Aleritas Capital Reports Second Quarter 2008 Financial Results
OVERLAND PARK, Kan., Aug. 18, 2008 – Aleritas Capital Corp. (OTCBB: BRCR; BRCRW; BRCRU), today reported its second quarter 2008 financial results.
For the three months ended June 30, 2008, the Company reported after-tax income of $1.1 million, or a gain of 4 cents per diluted share compared to after-tax profits of $3.5 million, or 19 cents per diluted share for the same period in the prior year.
For the three months ended June 30, 2008, the Company increased its loan loss reserves by approximately $2.3 million resulting in loss reserves totaling approximately $16.4 million against loan balances held in inventory of $172.0 million, representing a loan loss reserve percentage of approximately 9.5 percent. Additionally, as of June 30, 2008, the Company’s securities balances had been discounted by approximately $19.1 million for expected loan losses related to approximately $293.5 million in loan balances held in the various securitizations and off-balance warehouse facilities.
“Aleritas management made the right decisions and implemented the proper strategies to position the company for a profitable 2008 second quarter,” said Aleritas’ chairman, Robert D. Orr. We are encouraged by the second quarter results and a return to profitability. Although we made significant progress during the second quarter, a source of frustration has been delays in the payment of servicing fees to our organization and Brooke Capital by securitization trusts. These servicing fees total approximately $7.0 million and the delays have adversely impacted our organization’s cash flows. As the result of recent discussions with the securitization trusts, we believe that most servicing fees will be received within the next 60 days.”
Orr added, “Mike Hess leads our communications initiatives and has been the primary liaison with our Main Street participating lenders. I have been the primary liaison with our institutional partners.”
“Aleritas Capital ‘took its medicine’ in the first quarter and started getting well in the second quarter,” Orr said. “I believe I can now redirect much of my attention to Brooke Capital Corporation in an effort to help it return to profitability in the third quarter. Brooke Capital provides collateral preservation servicing for Aleritas Capital’s securitization trusts, and, as such, its financial well being is important to Aleritas and its secondary market participants and investors.”
Michael Hess, Aleritas’ president, noted, “We still have a lot of work to do, but being profitable in the second quarter is certainly a step in the right direction. Communication is key to continuing our business relationships and to continuing profitability. Our communication initiatives implemented earlier in the year encourage due diligence and on-site visits by participating lenders, servicers, large investors and others. However, our efforts to be transparent have strained resources as we have tried to honor all requests for information on a timely basis.”
Hess also stated, “Aleritas Capital was profitable in the second quarter despite virtually originating no new loans during the quarter. Until credit markets improve, Aleritas Capital will focus on collection of existing loans and assisting existing borrowers.”
As of June 30, 2008, Aleritas Capital had stockholders’ equity exceeding $89 million, resulting in a book value per share of approximately $3.45 and a capital to asset ratio exceeding 30 percent. As of Aug. 15, 2008, the closing price of BRCR stock was 48 cents, which represents approximately 14 percent of the quarter-end book value per share.
About the Company… Aleritas Capital is a specialty finance company that originates loans to insurance agencies and insurance-related businesses.
This press release contains forward-looking statements. All forward-looking statements involve risks and uncertainties, and several factors could cause actual results to differ materially from those in the forward-looking statements. The following factors, among others, could cause actual results to differ from those indicated in the forward-looking statements: the uncertainty that the Company will achieve its short-term and long-term profitability and growth goals, uncertainties associated with market acceptance of and demand for the Company's products and services, the impact of competitive products and pricing, the dependence on third-party suppliers and their pricing, its ability to meet product demand, the availability of funding sources, the exposure to market risks, uncertainties associated with the development of technology, changes in the law and in economic, political and regulatory environments, changes in management, the dependence on intellectual property rights, the effectiveness of internal controls, and risks and factors described from time to time in reports and registration statements filed by the Company with the Securities and Exchange Commission. A more complete description of the Company’s business is provided in the Company’s reports and registration statements, which are available from the Company without charge at www.aleritascapital.com or at www.sec.gov.