FOR IMMEDIATE RELEASE
March 5, 1999
POINT WEST CAPITAL CORPORATION
ANNOUNCES 1998 RESULTS
AND FINANCIAL CONDITION
SAN FRANCISCO-(March 5, 1999) Point West Capital Corporation (Nasdaq
Symbol: PWCC) today reported the following:
(Dollars in thousands, except per share amounts)
Year Ended Three Months Ended
December 31, December 31,
1998 1997 1998 1997
---------------------- ------------------- --------------------- ---------------------
Net income (loss) $ (3,650) $ 1,011 $ (1,601) $ (199)
---------------------- ------------------- --------------------- ---------------------
Comprehensive income --
net unrealized
investment gains
(losses) $ (2,786) $ 2,597 $ (5,191) $ 2,241
---------------------- ------------------- --------------------- ---------------------
Total comprehensive
income(loss) $ (6,437) $ 3,608 $ (6,792) $ 2,042
---------------------- ------------------- --------------------- ---------------------
Basic earnings
(loss) per share $ (1.12)* $ 0.29** $ (0.49)* $ (0.06)*
---------------------- ------------------- --------------------- ---------------------
<FN>
*Based on 3,253,324 weighted average shares of common stock outstanding.
**Based on 3,521,736 weighted average shares of common stock outstanding.
</FN>
The Company also reported a book value of $4.56 per share.
The Company's results of operations for the three months and year ended
December 31, 1998 are not comparable to the three months and year ended December
31, 1997, partially as a result of the volume of assets sold during the first
half of 1997, the establishment of two new businesses (Fourteen Hill Capital,
L.P. and Allegiance Capital, LLC) in the second half of 1997 and the write-off
of $1.1 million of non-marketable securities in the third quarter of 1998.
In addition, prior to the third quarter of 1998, all losses associated
with Dignity Partners Funding Corp. I ("DPFC"), a wholly owned special purpose
finance subsidiary of the Company, were charged against a reserve which was
originally established in 1996 for the estimated loss of Point West's equity
interest in DPFC. During the third quarter of 1998 the reserve was fully
depleted. In 1998, the total loss realized by DPFC was $4.0 million, $2.3
million of which was charged against the reserve, and $1.7 million of which was
otherwise reflected in the Company's consolidated statements of operations and
comprehensive income (loss). At December 31, 1998, DPFC's accumulated deficit
was $1.7 million. Any future losses associated with DPFC will increase the
amount of the deficit. Upon the retirement of the securitized notes issued by
DPFC, the Company will recognize a gain in an amount approximately equal to any
accumulated deficit reflected at that time on DPFC's balance sheet.
At December 31, 1998, Fourteen Hill Capital had loans outstanding in
the aggregate principal amount of $864,318, non-marketable securities carried at
a cost of $3.7 million and marketable securities carried at $2.0 million. Any
unrealized gains or losses on marketable securities are reflected as
"Accumulated Comprehensive Income -- Net Unrealized Investment Gains (Losses)"
in stockholders' equity. At December 31, 1998 the unrealized gains were
immaterial. At December 31, 1997, unrealized gains were $2.6 million, including
$1.2 million recognized in connection with the exercise of warrants in January
1998. Any gains or losses for such securities will be recognized on the income
statement, if ever, upon sale.
The non-marketable securities include 329,490 convertible preferred
shares of FlashNet Communications, Inc. ("FlashNet") which
Fourteen Hill purchased for $2 million. In December 1998, FlashNet filed a
registration statement for an initial public offering. Such offering is
scheduled for March 1999. In connection with such offering, Fourteen Hill's
shares will be automatically converted into 1,120,266 common shares of FlashNet,
after giving effect to a 3.4 to 1 stock split which was authorized to occur in
connection with such offering. The shares are subject to a standard six-month
lockup agreement which Fourteen Hill has executed. If the FlashNet initial
public offering occurs, the FlashNet shares will become marketable securities.
As a result, any unrealized gains or losses in such investment will also be
reflected as "Accumulated Comprehensive Income -- Net Unrealized Investment
Gains (Losses)" in stockholders' equity. In addition, non-marketable securities
include preferred shares convertible into marketable securities. If the Company
had converted such shares in 1998, the unrealized gains would have been $4.1
million and would have been reflected as "Accumulated Comprehensive Income --
Net Unrealized Investment Gains (Losses)" in stockholders equity.
Allegiance had five loans outstanding at December 31, 1998 in the
aggregate principal amount of $9.1 million. All loans bear a fixed interest
rate, which on a dollar weighted basis was 9.3%. On August 19, 1998, Allegiance
put in place a structured financing which may provide up to $56.4 million to
support any future lending activities of Allegiance. The financing will provide
interim floating rate financing through August 31, 1999 and it is anticipated it
will ultimately provide 15 year fixed and floating rate financing for loans
Allegiance has made in the past and may make in the future. However, if
Allegiance does not originate $30 million in loans by August 31, 1999, the term
certificates may not be issued and Allegiance would be
responsible for finding an alternative financing source to repay the interim
financing.
The Company continues to evaluate other strategic business
opportunities. Fourteen Hill Capital and Allegiance may or may not be indicative
of the types of business opportunities the Company intends to continue to
pursue.
The following is summary balance sheet information as of December 31,
1998:
Cash and cash equivalents...................................$6,668,126
Restricted cash (1).........................................$3,153,513
Investment securities.......................................$2,113,034
Loans receivable, net of unearned income of
$117,709 and net of an allowance on loan
losses of $50,000 .....................................$10,187,590
Purchased life insurance policies..........................$33,893,017
Non-marketable securities...................................$5,396,607
Total assets...............................................$62,442,761
Revolving certificates......................................$5,400,045
Long term notes payable....................................$38,528,914
Debentures payable to the Small Business
Administration........................................$3,000,000
Total liabilities..........................................$47,613,200
Accumulated comprehensive income -- net
unrealized investment gains (losses)...................$(188,966)
Retained deficit........................................ $(11,647,079)
Total stockholders' equity.................................$14,829,561
<FN>
(1) Restricted cash is pledged by the Company's wholly owned financing
subsidiary, Dignity Partners Funding Corp. I, to secure the repayment of long
term notes payable.
</FN>
(KEYWORD CALIFORNIA AND INDUSTRY KEYWORD: SPECIALTY FINANCE EARNINGS).
CONTACTS: POINT WEST CAPITAL CORPORATION, SAN FRANCISCO.
Alan B. Perper, 415/394-9467