EXHIBIT 99.1
[HAWTHORNE LOGO]
HAWTHORNE FINANCIAL CORPORATION
PRESS RELEASE
JULY 22, 2002
IMMEDIATE RELEASE
Contact: Ms. Simone Lagomarsino, President and Chief Executive Officer
(310) 725-5631
Ms. Karen Abajian, Chief Financial Officer (310) 725-1890
HAWTHORNE FINANCIAL ANNOUNCES SECOND QUARTER 2002 RESULTS
(El Segundo, CA) Hawthorne Financial Corporation (NASDAQ:HTHR), parent company
of Hawthorne Savings, F.S.B., today announced second quarter earnings for 2002
of $5.3 million, or $0.69 per diluted share, compared with earnings of $3.6
million, or $0.48 per diluted share after extraordinary item, for the second
quarter of 2001. Net earnings year-to-date for 2002 were $11.2 million, or $1.46
per diluted share, compared with net earnings of $6.6 million, or $0.88 per
diluted share, for the six months ended June 30, 2001.
Net income for the three and six months ended June 30, 2002, resulted in an
annualized return on average assets ("ROA") of 1.14% and 1.20%, respectively,
and an annualized return on average equity ("ROE") of 17.03% and 18.27%,
respectively, compared with an annualized ROA of 0.82% and 0.75%, respectively,
and an annualized ROE of 13.30% and 12.36%, respectively, for the three and six
months ended June 30, 2001. Income before income taxes and extraordinary item
increased 46.83% and 63.47%, respectively, for the three and six months ended
June 30, 2002, to $9.3 million from $6.3 million and to $19.6 million from $12.0
million, during the same periods in 2001.
The Company's net interest income before provision for credit losses increased
13.44% to $16.5 million and 17.43% to $34.1 million, during the three and six
months ended June 30, 2002, compared with $14.6 million and $29.0 million for
the three and six months ended June 30, 2001. The Company's resulting net
interest margin for the three and six months ended June 30, 2002, was 3.56% and
3.68%, compared with 3.30% for both the three and six months ended June 30,
2001. The Company's yield on average earning assets was 6.80% and 7.00% for the
three and six months ended June 30, 2002, compared with 8.40% and 8.59% during
the same periods in 2001. During the three and six months ended June 30, 2002,
interest of $0.6 million and $1.0 million, respectively, was collected on loans
that were brought current, producing a positive but nonrecurring impact on the
Company's net interest margin of 13 basis points and 11 basis points,
respectively. The Bank experienced strong loan originations during the first six
months of 2002, recording new commitments of $334.3 million, consistent with the
same period in 2001. Although loan production was strong, the Bank experienced
accelerated prepayments of higher yielding assets during the first six months of
2002, which totaled $327.7 million, with a weighted average rate of 7.77%. The
new loans originated were recorded at an average yield of 6.47%. The average
cost of funds for the Company decreased to 3.57% and 3.67% during the three and
six months ended June 30, 2002, compared with 5.59% and 5.81% during the same
periods in 2001.
"We are extremely pleased with our loan origination levels for the first half of
the year," said Simone Lagomarsino, president and chief executive officer of
Hawthorne Financial Corporation. "In a lending environment dominated by mortgage
refinancing, we capitalized on our superior customer service and originated
$177.5 million in single family residential loans, of which 67% were for home
purchase transactions." "Growing our loan portfolio by originating quality
loans, continues, as always, to be a key focus. We believe our acquisition of
First Fidelity will assist us in this process, as First Fidelity's results show
that they have a proven asset generating capability. First Fidelity's net loans
have grown 11.3%, on an annualized basis, this year, and have averaged a growth
rate of approximately 12.3% over the past three years," Ms. Lagomarsino added.
"I am pleased not only with the strength of our financial performance, but more
importantly with the integrity of our results," said Ms. Lagomarsino. "A culture
of high ethical standards is deeply ingrained throughout the
HAWTHORNE FINANCIAL CORPORATION
SECOND QUARTER 2002 RESULTS
JULY 22, 2002
PAGE 2 OF 10
Company beginning with our Board of Directors, six out of seven of whom are
outside directors. Our management team and Board of Directors enthusiastically
support the call for higher standards of corporate governance, and we are
committed to ensuring that trust, integrity and honesty are never compromised at
Hawthorne."
Provisions for credit losses totaled $0.2 million and $0.7 million for the three
and six months ended June 30, 2002, compared with $1.0 million and $2.5 million
for the three and six months ended June 30, 2001. The decrease in the provision
for credit losses was due to the overall improvement in asset quality. At June
30, 2002, the ratio of total allowance for credit losses to loans receivable,
net of specific allowance and deferred fees and costs was 1.77%, compared with
1.76% at December 31, 2001 and 1.75% at June 30, 2001.
Nonaccrual loans totaled $6.1 million at June 30, 2002 (or 0.33% of total
assets), compared with nonaccrual loans of $20.7 million (or 1.11% of total
assets) at December 31, 2001 and $27.5 million (or 1.52% of total assets) at
June 30, 2001. Total classified loans were $45.1 million at June 30, 2002,
compared with $58.0 million at December 31, 2001. Delinquent loans totaled $11.9
million at June 30, 2002, compared with $7.7 million at December 31, 2001. The
Company held no other real estate owned properties at June 30, 2002, compared
with $1.3 million at December 31, 2001.
Underwriting standards for construction loans were further tightened during the
first six months of 2002. As a result, construction loans decreased to 12.0% of
the total loan portfolio from 15.9% at December 31, 2001. The Bank remains
committed to the seasoned builders with whom it has established relationships,
but believes it is prudent to reduce construction exposure until the national
economy is on a stronger footing. The California housing market continues to
show surprising strength with pockets of softness only in higher-end homes.
Noninterest revenues were $1.2 million and $2.5 million for the three and six
months ended June 30, 2002, compared with noninterest revenues of $1.5 million
and $3.0 million earned during the same periods in 2001. For 2002, loan related
fees decreased due to the lower risk nature of the loans underwritten and the
competitive lending environment during the last three years.
The Company remains focused on becoming more efficient. Over the past three
years, the Company has maintained a consistent expense run rate while continuing
to grow earning assets. This performance is depicted in the ratio of general and
administrative expenses as a percentage of average assets. On an annualized
basis, this ratio has improved to 1.76% for the six months ended June 30, 2002,
compared with 2.00% and 2.08% for the comparable periods in 2001 and 2000,
respectively. Total general and administrative expenses ("G&A") were $8.3
million and $16.3 million for the three and six months ended June 30, 2002,
compared with $8.7 million and $17.7 million of G&A incurred during the same
periods in 2001. The decrease in G&A for the six months ended June 30, 2002 was
primarily due to a decrease of $1.2 million in professional fees, as a result of
first quarter 2002 insurance company reimbursements totaling $0.7 million for
legal fees related to litigation and fewer outstanding legal issues. The
efficiency ratios were 46.66% and 44.63% for the three and six months ended June
30, 2002 compared with 54.36% and 54.87% for the three and six months ended June
30, 2001. Excluding the $0.7 million insurance reimbursement for legal fees
related to litigation, the efficiency ratio for the six months ended June 30,
2002 was 46.58%
Total assets were $1.84 billion at June 30, 2002, down slightly from total
assets of $1.86 billion at December 31, 2001. Net loans receivable at June 30,
2002, totaled $1.59 billion, reflecting an annualized decrease of 13.70%
compared with net loans receivable of $1.71 billion at December 31, 2001. As
previously mentioned, the Bank continued to experience an increase in loan
prepayments during the first six months of 2002 as borrowers refinanced out of
their variable rate loans into fixed rate loans. For the three and six months
ended June 30, 2002, average earning assets were $1.86 billion for both periods,
an increase of 5.36% and 5.42%, over average earning assets of $1.76 billion for
both the three and six month periods ended June 30, 2001. Ms Lagomarsino said,
"We have taken steps in recent months to invest excess liquidity on our balance
sheet into an investment portfolio of U.S. Government Agency mortgage backed
securities with an average life of 2 to 4 years. We anticipate that the yield on
this portfolio will be approximately 300 basis points higher than the current
yield earned on these assets, which will provide support to the net interest
margin during the last half of the year."
HAWTHORNE FINANCIAL CORPORATION
SECOND QUARTER 2002 RESULTS
JULY 22, 2002
PAGE 3 OF 10
Total deposits of $1.19 billion at June 30, 2002, remained consistent with the
$1.20 billion at December 31, 2001. Certificates of deposit decreased $163.9
million, while transaction accounts increased $156.2 million, or 83.43%
annualized, to $530.7 million at June 30, 2002, from $374.5 million at December
31, 2001. As a percentage of total deposits, transaction accounts have increased
to 44.52% at June 30, 2002, compared with 31.21% of total deposits at December
31, 2001. Certificates of deposit totaled $661.3 million, or 55.48% of total
deposits at June 30, 2002, compared with 68.79% of total deposits, or $825.2
million, at December 31, 2001. The change in the deposit mix had a positive
impact on the Company's total interest costs during 2002.
Once again, Hawthorne's outstanding customer service was recognized by the
community earlier this year when voted "The Best Bank in the South Bay" by the
readers of a local South Bay newspaper, the Easy Reader. Our "extreme service"
continues to translate into an improved cross-sell ratio, defined as the number
of different types of loan and/or deposit products and services per household
serviced, which increased to 2.69 per household at June 30, 2002, from 2.37 at
December 31, 2001.
Consistent with our ongoing commitment to improve shareholder value, on June 21,
2002, the Company repurchased 500,000 shares of stock from members of the Bass
Family, for an aggregate purchase price of $14.5 million. Prior to the
repurchase, members of the Bass Family exercised warrants to purchase an
aggregate of 314,978 shares of common stock. Assuming the repurchase transaction
was executed on the first day of the second quarter of 2002, diluted earnings
per share for the second quarter would have been positively impacted by $0.03.
Due to the additional shares that are expected to be issued, for the pending
acquisition, the impact of this repurchase on earnings per share in the future,
although still accretive, will not be as significant.
At June 30, 2002, the Bank is categorized as well-capitalized with core, tier 1
and risk-based capital ratios of 9.12%, 13.31% and 14.57%, respectively. The
minimum ratios for well-capitalized banks are 5%, 6% and 10% for core capital,
tier 1 and risk-based capital, respectively.
The Company was recently included in the Russell 2000 Index for 2002. The
Russell 2000 Index is a broad-based market index that is based on total market
capitalization. Ms. Lagomarsino added, "We are proud to be included in the
Russell 2000. This important milestone is attributable to our strategy of
building value for our shareholders."
In March 2002, the Company announced the execution of a definitive agreement to
acquire First Fidelity Bancorp, Inc. and its subsidiary, First Fidelity
Investment and Loan. The acquisition, which is subject to shareholder and
regulatory approval, provides for the Company to issue 1,266,555 shares of
Hawthorne Financial Corporation stock and $37.4 million in cash for the
1,815,115 shares of First Fidelity Bancorp, Inc. stock and 88,000 options
outstanding. The Company's stockholders are being asked to approve the issuance
of shares at the annual stockholders' meeting, to be held on July 23, 2002.
Regulatory applications have been filed and, pending shareholder and regulatory
approval, completion of the transaction is expected to occur in August 2002.
Second quarter and year-to-date results for First Fidelity Investment and Loan
can be found at www.1stFidelity.com or by contacting their headquarters in
Tustin, CA, at (949) 936-3235. During the Hawthorne Financial Corporation
investor conference call scheduled for Monday, July 22, 2002, at 1:00 p.m. EDT,
additional information regarding the acquisition will be discussed. To
participate in the conference call, please call (800) 521-5428 Toll Free and
reference "Hawthorne Savings -- ID #2061921." Audio access to the conference
call will also be available through a live Webcast over the Internet at
www.hawthornesavings.com. The Webcast of this conference call will be available
for replay through August 19, 2002 by accessing the same link.
Hawthorne Savings, F.S.B., operates nine branches in the coastal counties of
Southern California. The Company specializes in real estate secured loans in the
niche markets that it serves, including: 1) permanent loans collateralized by
single family residential property, 2) permanent and construction loans secured
by multi-family residential and commercial real estate, 3) loans for the
construction of individual single family residential homes and the acquisition
and development of land for the construction of such homes. The Company funds
its loans predominantly with retail deposits generated through its nine full
service retail offices. Provided the acquisition of First Fidelity is completed,
the Bank will add four branches, two each in coastal Orange and San Diego
counties.
HAWTHORNE FINANCIAL CORPORATION
SECOND QUARTER 2002 RESULTS
JULY 22, 2002
PAGE 4 OF 10
This press release contains forward-looking statements as referenced in the
Private Securities Litigation Reform Act of 1995. Forward-looking statements are
inherently unreliable and actual results may vary. Factors which could cause
actual results to differ from these forward-looking statements include changes
in the competitive marketplace, changes in the interest rate environment,
potential increased prepayment speeds on the Company's outstanding loan
portfolio, economic conditions, outcome of pending litigation, risks associated
with credit quality, the possibility that the Company will not obtain
stockholder or regulatory approval of the merger of Hawthorne and First
Fidelity, and other factors discussed in the Company's filings with the
Securities and Exchange Commission. The Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
HAWTHORNE FINANCIAL CORPORATION
SECOND QUARTER 2002 RESULTS
JULY 22, 2002
PAGE 5 OF 10
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
(Dollars in thousands)
JUNE 30, DECEMBER 31,
2002 2001
----------- -----------
Assets:
Cash and cash equivalents $ 185,740 $ 98,583
Investment securities, at fair value 19,720 --
Loans receivable (net of allowance for estimated credit losses
of $28,657 in 2002 and $30,602 in 2001) 1,592,200 1,709,283
Real estate owned -- 1,312
Accrued interest receivable 8,742 9,677
Investment in capital stock of Federal Home Loan Bank, at cost 25,220 24,464
Office property and equipment at cost, net 4,152 4,237
Deferred tax asset 2,668 4,363
Other assets 6,342 4,278
----------- -----------
Total assets $ 1,844,784 $ 1,856,197
=========== ===========
Liabilities and Stockholders' Equity:
Liabilities:
Deposits:
Noninterest-bearing $ 37,268 $ 35,634
Interest-bearing 1,154,651 1,164,011
----------- -----------
Total deposits 1,191,919 1,199,645
FHLB advances 459,000 484,000
Senior notes 25,778 25,778
Capital securities 36,000 14,000
Accounts payable and other liabilities 12,623 12,325
----------- -----------
Total liabilities 1,725,320 1,735,748
----------- -----------
Stockholders' Equity:
Common stock -- $0.01 par value; authorized 20,000,000 shares; issued and
outstanding, 6,763,628 shares (2002) and 5,920,266 shares (2001) 68 59
Capital in excess of par value-- common stock 46,880 44,524
Retained earnings 93,621 82,435
----------- -----------
140,569 127,018
Accumulated other comprehensive income 11 --
Less:
Treasury stock, at cost-- 1,060,802 shares (2002) and
560,719 shares (2001) (21,116) (6,569)
----------- -----------
Total stockholders' equity 119,464 120,449
----------- -----------
Total liabilities and stockholders' equity $ 1,844,784 $ 1,856,197
=========== ===========
SUPPLEMENTAL INFORMATION - BANK CAPITAL JUNE 30, DECEMBER 31,
2002 2001
----------- -----------
Core capital $ 167,964 $ 154,981
Ratio 9.12% 8.36%
Tier 1 capital $ 167,964 $ 154,981
Ratio 13.31% 11.63%
Risk-based capital $ 183,888 $ 169,278
Ratio 14.57% 12.70%
HAWTHORNE FINANCIAL CORPORATION
SECOND QUARTER 2002 RESULTS
JULY 22, 2002
PAGE 6 OF 10
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ----------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA) 2002 2001 2002 2001
-------- -------- -------- --------
Interest revenues:
Loans $ 30,385 $ 35,838 $ 62,893 $ 72,754
Investment and other securities 69 -- 69 --
Fed funds and other 1,089 1,128 1,950 2,726
-------- -------- -------- --------
Total interest revenues 31,543 36,966 64,912 75,480
-------- -------- -------- --------
Interest costs:
Deposits 8,493 16,146 18,027 33,447
FHLB advances 5,141 5,085 10,293 10,613
Senior notes 805 956 1,611 2,162
Capital securities 599 229 903 237
-------- -------- -------- --------
Total interest costs 15,038 22,416 30,834 46,459
-------- -------- -------- --------
Net interest income 16,505 14,550 34,078 29,021
Provision for credit losses 170 1,000 670 2,500
-------- -------- -------- --------
Net interest income after provision for credit losses 16,335 13,550 33,408 26,521
Noninterest revenues:
Loan related and other fees 832 1,164 1,752 2,362
Deposit fees 363 308 736 641
-------- -------- -------- --------
Total noninterest revenues 1,195 1,472 2,488 3,003
Income from real estate operations, net -- 2 69 162
Noninterest expenses:
General and administrative expenses:
Employee 4,700 4,519 9,732 9,009
Operating 1,516 1,586 3,019 3,150
Occupancy 941 1,064 1,855 2,009
Professional 599 786 706 1,895
Technology 371 517 740 1,027
SAIF premiums and OTS assessments 132 238 268 481
Legal settlements/other -- -- 20 110
-------- -------- -------- --------
Total general and administrative expenses 8,259 8,710 16,340 17,681
-------- -------- -------- --------
Income before income taxes and extraordinary item 9,271 6,314 19,625 12,005
Income tax provision 3,987 2,685 8,439 5,128
-------- -------- -------- --------
Income before extraordinary item 5,284 3,629 11,186 6,877
Extraordinary item, related to early extinguishment of
debt (net of taxes of $185) -- -- -- (255)
-------- -------- -------- --------
Net income $ 5,284 $ 3,629 $ 11,186 $ 6,622
======== ======== ======== ========
Basic earnings per share before extraordinary item $ 0.91 $ 0.69 $ 2.00 $ 1.32
======== ======== ======== ========
Basic earnings per share after extraordinary item $ 0.91 $ 0.69 $ 2.00 $ 1.27
======== ======== ======== ========
Diluted earnings per share before extraordinary item $ 0.69 $ 0.48 $ 1.46 $ 0.91
======== ======== ======== ========
Diluted earnings per share after extraordinary item $ 0.69 $ 0.48 $ 1.46 $ 0.88
======== ======== ======== ========
Weighted average basic shares outstanding 5,821 5,277 5,597 5,228
======== ======== ======== ========
Weighted average diluted shares outstanding 7,665 7,512 7,646 7,555
======== ======== ======== ========
HAWTHORNE FINANCIAL CORPORATION
SECOND QUARTER 2002 RESULTS
JULY 22, 2002
PAGE 7 OF 10
SUPPLEMENTAL INFORMATION - CLASSIFIED ASSETS (UNAUDITED)
(Dollars in thousands)
JUNE 30, DECEMBER 31, JUNE 30,
2002 2001 2001
---------- ------------ ----------
Risk elements:
Nonaccrual loans $ 6,081 $ 20,666 $ 27,508
Real estate owned, net -- 1,312 336
---------- ---------- ----------
6,081 21,978 27,844
Performing loans classified substandard or lower(1) 38,984 37,341 28,128
---------- ---------- ----------
Total classified assets $ 45,065 $ 59,319 $ 55,972
========== ========== ==========
Total classified loans $ 45,065 $ 58,007 $ 55,636
========== ========== ==========
Loans restructured and paying in accordance with modified terms(2) $ 2,317 $ 4,506 $ 12,710
========== ========== ==========
Gross loans before allowance for credit losses $1,620,857 $1,739,885 $1,710,602
========== ========== ==========
Loans receivable, net of specific allowance and deferred (fees) and costs $1,619,807 $1,736,310 $1,704,901
========== ========== ==========
Delinquent loans:
30 - 89 days $ 9,920 $ 2,742 $ 8,105
90 + days 1,931 4,982 5,309
---------- ---------- ----------
Total delinquent loans $ 11,851 $ 7,724 $ 13,414
========== ========== ==========
Allowance for credit losses:
General $ 27,607 $ 27,027 $ 24,151
Specific(3) 1,050 3,575 5,701
---------- ---------- ----------
Total allowance for credit losses $ 28,657 $ 30,602 $ 29,852
========== ========== ==========
Net loan charge-offs:
Net charge-offs for the quarter ended $ 189 $ 13 $ 1,881
Percent to loans receivable, net of specific allowance and
deferred (fees) and costs (annualized) 0.05% 0.00% 0.44%
Percent to beginning of period allowance for credit losses (annualized) 2.64% 0.17% 24.48%
Selected asset quality ratios at period end:
Total nonaccrual loans to total assets 0.33% 1.11% 1.52%
Total allowance for credit losses to loans receivable, net of
specific allowance and deferred (fees) and costs 1.77% 1.76% 1.75%
Total general allowance for credit losses to loans receivable,
net of specific allowance and deferred (fees) and costs 1.70% 1.56% 1.42%
Total allowance for credit losses to nonaccrual loans 471.25% 148.08% 108.52%
Total classified assets to Bank core capital and general 23.04% 32.59% 32.89%
allowance for credit losses
- --------------
(1) Excludes nonaccrual loans.
(2) Troubled debt restructured loans not classified and not on nonaccrual.
(3) In December 2000, a $5.2 million specific allowance was identified for one
nonaccrual commercial loan, whose major tenant filed for Chapter 11
bankruptcy protection. The required reserve was reclassified from general
allowance to specific allowance. A 51% controlling interest in this tenant
was acquired by a strong investor during 2001. During the third quarter of
2001, the tenant ratified a renegotiated lease, which enabled the Bank to
revise its internal valuation and consequently, reduce the specific
allowance for this loan to $3.0 million. This loan was discounted at
payoff in March 2002, which resulted in a charge-off of $2.2 million.
HAWTHORNE FINANCIAL CORPORATION
SECOND QUARTER 2002 RESULTS
JULY 22, 2002
PAGE 8 OF 10
THREE MONTHS ENDED JUNE 30,
-----------------------------------------------------------------------------------
2002 2001
---------------------------------------- ----------------------------------------
WEIGHTED WEIGHTED
AVERAGE REVENUES/ AVERAGE AVERAGE REVENUES/ AVERAGE
(DOLLARS IN THOUSANDS) BALANCE COSTS YIELD/COST BALANCE COSTS YIELD/COST
---------- ---------- ---------- ---------- ---------- ----------
Assets:
Interest-earning assets:
Loans receivable (1) $1,654,830 $ 30,385 7.35% $1,664,754 $ 35,838 8.62%
Cash and cash equivalents 169,220 707 1.68 77,356 858 4.45
Investment securities 8,722 69 3.17 -- --
Investment in capital stock of
Federal Home Loan Bank 25,001 382 6.13 21,184 270 5.11
---------- ---------- ---------- ----------
Total interest-earning assets 1,857,773 31,543 6.80 1,763,294 36,966 8.40
---------- ---- ---------- -----
Noninterest-earning assets 2,479 1,944
---------- ----------
Total assets $1,860,252 $1,765,238
========== ==========
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Deposits $1,151,892 $ 8,493 2.96% $1,178,962 $ 16,146 5.49%
FHLB advances 468,615 5,141 4.34 384,000 5,085 5.24
Senior notes 25,778 805 12.50 30,628 956 12.50
Capital securities 33,824 599 7.08 9,000 229 10.18
---------- ---------- ---------- ----------
Total interest-bearing liabilities 1,680,109 15,038 3.57 1,602,590 22,416 5.59
---------- ----- ---------- -----
Noninterest-bearing checking 37,130 33,269
Noninterest-bearing liabilities 18,891 20,260
Stockholders' equity 124,122 109,119
---------- ----------
Total liabilities and stockholders'
equity $1,860,252 $1,765,238
========== ==========
Net interest income $ 16,505 $ 14,550
========== ==========
Interest rate spread 3.23% 2.81%
===== =====
Net interest margin 3.56% 3.30%
===== =====
- --------------
(1) Includes the interest on nonaccrual loans only to the extent that it was
paid and recognized as interest income.
HAWTHORNE FINANCIAL CORPORATION
SECOND QUARTER 2002 RESULTS
JULY 22, 2002
PAGE 9 OF 10
SIX MONTHS ENDED JUNE 30,
--------------------------------------------------------------------------------
2002 2001
---------------------------------------- -------------------------------------
WEIGHTED WEIGHTED
AVERAGE REVENUES/ AVERAGE AVERAGE REVENUES/ AVERAGE
(DOLLARS IN THOUSANDS) BALANCE COSTS YIELD/COST BALANCE COSTS YIELD/COST
---------- ---------- ---------- ---------- --------- ----------
Assets:
Interest-earning assets:
Loans receivable (1) $1,686,078 $ 62,893 7.48% $1,658,493 $72,754 8.81%
Cash and cash equivalents 144,078 1,194 1.67 84,308 2,117 5.06
Investment securities 4,385 69 3.17 -- --
Investment in capital stock of
Federal Home Loan Bank 24,805 756 6.15 21,032 609 5.84
---------- ---------- ---------- -------
Total interest-earning assets 1,859,346 64,912 7.00 1,763,833 75,480 8.59
---------- ----- ------- -----
Noninterest-earning assets 1,751 1,700
---------- ----------
Total assets $1,861,097 $1,765,533
========== ==========
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Deposits $1,156,907 $ 18,027 3.14% $1,182,799 $33,447 5.70%
FHLB advances 476,265 10,293 4.30 384,000 10,613 5.50
Senior notes 25,778 1,611 12.50 34,556 2,162 12.51
Capital securities 23,967 903 7.54 4,724 237 10.03
---------- ---------- ---------- -------
Total interest-bearing liabilities 1,682,917 30,834 3.67 1,606,079 46,459 5.81
---------- ----- ------- -----
Noninterest-bearing checking 36,546 32,495
Noninterest-bearing liabilities 19,177 19,825
Stockholders' equity 122,457 107,134
---------- ----------
Total liabilities and stockholders'
equity $1,861,097 $1,765,533
========== ==========
Net interest income $ 34,078 $29,021
========== =======
Interest rate spread 3.33% 2.78%
===== =====
Net interest margin 3.68% 3.30%
===== =====
- --------------
(1) Includes the interest on nonaccrual loans only to the extent that it was
paid and recognized as interest income.
HAWTHORNE FINANCIAL CORPORATION
SECOND QUARTER 2002 RESULTS
JULY 22, 2002
PAGE 10 OF 10
HAWTHORNE FINANCIAL CORPORATION
(UNAUDITED)
(Dollars in thousands)
NET LOAN PORTFOLIO COMPOSITION JUNE 30, 2002 DECEMBER 31, 2001
----------------------- -----------------------
BALANCE PERCENT BALANCE PERCENT
---------- ------- ---------- -------
Single family residential $ 887,770 55.05% $ 913,255 52.68%
Income property:
Multi-family 284,315 17.63% 254,530 14.68%
Commercial 208,965 12.96% 235,156 13.57%
Development:
Multi-family 77,199 4.79% 102,682 5.92%
Commercial 38,514 2.39% 68,431 3.95%
Single family construction:
Single family residential 78,249 4.85% 104,158 6.01%
Land 33,282 2.06% 48,719 2.81%
Other 4,359 0.27% 6,617 0.38%
---------- ------ ---------- ------
Total loan principal(1) $1,612,653 100.00% $1,733,548 100.00%
========== ====== ========== ======
- --------------
(1) Excludes net deferred fees and costs.
SELECTED FINANCIAL DATA THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -------------------
2002 2001 2002 2001
----- ----- ----- -----
PERFORMANCE RATIOS
Return on average assets(1) 1.14% 0.82% 1.20% 0.75%
Return on average equity(1) 17.03% 13.30% 18.27% 12.36%
Efficiency ratio(2) 46.66% 54.36% 44.63% 54.87%
GROWTH RATIOS(1)
Total assets -1.23% 6.17%
Loans receivable, net -13.70% 9.04%
Total deposits -1.29% 7.08%
JUNE 30,
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2002 2001
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Bank Capital Ratios
Core capital 9.12% 8.09%
Tier 1 capital 13.31% 11.35%
Risk-based capital 14.57% 12.41%
BOOK VALUE PER SHARE AS OF JUNE 30, 2002
Basic $20.95
Diluted $16.26
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(1) Annualized.
(2) Represents total general and administrative expenses (excluding legal
settlements/other) divided by net interest income before provision for
credit losses and noninterest revenues. JUNE 30,