Fremont General Corporation (the “Company”) reported net income of $18,057,000 for the first quarter of 2002. This was comprised of net income from continuing operations of $17,535,000 and an after tax gain on the extinguishment of debt of $522,000. The net income from continuing operations for the first quarter of 2002 of $17,535,000 is compared to $14,559,000 for the fourth quarter of 2001 and $11,781,000 for the first quarter of 2001*.
Diluted net income per share from continuing operations was $.25 for the quarter ended March 31, 2002, as compared to $.21 per share for the fourth quarter of 2001 and $.17 per share for the first quarter of 2001*.
The Company’s stockholders’ equity per share was $5.21 at December 31, 2001. During the quarter ended March 31, 2002, the Company extinguished an additional $6.0 million par value of its senior notes outstanding.
The Company’s nationwide financial services operations, represented primarily by the Company’s industrial bank, Fremont Investment & Loan, reported record pre-tax income of $42,186,000 for the first quarter of 2002, as compared to $37,433,000 for the fourth quarter of 2001 and $31,004,000 for the first quarter of 2001. This represents an increase in pre-tax income of 13% from the fourth quarter of 2001 and a 36% increase from the first quarter of 2001. Fremont Investment & Loan is “well-capitalized”, as defined by the FDIC, and had $4.18 billion in FDIC-insured deposits at March 31, 2002. Loans receivable, before allowance for loan losses, were approximately $3.88 billion at March 31, 2002, as compared to $3.86 billion at December 31, 2001.
Loans receivable are primarily comprised of commercial real estate loans, as the Company currently sells on a whole loan basis substantially all of its residential real estate loan production. Residential loan originations totaled $1.33 billion during the first quarter of 2002, up from $999.9 million during the fourth quarter of 2001. Commercial real estate loan originations and advances were $359.9 million for the first quarter of 2002, as compared to $440.7 million during the fourth quarter of 2001.
Total net charge-offs for the first quarter of 2002 were $5.6 million, of which $3.6 million was related to the Company’s average commercial real estate loan portfolio of $3.5 billion. The net charge-off ratio for the Company’s commercial real estate loan portfolio was 0.42% for the first quarter of 2002. Non-performing assets (non-accrual loans and real estate owned) increased from $115.2 million at December 31, 2001 to $167.4 million as of March 31, 2002. A total of $62.9 million, or approximately 38% of the total non-performing assets at March 31, 2002, are currently in the process of being sold to third parties and is comprised of $36.2 million of non-accrual commercial real estate loans and $26.7 million of commercial real estate owned. The Company expects to realize proceeds from these sales that are equal to or slightly above the net carrying values of these loans and REO.
The Company and Employers Insurance Company of Nevada (“EICN”) have executed a letter of intent regarding the potential acquisition by EICN of the on-going business, organization and facilities of the Company’s workers’ compensation insurance operation and are moving forward towards completion of a definitive agreement.
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