Bingham shareholders in December
2001. As part of the recapitalization, three investors, Shiffman Family LLC,
SUI TRS, Inc. and Woodward Holdings, LLC, contributed an aggregate of $40
million to Origen LLC. Bingham will retain an initial ownership interest of
approximately 20% and the three investors will receive an initial aggregate
ownership interest of approximately 80% in Origen LLC. The funds from the
$40 million capital contributions were used to repay a substantial portion
of Origen, Inc.'s and Bingham's debt to Sun Communities Operating Limited
Partnership. The remaining portion of this debt was restructured as a
one-year line of credit between Origen LLC as borrower, and Sun Communities
Operating Limited Partnership, as lender.
11
BINGHAM FINANCIAL SERVICES CORPORATION
----------------
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis provides information on material
factors affecting our results of operations and significant balance sheet
changes. This discussion should be read in conjunction with the consolidated
financial statements and notes included herein and our Annual Report on Form
10-K, as amended for the fiscal year ended December 31, 2001. Results of
operations for the three-month period presented are not necessarily
indicative of results which may be expected for the entire year.
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements based on our
current expectations, estimates and projections about our industry,
management's beliefs and certain assumptions made by us. Words such as
"anticipates," "expects," "intends," "plans," "believes," "seeks,"
"estimates," "may," "will" and variations of these words or similar
expressions are intended to identify forward-looking statements. In
addition, any statements that refer to expectations, projections or other
characterizations of future events or circumstances, including any
underlying assumptions, are forward-looking statements. Such statements are
not guarantees of future performance and are subject to certain risks,
uncertainties and assumptions that are difficult to predict. Therefore, our
actual results could differ materially and adversely from those anticipated
in any forward-looking statements as a result of numerous factors, many of
which are described in the "Factors That May Affect Future Results" section
in Item 1 of our Annual Report on Form 10-K, as amended for the year ended
December 31, 2001. You should carefully consider those risks, in addition to
the other information in this quarterly report and in our other filings with
the SEC. We undertake no obligation to revise or update publicly any
forward-looking statements for any reason.
CRITICAL ACCOUNTING POLICIES
We have identified critical accounting policies that, as a result of the
judgments, uncertainties, uniqueness and complexities of the underlying
accounting standards and operations involved, could result in material
changes to our financial condition or results of operations under different
conditions or using different assumptions.
We believe our most critical accounting policies are related to the
following areas: allowance for credit losses, liability for loans sold with
recourse, deferred taxes and accounting for securitizations. Details
regarding our use of these policies and the related estimates are described
fully in our 2001 Annual Report filed with the Securities and Exchange
Commission on Form 10-K, as amended. During the first quarter of 2002, there
have been no material changes to our critical accounting policies that
impacted our financial condition or results of operations.
RESULTS OF OPERATIONS
Results for the quarter ended March 31, 2002 include the following:
- Bingham completed a securitization of manufactured home loans with
principal balances totaling approximately $135.0 million on March 27,
2002. The securitization qualifies as a sale of loan receivables and we
recorded a pre-tax gain of $2.7 million on the entire transaction.
- Manufactured home loan originations for the quarter ended March 31, 2002
were $25.1 million versus $56.4 million in the quarter ended March 31,
2001, a decrease of 55.5%.
- Additions to the allowance for credit losses were approximately $1.1
million for the quarter ended March 31, 2002, compared to $790,000 in
the quarter ended March 31, 2001, an increase of 51.9%.
12
BINGHAM FINANCIAL SERVICES CORPORATION
----------------
We reported pre-tax income prior to the allocation of income to
non-controlling members' interests of $179,000 for the quarter ended March
31, 2002, compared to pre-tax income of $1.3 million for the quarter ended
March 31, 2001. Pre-tax income for the quarter ended March 31, 2002 after
the allocation of income to the non-controlling members' interests was
$15,000. The pre-tax income for the current quarter includes a $2.7 million
gain on the sale of loans related to the $135.0 million securitization of
manufactured home loans compared to a pre-tax gain of $3.8 million on the
securitization of $140.1 million of manufactured home loans in the quarter
ended March 31, 2001.
Interest income on loans was $3.1 million for the quarter ended March 31,
2002 compared to $3.5 million for the quarter ended March 31, 2001, a
decrease of 11.4%. The decrease is primarily the result of a decrease in the
average yield on the loan receivable portfolio, which was 10.85% for the
quarter ended March 31, 2002 versus 11.54% for the quarter ended March 31,
2001. Interest income was also affected by a decrease in the average
outstanding loan receivable balance to $115.6 million for the current
quarter from $117.3 million for the quarter ended March 31, 2001, a decrease
of 1.5%.
Interest expense for the quarter ended March 31, 2002 was $1.4 million
compared to $2.9 million for the quarter ended March 31, 2001, a decrease of
51.7%. The decrease is primarily a result of the decrease in the average
outstanding balance of debt used to finance the loan receivables and fund
operations. Average outstanding debt was $124.6 million for the quarter
ended March 31, 2002 compared to $130.9 million for the quarter ended March
31, 2001, a decrease of 4.8%. The average borrowing rate decreased
approximately 438 basis points to 4.53% for the quarter ended March 31, 2002
compared to 8.91% for the quarter ended March 31, 2001. The decrease in the
average borrowing rate is primarily related to a decrease in the average
LIBOR rate of approximately 392 basis points for the three months ended
March 31, 2002 as compared to the three months ended March 31, 2001. Our
current financing sources are primarily variable rate facilities that use
the 30 day LIBOR rate as an index.
The following tables set forth the extent to which our net interest income
has been affected by changes in average interest rates and average balances
of interest-earning assets and interest-bearing liabilities.
Three months ended March 31, 2002 and 2001
--------------------------------------------------------------------------------------------
Average Balance Average Rate Interest Increase Variance due to:
-------------------- -------------- --------------- -----------------
2002 2001 2002 2001 2002 2001 (Decrease) Volume Rate
-------- -------- ----- ----- ------ ------ ------- ------- -----
Interest-earning assets: (Dollars in thousands)
Loans $115,625 $117,318 10.85% 11.54% $3,135 $3,384 $ (249) $ (47) $(202)
Cash and equivalents 1,588 2,335 2.63% 3.50% 10 21 (11) (10) (1)
-----------------------------------------------------------------------------------------
$117,213 $119,653 10.73% 11.38% $3,145 $3,405 $ (260) $ (57) $(203)
==================== =============== ===============================================
Interest-bearing Liabilities
Term loan -- $ 4,000 -- 11.68% $ -- $ 117 $ (117) $ (117) $ --
Line of credit 18,988 57,820 9.99% 8.15% 475 1,175 (700) (703) 3
Loans sold under repurchase 105,564 69,050 3.53% 9.40% 934 1,622 (688) (672) (16)
--------------------------------------- -----------------------------------------------
$124,552 $130,870 4.53% 8.91% $1,409 $2,914 $(1,505) $(1,492) $( 13)
=========================================================================================
Interest rate spread 6.21% 2.47%
Excess average earning assets $ (7,339) $(11,217) 10.73% 11.38%
=======================================
Net interest margin 5.92% 1.64% $1,736 $ 491 $ 1,245 $ 1,435 $(190)
=================================================================
13
BINGHAM FINANCIAL SERVICES CORPORATION
----------------
Loan servicing fees, which are reported net of amortization of servicing
assets, were $2.0 million for the three months ended March 31, 2002,
compared to $2.7 million for the three months ended March 31, 2001, a
decrease of 25.9%. Servicing fees recorded for the three months ended March
31, 2001 include approximately $165,000 earned on the commercial loan
portfolio serviced for others. This portfolio was sold along with certain of
the other assets of our commercial origination and servicing subsidiaries in
June 2001. The average principal balance of manufactured home loans serviced
for others was approximately $1.1 billion for the quarter ended March 31,
2002, compared to an average outstanding principal balance of $1.3 billion
for the quarter ended March 31, 2001, a decrease of 15.4%.
In the quarter ended March 31, 2002 we securitized and sold approximately
$135.0 million of manufactured home loans and recorded a gain on the sale of
loans of approximately $2.7 million compared to the securitization of
approximately $140.1 million of manufactured home loans and a gain on sale
of loans of approximately $3.8 million in the quarter ended March 31, 2001.
Under the current legal structure of our securitization program we sell
manufactured home loans we originate and purchase to a trust for cash. The
trust sells asset-backed bonds secured by the loans to investors. We record
certain assets and income based upon the difference between all principal
and interest received from the loans sold and the following factors: (i) all
principal and interest required to be passed through to the asset-backed
bond investors, (ii) all excess contractual servicing fees, (iii) other
recurring fees and (iv) an estimate of losses on loans. At the time of the
securitization we estimate these amounts based upon a declining principal
balance of the underlying loans, adjusted by an estimated prepayment and
loss rate, and capitalize these amounts using a discount rate that market
participants would use for similar financial instruments. These capitalized
assets are recorded as residual receivables. We believe the assumptions we
have used are appropriate and reasonable.
We retain the right to service the loans we securitize. Fees for servicing
the loans are based on a contractual percentage per annum of the unpaid
principal balance of the associated loans. We recognize a servicing asset in
addition to our gain on sale of loans. The servicing asset is calculated as
the present value of the expected future net servicing income in excess of
adequate compensation for a substitute servicer, based on common industry
assumptions and our historical experience. These factors include default and
prepayment speeds.
The key economic assumptions used in measuring the initial retained
interests resulting from the securitization completed in the quarter ended
March 31, 2002 were as follows:
Prepayment speed 175.00% MHP
Weighted average life (months) 311
Discount rate 15.00%
Expected credit losses 8.25%
We periodically sell manufactured home loans on a whole-loan basis. At the
time of such loan sales, we recognize recourse liabilities pursuant to our
future obligations, if any, to the applicable loan purchasers under the
provisions of the respective sale agreements. Under our existing recourse
obligations, we are required to repurchase any loan contract that goes into
default, as defined in the respective loan agreement, for the life of each
loan sold, at an amount equal to the outstanding principal balance and
accrued interest, and refund any purchase premiums. The loan purchasers have
no recourse to our other assets for failure of debtors to pay when due.
The loan pools subject to recourse provisions are comprised of homogenous
manufactured home loans with an average loan balance of less than $50,000.
The estimated recourse liability is calculated based on historical default
rates and loss experience for pools of similar loans we originate and
service. These loss rates are applied to each pool of loans subject to
recourse provisions and the resulting estimated recourse liability
represents the present value of the expected obligations under those
recourse provisions. The loss rates are adjusted for economic conditions and
other trends affecting borrowers' ability to repay and estimated collateral
value. The recourse liability is calculated at a portfolio level and there
are no elements of the estimated recourse liability allocated to specific
loans. At March 31, 2002 we had principal balance of loans sold with
recourse of $120.8 million and had recorded liability of $6.7 million
compared to $141.7 million of principal balance of loans sold with recourse
and recorded liability of $7.9 million at March 31, 2001.
14
BINGHAM FINANCIAL SERVICES CORPORATION
----------------
During the three months ended March 31, 2001, we repurchased loans with
principal balances of approximately $15.0 million that had previously been
sold with recourse and subsequently securitized those loans as part of our
March 2001 securitization. As a result of the elimination of our recourse
obligations associated with the repurchased loans, the related previously
recognized recourse obligation of approximately $450,000 was derecognized at
the time of the repurchase.
Changes in the recorded recourse liability are summarized as follows:
Three Months Ended March 31,
----------------------------
2002 2001
------- -------
(In thousands)
Balance at beginning of period $ 7,860 $ 9,313
Adjustment related to repurchase
of loans to put in securitization -- (450)
Transfers to allowance for credit losses (1,200) (999)
------- -------
Balance at end of period $ 6,660 $ 7,864
======= =======
Our loan portfolio is comprised of homogenous manufactured home loans with
an average loan balance of less than $50,000. The allowance for credit
losses is determined at a portfolio level and computed by applying loss rate
factors to the loan portfolio on a stratified basis using current portfolio
performance and delinquency levels (0-30 days, 31-60 days, 61-90 days and
more than 90 days delinquent). Our loss rate factors are based on historical
loan loss experience and are adjusted for economic conditions and other
trends affecting borrowers' ability to repay and estimated collateral value.
The allowance for loan losses represents an unallocated allowance; there are
no elements of the allowance allocated to specific individual loans or to
impaired loans.
For the quarter ended March 31, 2002 the provision for credit losses was
approximately $1.1 million compared to $790,000 for the quarter ended March
31, 2001, an increase of 39.2%. The increase is primarily attributable to
the increase in the principal balance of loans more than 60 days delinquent,
which were $2.7 million at March 31, 2002 versus $2.4 million at March 31,
2001.
The allowance for credit losses as a percentage of gross manufactured home
loans outstanding was 9.08% at March 31, 2002 compared to 5.66% at March 31,
2001, an increase of approximately 342 basis points. The increase is
primarily the result of the sale of the majority of our performing loans in
the $135.0 million manufactured home loan securitization completed in March
2002.
Changes in the allowance for credit losses are summarized as follows:
Three Months Ended March 31,
----------------------------
2002 2001
------- -------
(In thousands)
Balance at beginning of period $ 1,764 $ 2,168
Provision for loan losses 1,108 790
Transfers from recourse liability 1,200 999
Gross charge-offs (4,883) (4,102)
Recoveries 2,253 1,539
------- -------
Balance at end of period $ 1,442 $ 1,394
======= =======
General and administrative expenses totaled approximately $4.7 million for
the quarter ended March 31, 2002 compared to $5.0 million for the quarter
ended March 31, 2001, a decrease of 6.0%. Personnel costs, the largest
component of general and administrative expenses, decreased to $3.4 million
for the quarter ended March 31, 2002 versus $3.9 million for the quarter
ended March 31, 2001, a 12.8% decrease. The decrease is principally due to a
decrease in staff and incentive commissions related to lower loan
originations.
15
BINGHAM FINANCIAL SERVICES CORPORATION
----------------
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is the measurement of our ability to have adequate cash or access
to cash at all times in order to meet financial obligations when due as well
as to fund corporate expansion or other activities. We expect to meet our
liquidity requirements through a combination of working capital provided by
operating activities, draws on our lines of credit, advances under our
master repurchase agreement, whole loan sales and periodic securitizations
of our loan portfolio. We may also issue additional equity in Bingham or its
subsidiaries when and if we believe existing shareholders are likely to
benefit from such offerings.
As of March 31, 2002 total borrowings were $20.4 million compared to $123.0
million at December 31, 2001, a decrease of 83.4%. The decreased borrowings
were primarily the result of the securitization of approximately $135.0
million of manufactured home loans completed on March 27, 2002. Proceeds
from the securitization totaled approximately $128.0 million which were used
to pay down our existing lines of credit. The origination of new
manufactured home loans also impacts total borrowings. Loan originations for
the quarter ended March 31, 2002 were $25.1 million compared to $56.4
million for the quarter ended March 31, 2001, a decrease of 55.5%.
Our primary sources of liquidity include cash generated from operations,
borrowing availability under our three credit facilities and our
securitization program through which loans are sold into the asset backed
securities market.
We currently have in place a $21.25 million line of credit extended by Sun
Communities Operating Limited Partnership to Origen LLC. The line of credit
will terminate on December 18, 2002 and the outstanding balance bears
interest at a rate of LIBOR plus 700 basis points, with a minimum interest
rate of 11% and a maximum interest rate of 15%. The line of credit is
secured by a security interest in substantially all of Origen LLC's assets.
Sun Communities Operating Limited Partnership and Woodward Holding, a member
of Origen LLC, have entered into a participation agreement under which Sun
Communities Operating Limited Partnership will loan up to approximately 59%
of the borrowing limit (or $12.5 million) and Woodward Holding will loan up
to approximately 41% of the borrowing limit (or $8.75 million) under the
line of credit. Sun Communities Operating Limited Partnership and Woodward
Holding jointly administer the line of credit. Bingham has guaranteed the
obligations of Origen LLC under the line of credit and has granted the
lenders a security interest in substantially all of its assets as security
for the guaranty. As of March 31, 2002 the outstanding principal balance on
this facility was approximately $10.2 million.
Sun Communities Operating Limited Partnership and Woodward Holding are
members of Origen LLC. In addition, Gary A. Shiffman, Bingham's Chairman of
the Board, and Arthur A. Weiss, a Director of Bingham, are affiliates of Sun
Communities Operating Limited Partnership. Please see Bingham's Annual
Report on Form 10-K, as amended, for a discussion of the effect of their
related party transactions on our liquidity and capital resources.
Bingham and Origen LLC are borrowers under a revolving credit facility with
Standard Federal Bank (as successor to Michigan National Bank). Under this
facility, Bingham and Origen LLC may borrow up to $10.0 million. Interest at
a rate of 30-day LIBOR plus a spread is payable on the outstanding balance.
The outstanding principal balance on this credit facility as of March 31,
2002 was approximately $3.9 million. To secure the loan from Standard
Federal Bank, Origen LLC and Bingham have granted Standard Federal Bank a
security interest in our rights under three servicing agreements under which
Origen LLC services manufactured home loans. This facility will terminate on
June 30, 2002. Based on discussions with Standard Federal Bank and other
lenders, we expect this facility to be extended or replaced at the end of
its current term.
Credit Suisse First Boston and Origen LLC's special purpose subsidiary
Origen Special Holdings, LLC, are parties to a master repurchase agreement.
Under this agreement, Origen LLC contributes manufactured home loans it
originates or purchases to Origen Special Holdings. Origen Special Holdings
then transfers the manufactured home loans to Credit Suisse First Boston
against the transfer of funds from Credit Suisse First Boston and Origen
Special Holdings transfers the funds to Origen LLC for operations. Bingham
guarantees the obligations of Origen Special Holdings under this agreement.
The maximum financing limit on the facility is $150.0 million.
16
BINGHAM FINANCIAL SERVICES CORPORATION
----------------
The annual interest rate on the facility is a variable rate equal to LIBOR
plus a spread. The loans are financed on the facility at varying advance
rates on the lesser of the then current face value or market value of the
loans. The advance rates depend on the characteristics of the loans
financed. The facility will terminate on May 28, 2002, but may be terminated
earlier upon an event of default under the master repurchase agreement.
Based on discussions with Credit Suisse First Boston, we expect the term of
this agreement will be extended. At March 31, 2002, the aggregate amount
advanced by Credit Suisse First Boston under the facility was approximately
$6.3 million.
In addition to these borrowings, we have fixed contractual obligations under
various lease agreements. Our contractual obligations were comprised of the
following as of March 31, 2002:
Payments due by Period
----------------------
Total Less than 1 year 1-3 years 4-5 years
----- ---------------- --------- ---------
(In thousands)
Repurchase obligations (1) $ 6,301 $ 6,301 $ -- $ --
Lines of credit (2) 14,098 14,098 -- --
Operating leases 1,939 875 1,029 35
------- ------- ------- -------
Total contractual obligations $22,338 $21,274 $ 1,029 $ 35
======= ======= ======= =======
Guarantees (3) $16,478 $16,478 -- --
(1) These repurchase obligations are owed by Origen LLC to Credit Suisse
First Boston.
(2) Origen LLC is the borrower under the Sun Communities Operating Limited
Partnership line of credit and Origen LLC and Bingham are co-borrowers
under the Standard Federal Bank line of credit.
(3) Bingham is the guarantor of the obligations of Origen LLC under the
Credit Suisse First Boston repurchase agreement and under the Sun
Communities Operating Limited Partnership line of credit.
Our future liquidity and capital requirements depend on numerous factors,
many of which are outside of our control. Based on our business model and
the nature of the capital markets, we expect we will need to raise
additional capital before the end of 2002, even if we maintain our borrowing
relationships with Credit Suisse First Boston and Sun Communities Operating
Limited Partnership and replace or extend our Standard Federal Bank loan
facility. As a result, during that time we will need to obtain funding from
sources such as operating activities, loan sales or securitizations, sales
of debt or member interests by Origen LLC or additional debt financing
arrangements. Our ability to obtain funding from operations may be adversely
impacted by, among other things, market and economic conditions in the
manufactured home financing markets generally, including decreased sales of
manufactured homes. Our ability to obtain funding from loan sales and
securitizations may be adversely impacted by, among other things, the price
and credit quality of our loans, conditions in the securities markets
generally (and specifically in the asset-backed securities), compliance of
our loans with the eligibility requirements for a particular securitization
and any material negative rating agency action pertaining to certificates
issued in our securitizations. Our ability to obtain funding from sales of
securities or debt financing arrangements may be adversely impacted by,
among other things, market and economic conditions in the manufactured home
financing markets generally and our financial condition and prospects.
We will also need additional funds to meet our long-term capital needs. In
order to meet these capital needs, in addition to the sources of capital
referenced above, we believe we must raise additional capital or merge or
enter into a joint venture or otherwise enter into a strategic business
relationship that would provide access to low-cost funds. We may not be able
to enter into such a relationship on favorable terms, or at all, if our
business is adversely affected by any of the factors described in the
preceding paragraph. While we continue to pursue these options with respect
to meeting our long-term capital needs, there can be no assurance that these
efforts will be successful. If these efforts are not successful, our ability
to continue operations would be jeopardized.
17
BINGHAM FINANCIAL SERVICES CORPORATION
----------------
LOANS RECEIVABLE
Net loans receivable were $16.2 million at March 31, 2002 compared to $126.6
million at December 31, 2001, a decrease of $110.4 million or 87.2%. For the
three months ended March 31, 2002 manufactured home loan originations were
$25.1 million New loan originations were offset by the securitization and
sale of approximately $135.0 million of principal balance of manufactured
home loans during the quarter.
The carrying amounts and fair value of loans receivable consisted of the
following:
March 31, December 31,
2002 2001
------------- -----------
(In thousands)
Manufactured home loans $16,646 $128,208
Floor plan loans 948 1,094
Accrued interest receivable 200 903
Deferred fees (200) (1,850)
Allowance for credit losses (1,442) (1,764)
------- --------
$16,152 $126,591
======= ========
The following table sets forth the average loan balance, weighted average
loan yield and weighted average initial term of the manufactured home loan
portfolio:
March 31, December 31,
2002 2001
--------- ------------
(Dollars in thousands)
Gross principal balance loans receivable $ 16,646 $ 128,208
Number of loans receivable 386 3,117
Average loan balance $ 43 $ 41
Weighted average loan yield 11.17% 10.85%
Weighted average initial term 25 years 26 years
Delinquency statistics for the manufactured home loan portfolio are as
follows:
March 31, 2002
------------------------------------------------------
Days delinquent
-----------------------------
Gross Greater
Principal than Total
Balance 31-60 61-90 90 Delinquent
--------- ----- ----- ------- ----------
(Dollars in thousands)
Manufactured home loans available for sale $ 16,646 4.9% 4.4% 11.5% 20.8%
Manufactured home loans sold with recourse 120,809 2.6% 1.3% 1.6% 5.5%
-------- ----- ------ ------- ----------
Total $137,455 2.9% 1.6% 2.9% 7.4%
======== ===== ====== ======= ==========
18
BINGHAM FINANCIAL SERVICES CORPORATION
----------------
December 31, 2001
--------------------------------------------------------------
Days delinquent
------------------------------------
Gross Greater
Principal than Total
Balance 31-60 61-90 90 Delinquent
--------- ----- ----- ------- ----------
(Dollars in thousands)
Manufactured home loans available for sale $128,208 2.6% 0.6% 2.0% 5.2%
Manufactured home loans sold with recourse 125,588 3.2% 0.8% 1.4% 5.4%
-------- ---- ---- ---- ----
Total $253,796 2.9% 0.7% 1.7% 5.3%
======== ==== ==== ==== ====
Non-performing loans as a percentage of the total portfolio of manufactured
home loans available for sale increased to 11.5% at March 31, 2002 compared
to 2.0% at December 31, 2001. The increase is primarily the result of the
sale of the majority of our performing loans in the $135.0 million
manufactured home loan securitization completed in March 2002. The gross
principal balance of non-performing loans was approximately $1.9 million at
March 31, 2002 compared to $2.6 million at December 31, 2001 a decrease of
26.9%. We define non-performing loans as those loans that are 90 or more
days delinquent in contractual principal payments.
19
BINGHAM FINANCIAL SERVICES CORPORATION
----------------
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the risk of loss arising from adverse changes in market
prices and interest rates. Our market risk arises from interest rate risk
inherent in our financial instruments. We are not currently subject to
foreign currency exchange rate risk or commodity price risk.
The following table shows the contractual maturity dates of our assets and
liabilities. For each maturity category in the table the difference between
interest-earning assets and interest-bearing liabilities reflects an
imbalance between repricing opportunities for the two sides of the balance
sheet. The consequences of a negative cumulative gap at the end of one year
suggests that, if interest rates were to rise, liability costs would
increase more quickly than asset yields, placing negative pressure on
earnings.
Maturity
--------------------------------------------------
0 to 3 4 to 12 1 to 5 Over 5
Months Months Years Years Total
------- ---------- -------- --------- --------
(Dollars in thousands)
ASSETS
Cash and equivalents $ 265 $ - $ - $ - $ 265
Restricted cash 62 - - - 62
Loans receivable, net 1,180 100 702 14,170 16,152
Servicing rights 316 731 4,997 1,643 7,687
Servicing advances 4,925 3,011 - - 7,936
Furniture, fixtures and equipment, net 160 480 1,282 - 1,922
Deferred federal income taxes - - 1,622 5,373 6,995
Loan sale proceeds receivable 247 685 3,167 1,246 5,345
Residual interest in loans sold - - 4,750 3,167 7,917
Other assets 5,150 1,896 - 194 7,240
------- ---------- -------- --------- --------
Total assets $12,305 $ 6,903 $ 16,520 $ 25,793 $ 61,521
======= ========== ======== ========= ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Liabilities:
Accounts payable and accrued expenses $ 4,151 $ 413 $ 250 $ 80 $ 4,894
Recourse liability 1,886 976 2,190 1,608 6,660
Advances under repurchase agreements - 6,301 - - 6,301
Notes Payable 3,921 10,177 - - 14,098
------- ---------- -------- --------- --------
Total Liabilities 9,958 17,867 2,440 1,688 31,953
------- ---------- -------- --------- --------
Non-controlling members' interest - - - 39,026 39,026
------- ---------- -------- --------- --------
Stockholders' defecit:
Common stock - - - 26,478 26,478
Paid-in-capital - - - 96 96
Accumulated deficit - - - (36,032) (36,032)
------- ---------- -------- --------- --------
Total liabilities and stockholders' deficit $ 9,958 $ 17,867 $ 2,440 $ 31,256 $ 61,521
======= ========== ======== ========= ========
Reprice difference $ 2,347 $ (10,964) $ 14,080 $ (5,463)
Cumulative gap $ 2,347 $ (8,617) $ 5,463 -
Percent of total assets 3.81% -14.01% 8.88% -
20
BINGHAM FINANCIAL SERVICES CORPORATION
----------------
Our operations may be directly affected by fluctuations in interest rates.
While we monitor interest rates and have in the past employed strategies
designed to hedge some of the risks associated with changes in interest
rates, such as the use of forward interest rate swaps and Treasury rate
locks, no assurance can be given that our results of operations and
financial condition will not be adversely affected during periods of
fluctuations in interest rates. We currently have no open hedge positions on
our loans held for sale. Our present strategy is to securitize or sell all
new production within three to nine months of origination. Because the
interest rates on our lines of credit used to fund and acquire loans are
variable and the rates charged on loans we originate are fixed, increases in
the interest rates after the loans are originated but before they are sold
may reduce the gain on loan sales.
The following table shows our financial instruments that are sensitive to
changes in interest rates, categorized by expected maturity, and the
instruments' fair values at March 31, 2002.
Contractual Maturity
----------------------------------------------------------------------------
Total
2002 2003 2004 2005 2006 Thereafter Fair Value
------- ------- ------- ------- ------- ---------- ----------
Interest sensitive assets: (Dollars in thousands)
Loans receivable $ 1,245 $ 109 $ 122 $ 136 $ 152 $14,388 $16,152
Average interest rate 10.85% 10.85% 10.85% 10.85% 10.85% 10.85% 10.85%
Interest bearing deposits 1,588 -- -- -- -- -- 1,588
Average interest rates 2.63% -- -- -- -- -- 2.63%
Loan sale proceeds receivable 890 960 759 603 480 1,653 5,345
Average interest rate 10.79% 10.79% 10.79% 10.79% 10.79% 10.79% 10.79%
Residual interests -- 1,304 1,412 983 799 3,419 7,917
Average interest rate -- 15.00% 15.00% 15.00% 15.00% 15.00% 15.00%
------- ------- ------- ------- ------- ------- -------
Total interest sensitive assets $ 3,723 $ 2,373 $ 2,293 $ 1,722 $ 1,431 $19,460 $31,002
======= ======= ======= ======= ======= ======= =======
Interest sensitive liabilities:
Borrowings:
Advances under repurchase agreements $ 6,301 $ -- $ -- $ -- $ -- $ -- $ 6,301
Average interest rate 3.53% -- -- -- -- -- 3.53%
Recourse liability 3,243 1,611 685 422 264 435 6,660
Average interest rate 10.87% 10.87% 10.87% 10.87% 10.87% 10.87% 10.87%
Notes payable 14,098 -- -- -- -- -- 14,098
Average interest rate 9.99% -- -- -- -- -- 9.99%
------- ------- ------- ------- ------- ------- -------
Total interest sensitive liabilities $23,642 $ 1,611 $ 685 $ 422 $ 264 $ 435 $27,059
======= ======= ======= ======= ======= ======= =======
21
BINGHAM FINANCIAL SERVICES CORPORATION
----------------
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is subject to various claims and legal proceedings
arising out of the normal course of business, none of which in
the opinion of management are expected to have a material
effect on the Company's financial position.
ITEM 6. (A) EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K
Exhibit No. Description
----------- -----------
10.1 Amended and Restated Participation
Agreement between Sun Communities
Operating Limited Partnership and Woodward
Holding, LLC dated May 10, 2002 (filed
herewith).
ITEM 6. (B) REPORTS ON FORM 8-K
No reports on Form 8-K have been filed during the quarter for
which this report is filed.
22
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 15, 2002
BINGHAM FINANCIAL SERVICES CORPORATION
By: /s/ W. Anderson Geater
-----------------------
W. Anderson Geater
Chief Financial Officer
23
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
10.1 Amended and Restated Participation Agreement between Sun
Communities Operating Limited Partnership and Woodward Holding,
LLC dated May 10, 2002 (filed herewith).