x |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2000.
|
¨ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to |
Maryland
(State or other jurisdiction
of incorporation or organization) |
74-2830661
(I.R.S. Employer
Identification Number ) |
Page
|
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---|---|---|---|---|---|---|---|---|---|
PART I | FINANCIAL INFORMATION | ||||||||
Item 1. | Consolidated Financial Statements: | ||||||||
Balance Sheets | 1 | ||||||||
Statements of Operations | 2 | ||||||||
Statements of Cash Flows | 3 | ||||||||
Notes | 4 | ||||||||
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations | 6 | |||||||
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 44 | |||||||
PART II | OTHER INFORMATION | ||||||||
Item 1. | Legal Proceedings | 49 | |||||||
Item 2. | Changes in Securities | 49 | |||||||
Item 3. | Defaults Upon Senior Securities | 49 | |||||||
Item 4. | Submission of Matters to a Vote of Security Holders | 49 | |||||||
Item 5. | Other Information | 49 | |||||||
Item 6. | Exhibits and Reports on Form 8-K | 50 | |||||||
Signatures | 54 |
NOVASTAR FINANCIAL, INC.
September 30,
2000
|
December 31, 1999
|
|||||
---|---|---|---|---|---|---|
(unaudited) | ||||||
Assets | ||||||
Cash and cash equivalents | $ 2,767 | $ 2,395 | ||||
Mortgage loans | 424,547 | 620,406 | ||||
Mortgage-backed securitiesavailable-for-sale | 41,784 | 6,775 | ||||
Accrued interest receivable | 9,782 | 12,452 | ||||
Advances to and investment in NFI Holding Corporation | 20,617 | 29,208 | ||||
Assets acquired through foreclosure | 15,315 | 16,891 | ||||
Other assets | 1,905 | 2,383 | ||||
|
|
|||||
Total assets | $516,717 | $690,510 | ||||
|
|
|||||
Liabilities and Stockholders Equity | ||||||
Liabilities: | ||||||
Borrowings | $413,156 | $586,868 | ||||
Dividends payable | 525 | 525 | ||||
Accounts payable and other liabilities | 2,173 | 1,803 | ||||
|
|
|||||
Total liabilities | 415,854 | 589,196 | ||||
Stockholders equity: | ||||||
Capital stock, $0.01 par value, 50,000,000 shares authorized: | ||||||
Class B, convertible preferred stock, 4,285,714
shares issued and outstanding |
43 | 43 | ||||
Common stock, 8,143,407 and 8,130,069 shares issued;
6,206,441 and 7,460,523 shares outstanding, respectively |
81 | 81 | ||||
Additional paid-in capital | 151,197 | 151,173 | ||||
Accumulated deficit | (39,742 | ) | (41,502 | ) | ||
Accumulated other comprehensive income | 3,283 | 242 | ||||
Cost of treasury stock, 1,936,966 and 673,400 shares, respectively | (7,153 | ) | (1,877 | ) | ||
Notes receivable from founders | (6,846 | ) | (6,846 | ) | ||
|
|
|||||
Total stockholders equity | 100,863 | 101,314 | ||||
|
|
|||||
Total liabilities and stockholders equity | $516,717 | $690,510 | ||||
|
|
See notes to consolidated financial statements.
For the Nine Months
Ended September 30, |
For the Three Months
Ended September 30, |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2000
|
1999
|
2000
|
1999
|
|||||||||||||
Interest income on mortgage loans | $ | 34,981 | $ | 52,236 | $ | 10,391 | $ | 15,595 | ||||||||
Interest expense on mortgage loans | 26,881 | 36,059 | 8,240 | 11,206 | ||||||||||||
|
|
|
|
|||||||||||||
Net interest income | 8,100 | 16,177 | 2,151 | 4,389 | ||||||||||||
Prepayment penalty income | 1,431 | 2,385 | 448 | 769 | ||||||||||||
Provision for credit losses | (4,004 | ) | (11,499 | ) | (1,212 | ) | (5,634 | ) | ||||||||
Premiums for mortgage loan insurance | (1,009 | ) | (1,339 | ) | (302 | ) | (427 | ) | ||||||||
Loan servicing fees paid to NovaStar Mortgage, Inc. | (1,982 | ) | (3,056 | ) | (599 | ) | (936 | ) | ||||||||
|
|
|
|
|||||||||||||
Net portfolio income (loss) | 2,536 | 2,668 | 486 | (1,839 | ) | |||||||||||
Net interest income on mortgage-backed securities | 1,329 | 100 | 602 | 100 | ||||||||||||
Other income (loss) | (453 | ) | 706 | (591 | ) | 322 | ||||||||||
Equity in net income of NFI Holding Corporation | 646 | 1,518 | 787 | 576 | ||||||||||||
General and administrative expenses: | ||||||||||||||||
Net fees for other services provided by (to) NovaStar Mortgage, Inc. | (1,460 | ) | 287 | (1,458 | ) | (169 | ) | |||||||||
Compensation and benefits. | 1,042 | 1,358 | 325 | 421 | ||||||||||||
Professional and outside services | 467 | 546 | 210 | 181 | ||||||||||||
Office administration | 607 | 611 | 206 | 203 | ||||||||||||
Other | 66 | 156 |
|
23 | 60 | |||||||||||
|
|
|
|
|
||||||||||||
Total general and administrative expenses | 722 | 2,958 |
|
(694 | ) | 696 | ||||||||||
|
|
|
|
|
||||||||||||
|
||||||||||||||||
Net income (loss) | $ | 3,336 | $ | 2,034 |
|
$ | 1,978 | $ | (1,537 | ) | ||||||
|
|
|
|
|
||||||||||||
Dividends on preferred shares | $ | (1,575 | ) | $ | (1,081 |
)
|
$ | (525 | ) | $ | (525 | ) | ||||
|
|
|
|
|
||||||||||||
Net income (loss) available to common shareholders | $ | 1,761 | $ | 953 |
|
$ | 1,453 | $ | (2,062 | ) | ||||||
|
|
|
|
|||||||||||||
Basic earnings (loss) per share | $ | 0.25 | $ | 0.12 | $ | 0.21 | $ | (0.25 | ) | |||||||
|
|
|
|
|||||||||||||
Diluted earnings (loss) per share | $ | 0.25 | $ | 0.11 | $ | 0.18 | $ | (0.25 | ) | |||||||
|
|
|
|
|||||||||||||
Weighted average basic shares outstanding | 7,087 | 8,130 | 6,900 | 8,130 | ||||||||||||
Weighted average diluted shares outstanding | 7,094 | 8,326 | 11,192 | 8,130 | ||||||||||||
Dividends declared per common share | $ | | $ | | $ | | $ | | ||||||||
|
|
|
|
For the Ninth Months
Ended September 30, |
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2000 | 1999 | ||||||||||||
Net cash provided by operating activities | $ 13,945 | $ 23,504 | |||||||||||
Cash flow from investing activities: | |||||||||||||
Mortgage loan repayments | 176,799 | 201,034 | |||||||||||
Sales of assets acquired through foreclosure | 15,295 | 17,542 | |||||||||||
Mortgage loans sold to others | | 4,900 | |||||||||||
Proceeds from paydowns on mortgage-backed securities | 2,161 | | |||||||||||
Net change in advances to NFI Holding Corporation | 7,309 | (15,360 | ) | ||||||||||
Purchase of mortgage-backed securities from NFI Holding Corporation | (33,767 | ) | | ||||||||||
|
|
||||||||||||
Net cash provided by investing activities | 167,797 | 208,116 | |||||||||||
Cash flow from financing activities: | |||||||||||||
Payments on collateralized mortgage obligations | (185,502 | ) | (236,872 | ) | |||||||||
Change in short-term borrowings | 10,960 | (18,029 | ) | ||||||||||
Net proceeds from issuance of capital stock and exercise of equity instruments | 23 | 29,029 | |||||||||||
Dividends paid on preferred stock | (1,575 | ) | (556 | ) | |||||||||
Dividends paid on common stock | | (2,845 | ) | ||||||||||
Treasury stock purchases | (5,276 | ) | | ||||||||||
|
|
||||||||||||
Net cash used in financing activities | (181,370 | ) | (229,273 | ) | |||||||||
|
|
||||||||||||
Net increase in cash and cash equivalents | 372 | 2,347 | |||||||||||
Cash and cash equivalents, beginning of period | 2,395 | | |||||||||||
|
|
||||||||||||
Cash and cash equivalents, end of period | $ 2,767 | $ 2,347 | |||||||||||
|
|
||||||||||||
Supplemental disclosure of cash flow information: | |||||||||||||
Cash paid for interest | $ 27,048 | $ 36,567 | |||||||||||
|
|
||||||||||||
Assets acquired through foreclosure | $ 12,136 | $ 22,570 | |||||||||||
|
|
||||||||||||
Dividends payable | $ 525 | $ 525 | |||||||||||
|
|
||||||||||||
Issuance of warrants | $ | $ 350 | |||||||||||
|
|
Value of
Asset-Backed Bonds Issued |
Economic Residual Value
as of September 30, 2000 |
Value of
Collateral Sold |
Gain
Recognized |
|||||
---|---|---|---|---|---|---|---|---|
NMFT 2000-1 | $226 million | $13,750,000 | $229,846,000 | $2,936,000 | ||||
NMFT 2000-2 (A) | $334 million | $20,534,000 | $188,734,000 | $3,584,000 |
|
||
(A)
|
A second closing for NMFT 2000-2 is scheduled for December 26, 2000 in which $151.3 million of loans will be added.
|
·
|
Founded in 1996 as a specialty finance lender to invest in mortgage assets;
|
·
|
Assets have primarily come from the wholesale origination of nonconforming, single-family, residential mortgage loans of its
affiliate, NovaStar Mortgage;
|
·
|
Operates as a long-term portfolio investor;
|
·
|
Loans are financed on a short-term basis through various warehouse facilities. Long-term financing is provided through
securitization where asset-backed bonds are issued in financing-structured transactions;
|
·
|
Earnings are generated from spread income on the mortgage loan and securities portfolio and indirectly by gains associated with the
sale of loans to outside parties or through securitization transactions of NovaStar Mortgage.
|
·
|
Primary customer is the retail mortgage broker who deals with the borrower. NovaStar Mortgages account executives work with
more than 4,500 brokers to solicit loans.
|
·
|
Borrowers generally are individuals or families who do not qualify for agency/conventional lending programs because of a lack of
available documentation or previous credit difficulties. Often, these borrowers have built up high-rate consumer debt and are attempting to use equity in their home to consolidate debt and lower their total monthly payments.
|
·
|
Loans are financed on a short-term basis through warehouse facilities. Long-term financing is provided through securitization where
asset-backed bonds are issued in transactions that are structured as a sale.
|
·
|
Loans are held for saleeither to affiliates, third parties for cash or subsidiaries as collateral for securitization.
|
September 30, 2000
|
December 31, 1999
|
|||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Credit
Grade |
Allowed
Mortgage Lates (A) |
Maximum
Loan-to- value |
Current
Principal |
Weighted
Average Coupon |
Weighted
Average Loan-to- value |
Current
Principal |
Weighted
Average Coupon |
Weighted
Average Loan-to- value |
||||||||||||||||||||
Retained loans collateralizing
asset-backed bonds: |
||||||||||||||||||||||||||||
AA | 0 x 30 | 95 | $ | 62,099 | 10.11 | % | 82.8 | % | $ | 85,476 | 9.50 | % | 83.2 | % | ||||||||||||||
A | 1 x 30 | 90 | 170,903 | 10.61 | 79.3 | 244,187 | 10.06 | 80.1 | ||||||||||||||||||||
A- | 2 x 30 | 90 | 100,568 | 11.18 | 81.8 | 149,248 | 10.45 | 81.8 | ||||||||||||||||||||
B | 3 x 30, 1 x 60 | 85 | 59,056 | 11.68 | 78.0 | 89,477 | 10.86 | 78.4 | ||||||||||||||||||||
5 x 30, 2 x 60 | ||||||||||||||||||||||||||||
C | 1 x 90 | 75 | 26,353 | 12.11 | 72.8 | 42,766 | 11.35 | 72.5 | ||||||||||||||||||||
D | 6 x 30, 3 x 60, | 65 | 5,004 | 12.95 | 63.4 | 7,668 | 12.16 | 62.1 | ||||||||||||||||||||
|
|
|||||||||||||||||||||||||||
2 x 90 | ||||||||||||||||||||||||||||
Total on balance sheet | $ | 423,983 | 10.94 | % | 79.6 | % | $ | 618,822 | 10.31 | % | 80.0 | % | ||||||||||||||||
|
|
|
|
|
|
September 30, 2000
|
December 31, 1999
|
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Credit
Grade |
Allowed
Mortgage Lates (A) |
Maximum
Loan-to- value |
Current
Principal |
Weighted
Average Coupon |
Weighted
Average Loan-to- value |
Current
Principal |
Weighted
Average Coupon |
Weighted
Average Loan-to- value |
|||||||||||||||
Sold loans collateralizing asset-
backed bonds: |
|||||||||||||||||||||||
AAA | 0 x 30 | 97 | (B) | $115,453 | 9.69 | % | 80.8 | % | $ 3,474 | 9.18 | % | 80.7 | % | ||||||||||
AA | 0 x 30 | 95 | 136,895 | 10.17 | 83.6 | 27,236 | 9.47 | 84.8 | |||||||||||||||
A | 1 x 30 | 90 | 106,876 | 10.39 | 81.2 | 43,119 | 9.86 | 83.1 | |||||||||||||||
A- | 2 x 30 | 90 | 75,505 | 10.49 | 81.4 | 35,311 | 10.09 | 83.1 | |||||||||||||||
B | 3 x 30, 1x 60 | 85 | 39,052 | 10.97 | 79.3 | 19,612 | 10.59 | 79.7 | |||||||||||||||
5 x 30, 2 x 60 | |||||||||||||||||||||||
C | 1 x 90 | 75 | 16,180 | 11.50 | 70.4 | 11,405 | 11.09 | 71.9 | |||||||||||||||
D | 6 x 30, 3 x 60, | 65 | 2,071 | 12.29 | 70.0 | 3,171 | 12.16 | 62.1 | |||||||||||||||
2 x 90 | |||||||||||||||||||||||
Other | Varies | 97 | 36,525 | 11.42 | 92.6 | | | | |||||||||||||||
|
|
||||||||||||||||||||||
Total off balance sheet | $528,557 | 10.35 | % | 82.0 | % | $143,328 | 10.08 | % | 81.5 | % | |||||||||||||
|
|
|
|
|
|
(A)
|
Represents the number of times a prospective borrower is allowed to be late more than 30, 60 or 90 days. For instance, a 3x30, 1x60
category would afford the prospective borrower to be more than 30 days late on three separate occasions and 60 days late no more than one time.
|
(B)
|
97% on fixed-rate purchases; all other maximum of 95%.
|
Retained loans collateralizing asset-
backed bondson balance sheet |
Sold loans collateralizing asset-backed
bondsoff balance sheet |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2000
|
December 31, 1999
|
September 30, 2000
|
December 31, 1999
|
|||||||||
Collateral Location
|
||||||||||||
Florida | 15 | % | 14 | % | 16 | % | 21 | % | ||||
California | 14 | 16 | 10 | 7 | ||||||||
Washington | 6 | 7 | 4 | 4 | ||||||||
Texas | 5 | 5 | 3 | 6 | ||||||||
Nevada | 4 | 4 | 6 | 4 | ||||||||
Oregon | 4 | 5 | 2 | 1 | ||||||||
Tennessee | 4 | 3 | 6 | 5 | ||||||||
Michigan | 3 | 3 | 8 | 5 | ||||||||
Ohio | 3 | 3 | 6 | 4 | ||||||||
All other states | 42 | 40 | 39 | 43 | ||||||||
|
|
|
|
|||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | ||||
|
|
|
|
Product/Type
|
September 30, 2000
|
December 31, 1999
|
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Retained loans collateralizing asset-backed bonds
on balance sheet: |
|||||||||||||
Two and three-year fixed. | $201,440 | $343,193 | |||||||||||
Six-month LIBOR and one-year CMT | 27,164 | 43,178 | |||||||||||
30/15-year fixed and other | 195,379 | 232,451 | |||||||||||
|
|
||||||||||||
Outstanding principal | 423,983 | 618,822 | |||||||||||
Premium | 8,696 | 12,689 | |||||||||||
Allowance for credit losses | (8,132 | ) | (11,105 | ) | |||||||||
|
|
||||||||||||
Carrying Value | $424,547 | $620,406 | |||||||||||
|
|
||||||||||||
Carrying value as a percent of principal | 100.13 | % | 100.26 | % | |||||||||
|
|
||||||||||||
Sold loans collateralizing asset-backed bonds
off balance sheet: |
|||||||||||||
Two and three-year fixed. | $357,210 | $ 78,238 | |||||||||||
Six-month LIBOR and one-year CMT | 2,864 | 5,052 | |||||||||||
30/15-year fixed and other | 168,483 | 60,038 | |||||||||||
|
|
||||||||||||
Outstanding principal | $528,557 | $143,328 | |||||||||||
|
|
||||||||||||
Mortgage securities retained. | $ 41,784 | $ 6,775 | |||||||||||
|
|
Current
Principal |
Premium
|
Percent with
Prepayment Penalty |
Weighted Average
|
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Coupon
|
Loan-to-
value |
Remaining
Prepayment Penalty Period (in years) - Loans with Penalty |
|||||||||||||
As of September 30, 2000 | |||||||||||||||
Retained loans collateralizing asset-backed bonds: |
|
||||||||||||||
NHES 1997-1 | $ 58,054 | $2,679 | 23 | % | 11.61 | % | 74.9 | % |
0.33
|
||||||
NHES 1997-2 | 63,337 | 1,269 | 22 | 11.34 | 79.1 |
0.31
|
|||||||||
NHES 1998-1 | 127,936 | 2,126 | 48 | 10.96 | 80.6 |
0.57
|
|||||||||
NHES 1998-2 | 174,393 | 2,609 | 58 | 10.54 | 81.0 |
0.98
|
|||||||||
All other loans | 263 | 13 | | 12.86 | 76.0 |
|
|||||||||
|
|
|
|||||||||||||
Total on balance sheet | $423,983 | $8,696 | 45 | % | 10.94 | % | 79.6 | % |
0.67
|
||||||
|
|
|
|
|
|
||||||||||
Sold loans collateralizing asset-backed bonds (A): |
|
||||||||||||||
NMFT 1999-1 | $119,327 | $ | 66 | % | 10.43 | % | 81.7 | % |
1.36
|
||||||
NMFT 2000-1 (B) | 221,963 | | 93 | 10.15 | 81.1 |
2.63
|
|||||||||
NMFT 2000-2 (C) | 187,267 | | 90 | 10.54 | 83.3 |
2.62
|
|||||||||
|
|
|
|||||||||||||
Total off balance sheet | $528,557 | $ | 86 | % | 10.35 | % | 82.0 | % |
2.34
|
||||||
|
|
|
|
|
|
Current
Principal |
Premium
|
Percent with
Prepayment Penalty |
Weighted Average
|
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Coupon
|
Loan-to-
value |
Remaining
Prepayment Penalty Period (in years) - Loans with Penalty |
|||||||||||||
As of December 31, 1999 | |||||||||||||||
Retained loans collateralizing asset-backed bonds: | |||||||||||||||
NHES 1997-1 | $ 85,015 | $ 3,942 | 32 | % | 11.04 | % | 75.5 | % |
0.51
|
||||||
NHES 1997-2 | 101,031 | 1,917 | 35 | 10.90 | 79.3 |
0.55
|
|||||||||
NHES 1998-1 | 195,170 | 3,205 | 63 | 10.08 | 81.1 |
0.93
|
|||||||||
NHES 1998-2 | 237,223 | 3,606 | 74 | 9.97 | 81.1 |
1.51
|
|||||||||
All other loans | 383 | 19 | 6 | 11.96 | 77.6 |
0.10
|
|||||||||
|
|
|
|||||||||||||
Total on balance sheet | $618,822 | $12,689 | 58 | % | 10.31 | % | 80.0 | % |
1.03
|
||||||
|
|
|
|
|
|
||||||||||
Sold loans collateralizing asset-backed bonds (A): |
|
||||||||||||||
Off balance sheet NMFT 1999-1 | $143,328 | $ | 84 | % | 10.08 | % | 81.5 | % |
2.03
|
||||||
|
|
|
|
|
|
(A)
|
NovaStar Financial owns economic residual interests. The mortgage loans are not retained on the balance sheet of NovaStar Financial.
|
(B)
|
The economic residual interests in NMFT 2000-1 were purchased by NovaStar Financial April 1, 2000.
|
(C)
|
The economic residual interests in NMFT 2000-2 were purchased by NovaStar Financial September 29, 2000.
|
Issue Date
|
Current
Principal Balance |
Weighted
Average Age of Loans at Inception (in months) |
Constant Prepayment Rate
(Annual Percent) |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
One-
month |
Three-
month |
Twelve-
month |
Life
|
|||||||||||
September 30, 2000 | ||||||||||||||
Retained loans
collateralizing asset- backed bonds: |
||||||||||||||
NHES 1997-1 | October 1, 1997 | $ 58,054 | 7 | 44 | 41 | 41 | 40 | |||||||
NHES 1997-2 | December 11, 1997 | 63,337 | 3 | 33 | 38 | 47 | 35 | |||||||
NHES 1998-1 | April 30, 1998 | 127,936 | 3 | 38 | 45 | 41 | 29 | |||||||
NHES 1998-2 | August 18, 1998 | 174,393 | 3 | 39 | 43 | 30 | 23 | |||||||
Sold loans collateralizing
assetbacked bonds: |
||||||||||||||
NMFT 1999-1 | January 29, 1999 | $119,327 | 5 | 36 | 31 | 23 | 18 | |||||||
NMFT 2000-1 | March 31, 2000 | 221,963 | 2 | 8 | 9 | | 7 | |||||||
NMFT 2000-2 | September 28, 2000 | 187,267 | 1 | | | | |
Issue Date
|
Current
Principal Balance |
Weighted
Average Age of Loans at Inception (in months) |
Constant Prepayment Rate
(Annual Percent) |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
One-
month |
Three-
month |
Twelve-
month |
Life
|
|||||||||||
December 31, 1999 | ||||||||||||||
Retained loans
collateralizing asset- backed bonds: |
||||||||||||||
NHES 1997-1 | October 1, 1997 | $ 85,015 | 7 | 44 | 42 | 50 | 40 | |||||||
NHES 1997-2 | December 11, 1997 | 101,031 | 3 | 64 | 58 | 42 | 32 | |||||||
NHES 1998-1 | April 30, 1998 | 195,170 | 3 | 47 | 36 | 29 | 23 | |||||||
NHES 1998-2 | August 18, 1998 | 237,223 | 3 | 26 | 21 | 21 | 18 | |||||||
Sold loans collateralizing
assetbacked bonds: |
||||||||||||||
NMFT 1999-1 | January 29, 1999 | $143,328 | 5 | 14 | 20 | 14 | 14 |
Mortgage
Loans |
||||
---|---|---|---|---|
September 30, 2000 | 2.05 | % | ||
June 30, 2000 | 2.03 | |||
March 31, 2000 | 2.05 | |||
December 31, 1999 | 2.05 | |||
September 30, 1999 | 2.09 | |||
June 30, 1999 | 2.15 | |||
March 31, 1999 | 2.22 |
September 30, 2000
|
December 31, 1999
|
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
1999-1 | 2000-1 | 2000-2 | 1999-1 | |||||||||||||
Estimated Fair Value | $ | 7,500 | $ | 13,750 | $ | 20,534 | $ | 6,775 | ||||||||
|
|
|
|
|||||||||||||
Constant Prepayment Rate (weighted average life) | 37 | 29 | 28 | 31 | ||||||||||||
|
|
|
|
|||||||||||||
Static loss, net of mortgage insurance | 2.5 | % | 1.0 | % | 1.0 | % | 2.5 | % | ||||||||
|
|
|
|
|||||||||||||
Discount Rate | 17 | % | 15 | % | 15 | % | 17 | % | ||||||||
|
|
|
|
|||||||||||||
As a percent of mortgage loan principal: | ||||||||||||||||
Delinquent loans (30 days and greater) | 9.05 | % | 2.59 | % | 0.21 | % | 7.03 | % | ||||||||
|
|
|
|
|||||||||||||
Loans in foreclosure | 4.16 | 0.13 | | 3.22 | ||||||||||||
|
|
|
|
|||||||||||||
Real Estate Owned | 1.92 | | | 1.26 | ||||||||||||
|
|
|
|
|||||||||||||
Cumulative losses | $ | 969 | $ | | $ | | $ | | ||||||||
|
|
|
|
Collateralized
Mortgage Obligation |
Mortgage Loans
|
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Remaining
Principal |
Current Interest Rate |
Remaining Principal (A) |
Weighted Average Coupon |
Estimated
Weighted Average Months to Call |
|||||||||
As of September 30, 2000: |
|
||||||||||||
Retained loans collateralizing asset-backed bonds: |
|
||||||||||||
NHES 1997-1 | $ 54,325 | 7.13 | % | $59,297 | 11.61 | % |
|
||||||
NHES 1997-2 | 59,453 | 6.88 | 65,061 | 11.34 |
4
|
||||||||
NHES 1998-1 | 116,152 | 6.90 | 130,671 | 10.96 |
13
|
||||||||
NHES 1998-2 | 173,663 | 6.84 | 183,913 | 10.54 |
25
|
||||||||
Unamortized debt issuance costs, net | (1,397 | ) |
|
||||||||||
|
|
||||||||||||
Total on balance sheet | $402,196 | ||||||||||||
|
Collateralized
Mortgage Obligation |
Mortgage Loans
|
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Remaining
Principal |
Current Interest Rate |
Remaining Principal (A) |
Weighted Average Coupon |
Estimated
Weighted Average Months to Call |
|||||||||
Sold loans collateralizing asset-backed bonds: | |||||||||||||
NMFT 1999-1 | $116,659 | 7.14 | % | $119,327 | 10.43 | % | 50 | ||||||
NMFT 2000-1 (B) | 218,166 | 7.02 | 221,963 | 10.15 | 63 | ||||||||
NMFT 2000-2 (C) | 334,220 | 6.95 | 187,267 | 10.54 | 66 | ||||||||
|
|||||||||||||
Total off balance sheet | $669,045 | ||||||||||||
|
|||||||||||||
As of December 31, 1999: | |||||||||||||
Retained loans collateralizing asset-backed bonds: | |||||||||||||
NHES 1997-1 | $ 75,580 | 6.94 | $ 87,534 | 11.04 | | ||||||||
NHES 1997-2 | 95,053 | 6.72 | 104,851 | 10.90 | 12 | ||||||||
NHES 1998-1 | 186,493 | 6.55 | 200,625 | 10.08 | 22 | ||||||||
NHES 1998-2 | 231,969 | 6.71 | 244,109 | 9.97 | 29 | ||||||||
Unamortized debt issuance costs, net | (2,227 | ) | |||||||||||
|
|||||||||||||
Total on balance sheet | $586,868 | ||||||||||||
|
|||||||||||||
Sold loans collateralizing asset-backed bonds: | |||||||||||||
Off balance sheet NMFT 1999-1 | $140,710 | 6.67 | % | $143,328 | 10.08 | % | 55 | ||||||
|
·
|
$3.3 million increase due to net income recognized for the nine months ended September 30, 2000.
|
·
|
$5.3 million decrease as a result of common stock repurchases
.
NovaStar Financials Board of Directors amended its
stock repurchase program to increase the amount of common stock authorized to be acquired up to an aggregate purchase price of $9 million. Stock repurchases may be made in the open market, in block purchase transactions, through put options or through
privately negotiated transactions. The timing of repurchases and the number of shares ultimately repurchased will depend upon market conditions and corporate requirements. As of September 30,
2000, NovaStar Financial had repurchased 1,936,966 shares of its common stock. The number of shares repurchased by NovaStar Financial has increased to 1,979,666 through November 10, 2000 for an aggregate purchase price of $7.3 million.
|
·
|
$3.0 million increase in the unrealized gain on the economic residual interests in NovaStar Mortgages asset backed bond
transactions that for tax and accounting purposes were treated by NovaStar Mortgage as sales. The residual interests in those transactions have been classified as available-for-sale securities and the unrealized gain is recognized as a component of
accumulated other comprehensive income.
|
·
|
$1.6 million decrease due to dividends on Class B 7% cumulative convertible preferred stock in 2000.
|
Mortgage Loans
|
Mortgage-Backed Securities
|
Total
|
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Average
Balance |
Interest
Income/ Expense |
Annual
Yield/ Rate |
Average
Balance |
Interest
Income/ Expense |
Annual
Yield/ Rate |
Average
Balance |
Interest
Income/ Expense |
Annual
Yield/ Rate |
|||||||||||||
Nine months ended September 30, 2000 | |||||||||||||||||||||
Interest-earning mortgage assets | $475,419 | $34,981 | 9.81 | % | $13,648 | $1,611 | 15.74 | % | $489,067 | $36,592 | 9.98 | % | |||||||||
|
|
|
|
|
|
||||||||||||||||
Interest-bearing liabilities | |||||||||||||||||||||
Collateralized mortgage obligations | $499,805 | $26,721 | 7.13 | % | | | | $499,805 | $26,721 | 7.13 | % | ||||||||||
Other borrowings | | | | 5,228 | 282 | 7.19 | % | 5,228 | 282 | 7.19 | |||||||||||
|
|
|
|||||||||||||||||||
Cost of derivative financial | |||||||||||||||||||||
Instruments hedging liabilities | 160 | | | 160 | |||||||||||||||||
|
|
|
|||||||||||||||||||
Total borrowings | $499,805 | $26,881 | 7.17 | % | $ 5,228 | $ 282 | 7.19 | % | $505,033 | $27,163 | 7.17 | % | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
Net interest income | $ 8,100 | $1,329 | $ 9,429 | ||||||||||||||||||
|
|
|
|||||||||||||||||||
Net interest spread | 2.64 | % | 8.55 | % | 2.81 | % | |||||||||||||||
|
|
|
|||||||||||||||||||
Net yield | 2.27 | % | 12.98 | % | 2.57 | % | |||||||||||||||
|
|
|
Mortgage Loans
|
Mortgage-Backed Securities
|
Total
|
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Average
Balance |
Interest
Income/ Expense |
Annual
Yield/ Rate |
Average
Balance |
Interest
Income/ Expense |
Annual
Yield/ Rate |
Average
Balance |
Interest
Income/ Expense |
Annual
Yield/ Rate |
|||||||||||||
Nine months ended September 30, 1999 | |||||||||||||||||||||
Interest-earning mortgage assets | $765,073 | $52,236 | 9.10 | % | $808 | $100 | 16.50 | % | $765,845 | $52,336 | 9.11 | % | |||||||||
|
|
|
|
|
|
|
|||||||||||||||
Interest-bearing liabilities | |||||||||||||||||||||
Collateralized mortgage obligations | $785,547 | $33,782 | 5.73 | % | $ | $ | | % | $785,547 | $33,782 | 5.73 | % | |||||||||
Other borrowings | 5,623 | 541 | 12.83 | | | | 5,623 | 541 | 12.83 | ||||||||||||
|
|
|
|||||||||||||||||||
Cost of derivative financial | |||||||||||||||||||||
Instruments hedging liabilities | 1,736 | | 1,736 | ||||||||||||||||||
|
|
|
|||||||||||||||||||
Total borrowings | $791,170 | $36,059 | 6.08 | % | $ | | | % | $791,170 | $36,059 | 6.08 | % | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
Net interest income | $16,177 | $100 | $16,277 | ||||||||||||||||||
|
|
|
|||||||||||||||||||
Net interest spread | 3.02 | % | 16.50 | % | 3.03 | % | |||||||||||||||
|
|
|
|||||||||||||||||||
Net yield | 2.82 | % | 16.50 | % | 2.83 | % | |||||||||||||||
|
|
|
2000
|
1999
|
||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30
|
June 30
|
March 31
|
December 31
|
September 30
|
June 30
|
March 31
|
|||||||||||||||
Beginning balance | $ 8,993 | $ 9,763 | $11,105 | $ 5,370 | $ 3,573 | $ 3,492 | $ 3,573 | ||||||||||||||
Provision for credit losses | 1,212 | 1,213 | 1,579 | 10,579 | 5,634 | 3,566 | 2,299 | ||||||||||||||
Amounts charged off, net
of recoveries |
(2,073 | ) | (1,983 | ) | (2,921 | ) | (4,844 | ) | (3,837 | ) | (3,485 | ) | (2,380 | ) | |||||||
|
|
|
|
|
|
|
|||||||||||||||
Ending Balance | $ 8,132 | $ 8,993 | $ 9,763 | $11,105 | $ 5,370 | $ 3,573 | $ 3,492 | ||||||||||||||
|
|
|
|
|
|
|
2000
|
1999
|
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30
|
June 30
|
March 31
|
December 31
|
September 30
|
June 30
|
March 31
|
||||||||
Mortgage loans Collateralizing
NovaStar Home Equity Series (CMO): |
||||||||||||||
1997-1 Issued October 1, 1997 | $3,410 | $4,039 | $3,434 | $4,726 | $6,093 | $6,087 | $6,454 | |||||||
1997-2 Issued December 11, 1997 | 5,222 | 6,336 | 6,311 | 6,047 | 5,934 | 5,671 | 8,388 | |||||||
1998-1 Issued April 30, 1998 | 8,131 | 6,455 | 5,987 | 8,467 | 11,411 | 9,687 | 11,818 | |||||||
1998-2 Issued August 18, 1998 | 10,621 | 11,159 | 11,433 | 12,754 | 10,247 | 10,808 | 10,832 |
(A)
|
Includes loans in foreclosure or bankruptcy.
|
2000
|
1999
|
||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30
|
June 30
|
March 31
|
December 31
|
September 30
|
June 30
|
March 31
|
|||||||||||||||
Mortgage loans Collateralizing
NovaStar Home Equity Series (CMO): |
|||||||||||||||||||||
1997-1 Issued October 1, 1997 | 6.01 | % | 6.21 | % | 4.59 | % | 5.63 | % | 6.32 | % | 5.13 | % | 4.37 | % | |||||||
1997-2 Issued December 11, 1997 | 8.23 | 8.88 | 7.66 | 6.24 | 4.92 | 4.03 | 5.38 | ||||||||||||||
1998-1 Issued April 30, 1998 | 6.44 | 4.40 | 3.58 | 4.42 | 5.32 | 4.13 | 4.64 | ||||||||||||||
1998-2 Issued August 18, 1998 | 6.03 | 5.48 | 5.10 | 5.38 | 4.06 | 3.94 | 3.72 |
(A)
|
Includes loans in foreclosure or bankruptcy.
|
NovaStar Home Equity Series
|
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2000 |
1997-1
|
1997-2
|
1998-1
|
1998-2
|
All Loans
|
||||||||||
Allowance for Credit Losses: | |||||||||||||||
Balance, January 1, 2000 | $2,335 | $ 2,861 | $4,214 | $ 1,685 | $11,105 | ||||||||||
Provision for credit losses | 532 | 815 | 1,419 | 1,235 | 4,004 | ||||||||||
Amounts charged off, net of Recoveries | (1,154 | ) | (1,796 | ) | (2,246 | ) | (1,778 | ) | (6,977 | ) | |||||
|
|
|
|
|
|||||||||||
Balance, September 30, 2000 | $1,713 | $ 1,880 | $3,387 | $ 1,142 | $ 8,132 | ||||||||||
|
|
|
|
|
|||||||||||
Defaults as a percent of loan balance | |||||||||||||||
Delinquent loans (A) | 11.46 | % | 9.09 | % | 8.81 | % | 12.49 | % | 10.78 | % | |||||
|
|
|
|
|
|||||||||||
Loans in foreclosure | 3.99 | 6.71 | 4.80 | 4.53 | 4.86 | ||||||||||
|
|
|
|
|
|||||||||||
Real estate owned | 4.34 | 3.70 | 3.88 | 3.82 | 3.90 | ||||||||||
|
|
|
|
|
|||||||||||
Cumulative losses | $4,102 | $ 4,272 | $4,015 | $ 2,345 | |||||||||||
|
|
|
|
||||||||||||
NovaStar Home Equity Series
|
|||||||||||||||
December 31, 1999 |
1997-1
|
1997-2
|
1998-1
|
1998-2
|
All Loans
|
||||||||||
Allowance for Credit Losses: | |||||||||||||||
Balance, January 1, 1999 | $ 816 | $ 1,049 | $1,163 | $ 346 | $ 3,573 | ||||||||||
Provision for credit losses | 4,317 | 5,436 | 8,194 | 4,065 | 22,078 | ||||||||||
Amounts charged off, net of Recoveries | (2,798 | ) | (3,624 | ) | (5,143 | ) | (2,726 | ) | (14,546 | ) | |||||
|
|
|
|
|
|||||||||||
Balance, December 31, 1999 | $2,335 | $ 2,861 | $4,214 | $1,685 | $11,105 | ||||||||||
|
|
|
|
|
|||||||||||
Defaults as a percent of loan balance | |||||||||||||||
Delinquent loans (A) | 8.03 | % | 9.89 | % | 6.38 | % | 7.50 | % | 7.63 | % | |||||
|
|
|
|
|
|||||||||||
Loans in foreclosure | 4.73 | 4.32 | 3.75 | 4.02 | 4.09 | ||||||||||
|
|
|
|
|
|||||||||||
Real estate owned | 3.85 | 4.88 | 3.61 | 2.62 | 3.51 | ||||||||||
|
|
|
|
|
|||||||||||
Cumulative losses | $2,377 | $ 1,756 | $ 538 | $ 745 | |||||||||||
|
|
|
|
(A)
|
Includes loans delinquent 30 days or greater
|
Nine Months Ended September 30,
|
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2000
|
1999
|
||||||||||
Percent of
Stockholders Equity (Annualized) |
Percent of
Stockholders Equity (Annualized) |
||||||||||
Compensation and benefits | $1,042 | 1.38 | % | $1,358 | 1.61 | % | |||||
Professional and outside services | 467 | 0.62 | 546 | 0.65 | |||||||
Office administration | 607 | 0.80 | 611 | 0.72 | |||||||
Other | 66 | 0.09 | 156 | 0.18 | |||||||
|
|
|
|
||||||||
Total general and administrative expenses before Intercompany fees | 2,182 | 2.89 | % | 2,671 | 3.16 | % | |||||
|
|
||||||||||
Net fees for other services provided by (to) NovaStar Mortgage, Inc. | (1,460 | ) | 287 | ||||||||
|
|
||||||||||
Total general and administrative expenses. | $ 722 | $2,958 | |||||||||
|
|
Percent of
Stockholders Equity |
|||
---|---|---|---|
2000: | |||
Third quarter | 3.05 | % | |
Second quarter | 2.80 | ||
First quarter | 2.80 | ||
1999: | |||
Fourth quarter | 3.63 | ||
Third quarter | 3.06 | ||
Second quarter | 2.07 | ||
First quarter | 3.94 |
Nine Months Ended
September 30, |
|||||||
---|---|---|---|---|---|---|---|
2000
|
1999
|
||||||
Amounts paid to NovaStar Mortgage: | |||||||
Loan servicing fees | $ | 1,982 | $ | 3,056 | |||
|
|
||||||
Administrative fees | 126 | 1,263 | |||||
Amounts received from NovaStar Mortgage: | |||||||
Guaranty, commitment, loan sale and securitization fees | (1,246 | ) | | ||||
Interest income | (340 | ) | (976 | ) | |||
|
|
||||||
$ | (1,460 | ) | $ | 287 | |||
|
|
NovaStar Mortgage pays interest on amounts it borrows from NovaStar Financial. Interest on the borrowings accrues at the federal funds rate plus 1.75%. Under this agreement, NovaStar Mortgage is required to pay guaranty fees in the amount 0.25% of the loans sold by NovaStar Mortgage for which NovaStar Financial has guaranteed the performance of NovaStar Mortgage. In addition, beginning July 1, 2000, NovaStar Mortgage entered into the following intercompany agreements:
· | Servicing support fee : NovaStar Mortgage pays NovaStar Financial a fee equal to five basis points of the weighted average mortgage loan servicing principal. |
· | Financing commitment fee : NovaStar Mortgage pays NovaStar Financial a fee equal to 25 basis points on a $150 million annual commitment |
· | Residual purchase commitment fee : NovaStar Mortgage pays NovaStar Financial a fee at each securitization close equal to 20 basis points of the collateral principal value. |
· | Securitization consulting fee : NovaStar Mortgage pays NovaStar Financial a fee at each securitization close equal to 12.5 basis points of the collateral principal value. |
· | Guaranty spread fee : NovaStar Mortgage pays NovaStar Financial a fee equal to one basis point of the weighted average mortgage loan warehouse and repurchase borrowings. |
Mortgage Loans
|
Mortgage-Backed Securities
|
Average
Balance |
Total
|
Annual
Yield/ Rate |
|||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Three months ended September 30, 2000
|
Average
Balance |
Interest
Income/ Expense |
Annual
Yield/ Rate |
Average
Balance |
Interest
Income/ Expense |
Annual
Yield/ Rate |
Interest
Income/ Expense |
||||||||||||||||||||||||||||||||||||||||
Interest-earning mortgage assets | $417,846 | $10,391 | 9.95 | % | $18,701 | $733 | 15.68 | % | $436,548 | $11,124 | 10.19 | % | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Interest-bearing liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
Collateralized mortgage obligations | $443,082 | $ 8,400 | 7.58 | % | | | | $443,082 | $ 8,400 | 7.58 | % | ||||||||||||||||||||||||||||||||||||
Other borrowings | | | | 6,787 | 131 | 7.72 | % | 6,787 | 131 | 7.72 | % | ||||||||||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||
Cost of derivative financial instruments hedging liabilities | (160 | ) | | (160 | ) | ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||
Total borrowings | $443,082 | $ 8,240 | 7.44 | % | $ 6,787 | $131 | 7.72 | % | $449,869 | $ 8,371 | 7.44 | % | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||
Net interest income | $ 2,151 | $602 | $ 2,753 | ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||
Net interest spread | 2.51 | % | 7.96 | % | 2.75 | % | |||||||||||||||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||
Net yield | 2.06 | % | 12.88 | % | 2.52 | % | |||||||||||||||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||
Mortgage Loans
|
Mortgage-Backed Securities
|
Average
Balance |
Total
|
Annual
Yield/ Rate |
|||||||||||||||||||||||||||||||||||||||||||
Three months ended September 30, 2000
|
Average
Balance |
Interest
Income/ Expense |
Annual
Yield/ Rate |
Average
Balance |
Interest
Income/ Expense |
Annual
Yield/ Rate |
Interest
Income/ Expense |
||||||||||||||||||||||||||||||||||||||||
Interest-earning mortgage assets | $690,323 | $15,595 | 9.04 | % | $ 2,424 | $100 | 16.50 | % | $692,747 | $15,695 | 9.06 | % | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Interest-bearing liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
Collateralized mortgage obligations | $706,685 | $10,626 | 6.01 | % | | | | $706,685 | $10,626 | 6.01 | % | ||||||||||||||||||||||||||||||||||||
Other borrowings | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||
Cost of derivative financial instruments hedging liabilities | 580 | | 580 | ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||
Total borrowings | $706,685 | $11,206 | 6.34 | % | $ | | | % | $706,685 | $11,206 | 6.34 | % | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||
Net interest income | $ 4,389 | $100 | $ 4,489 | ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||
Net interest spread | 2.70 | % | 16.50 | % | 2.72 | % | |||||||||||||||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||
Net yield | 2.54 | % | 16.50 | % | 2.59 | % | |||||||||||||||||||||||||||||||||||||||||
|
|
|
Three Months Ended September 30,
|
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2000
|
1999
|
||||||||||||
Percent of
Stockholders Equity (Annualized) |
Percent of
Stockholders Equity (Annualized) |
||||||||||||
Compensation and benefits | $ | 325 | 1.30 | % | $ | 421 | 1.49 | % | |||||
Professional and outside services | 210 | 0.84 | 181 | 0.64 | |||||||||
Office administration | 206 | 0.82 | 203 | 0.72 | |||||||||
Other | 23 | 0.09 | 60 | 0.21 | |||||||||
|
|
|
|
||||||||||
Total general and administrative expenses before Intercompany fees | 764 | 3.05 | % | 865 | 3.06 | % | |||||||
|
|||||||||||||
Net fees for other services provided by (to) NovaStar Mortgage, Inc. | (1,458 | ) | (169 | ) | |||||||||
|
|
||||||||||||
Total general and administrative expenses. | $ | (694 | ) | $ | 696 | ||||||||
|
|
Three Months
Ended September 30, |
||||||||
---|---|---|---|---|---|---|---|---|
2000
|
1999
|
|||||||
Amounts paid to NovaStar Mortgage: | ||||||||
Loan servicing fees | $ | 599 | $ | 936 | ||||
|
|
|||||||
Administrative fees, net of guaranty fees. | (111 | ) | 115 | |||||
Amounts received from NovaStar Mortgage: | ||||||||
Guaranty, commitment, loan sale and securitization fees | (1,239 | ) | | |||||
Interest income | (108 | ) | (284 | ) | ||||
|
|
|||||||
$ | (1,458) | $ | (169 | ) | ||||
|
|
September 30,
|
||||||||
---|---|---|---|---|---|---|---|---|
2000
|
1999
|
|||||||
Net income | $ | 3,336 | $ | 2,034 | ||||
Use of net operating loss carryforward | (176 | ) | (2,628 | ) | ||||
Results of NFI Holding and subsidiaries | (646 | ) | (1,518 | ) | ||||
Provision for credit losses | 4,004 | 11,499 | ||||||
Loans charged-off | (6,977 | ) | (9,702 | ) | ||||
Other, net | 459 | 1,175 | ||||||
|
|
|||||||
Estimated taxable income (loss) | $ | | $ | 860 | ||||
|
|
NFI Holding Corporation
Condensed Consolidated Balance Sheets (unaudited, dollars in thousands) |
||||||
---|---|---|---|---|---|---|
September 30,
2000 |
December 31,
1999 |
|||||
Assets | ||||||
Cash and cash equivalents | $ | 3,272 | $ | 1,466 | ||
Mortgage loans | 68,750 | 107,916 | ||||
Other assets | 12,647 | 10,061 | ||||
|
|
|||||
Total assets | $ | 84,669 | $ | 119,443 | ||
|
|
|||||
Liabilities and Stockholders Equity | ||||||
Liabilities: | ||||||
Borrowings | $ | 44,805 | $ | 78,448 | ||
Due to NovaStar Financial, Inc. | 12,918 | 22,161 | ||||
Accounts payable and other liabilities | 19,247 | 11,787 | ||||
|
|
|||||
Total liabilities | 76,970 | 112,396 | ||||
Stockholders equity | 7,699 | 7,047 | ||||
|
|
|||||
Total liabilities and stockholders equity | $ | 84,669 | $ | 119,443 | ||
|
|
Nine Months Ended
September 30, |
Three Months Ended
September 30, |
||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2000
|
1999
|
2000
|
1999
|
||||||||
Interest income | $11,828 | $ 7,948 | $ 4,723 | $3,122 | |||||||
Interest expense. | 7,034 | 3,764 | 3,007 | 1,544 | |||||||
|
|
|
|
||||||||
Net interest income | 4,794 | 4,184 | 1,716 | 1,578 | |||||||
Provision for credit losses | 80 | (284 | ) | 97 | (168 | ) | |||||
|
|
|
|
||||||||
Net interest income after provision for credit losses | 4,714 | 4,468 | 1,619 | 1,746 | |||||||
Other income: | |||||||||||
Fees from third parties | 5,057 | 706 | 2,826 | 152 | |||||||
Fees received from, net of paid to, NovaStar Financial, Inc. | 522 | 3,343 | (859 | ) | 767 | ||||||
Net gain on sales of mortgage assets | 9,909 | 9,189 | 5,075 | 3,101 | |||||||
|
|
|
|
||||||||
Total other income | 15,488 | 13,238 | 7,042 | 4,020 | |||||||
General and administrative expenses | 19,550 | 16,172 | 7,866 | 5,183 | |||||||
|
|
|
|
||||||||
Net income before taxes | 652 | 1,534 | 795 | 583 | |||||||
Income tax expense | | | | | |||||||
|
|
|
|
||||||||
Net income | $ 652 | $ 1,534 | $ 795 | $ 583 | |||||||
|
|
|
|
Number
of Loans |
Principal
|
Average
Loan Balance |
Weighted Average
|
Percent with
Prepayment Penalty |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Price Paid
to Broker |
Loan to
Value |
Credit
Rating (A) |
Coupon
|
||||||||||||||||
2000: | |||||||||||||||||||
Third quarter | 1,793 | $207,662 | $115,818 | 101.1 | 84 | % | 5.20 | 10.72 | % | 90 | % | ||||||||
Second quarter | 1,473 | 171,375 | 116,344 | 101.0 | 82 | 5.32 | 10.50 | 91 | |||||||||||
First quarter | 1,232 | 132,072 | 107,201 | 101.1 | 80 | 5.45 | 10.16 | 93 | |||||||||||
|
|
||||||||||||||||||
2000 total | 4,498 | $511,109 | $113,630 | 101.1 | 82 | % | 5.30 | 10.50 | % | 91 | % | ||||||||
|
|
|
|
|
|
|
|
||||||||||||
1999: | |||||||||||||||||||
Fourth quarter | 1,265 | $130,288 | $102,994 | 101.0 | 82 | % | 5.30 | 10.04 | % | 91 | % | ||||||||
Third quarter | 1,204 | 125,140 | 103,937 | 100.8 | 82 | 5.28 | 9.87 | 91 | |||||||||||
Second quarter | 1,161 | 114,631 | 98,735 | 101.1 | 82 | 5.14 | 9.82 | 89 | |||||||||||
First quarter | 865 | 82,495 | 95,370 | 100.5 | 80 | 4.95 | 9.85 | 89 | |||||||||||
|
|
||||||||||||||||||
1999 total | 4,495 | $452,554 | $100,679 | 100.9 | 82 | % | 5.19 | 9.90 | % | 90 | % | ||||||||
|
|
|
|
|
|
|
|
(A)
|
AAA=7, AA=6, A=5, A-=4, B=3, C=2, D=1
|
Mortgage Loan Sales to Third
Parties |
Mortgage Loans
Transferred in Securitizations |
||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Principal
Amount |
Net Gain
Recognized |
Weighted
Average Price To Par |
Principal
Amount |
Net Gain
Recognized |
|||||||
2000: | |||||||||||
Third quarter | $ 50,334 | $ 1,552 | 104.0 | $188,734 | $3,584 | ||||||
Second quarter | 27,799 | 661 | 104.0 | 101,675 | 1,392 | ||||||
First quarter | 48,548 | 1,204 | 104.0 | 128,171 | 1,544 | ||||||
|
|
|
|
||||||||
2000 total | $126,681 | $ 3,417 | 104.0 | $418,580 | $6,520 | ||||||
|
|
|
|
|
|||||||
1999: | |||||||||||
Fourth quarter | $109,443 | $ 2,583 | 104.1 | % | $ | $ | |||||
Third quarter | 110,512 | 3,075 | 104.2 | | | ||||||
Second quarter | 98,048 | 2,911 | 104.4 | 25,800 | 355 | ||||||
First quarter | 72,824 | 1,593 | 103.6 | 138,847 | 1,250 | ||||||
|
|
|
|
||||||||
1999 total | $390,827 | $10,162 | 104.1 | $164,647 | $1,605 | ||||||
|
|
|
|
|
Gross Loan
Production |
Premium paid to
broker, net of fees collected |
Total
Acquisition Cost |
|||||||
---|---|---|---|---|---|---|---|---|---|
Costs as a percent of principal: | |||||||||
2000: | |||||||||
Third quarter | 2.6 | % | 0.5 | % | 3.1 | % | |||
|
|
|
|||||||
Second quarter | 3.0 | % | 0.5 | % | 3.5 | % | |||
|
|
|
|||||||
First quarter | 3.3 | % | 0.5 | % | 3.8 | % | |||
|
|
|
|||||||
1999: | |||||||||
Fourth quarter | 3.1 | % | 0.5 | % | 3.6 | % | |||
|
|
|
|||||||
Third quarter | 3.8 | % | 0.4 | % | 4.2 | % | |||
|
|
|
|||||||
Second quarter | 4.2 | % | 0.5 | % | 4.7 | % | |||
|
|
|
|||||||
First quarter. | 6.2 | % | 0.2 | % | 6.4 | % | |||
|
|
|
Percent of Total Originations during Quarter
(based on original principal balance) |
|||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2000
|
1999
|
||||||||||||||||||||
Collateral Location
|
Third
|
Second
|
First
|
Fourth
|
Third
|
Second
|
First
|
||||||||||||||
Florida | 12 | % | 13 | % | 14 | % | 12 | % | 15 | % | 12 | % | 15 | % | |||||||
California | 11 | 10 | 10 | 10 | 10 | 8 | 6 | ||||||||||||||
Ohio | 7 | 8 | 7 | 8 | 12 | 10 | 8 | ||||||||||||||
Michigan | 10 | 11 | 11 | 12 | 10 | 10 | 12 | ||||||||||||||
Nevada | 6 | 7 | 7 | 5 | 4 | 4 | 3 | ||||||||||||||
Arizona | 5 | 5 | 5 | 8 | 5 | 7 | 4 | ||||||||||||||
Colorado | 5 | 5 | 4 | 2 | 1 | 1 | 2 | ||||||||||||||
Tennessee | 5 | 6 | 7 | 6 | 4 | 6 | 9 | ||||||||||||||
Washington | 5 | 5 | 5 | 4 | 4 | 5 | 3 | ||||||||||||||
All other states | 34 | 30 | 30 | 33 | 35 | 37 | 38 |
Constant
prepayment rate (weighted average life) |
Static loss, net of
mortgage insurance (basis points) |
Discount
Rate |
|
---|---|---|---|
2000-1 | 27 | 1% | 15% |
2000-2 | 28 | 1% | 15% |
Table 23
Delinquencies and Defaults
(dollars in thousands)
|
||||||||||||||
2000
|
1999
|
|||||||||||||
September 30
|
June 30
|
March 31
|
December 31
|
September 30
|
June 30
|
March 31
|
||||||||
Loan servicing
portfolio |
$1,016,952 | $970,016 | $872,693 | $894,572 | $969,343 | $1,032,065 | $1,072,393 | |||||||
|
|
|
|
|
|
|
||||||||
Total defaults: | ||||||||||||||
Delinquent loans (A) | 4.90% | 4.82% | 5.58% | 6.28% | 4.75% | 5.21% | 4.12% | |||||||
|
|
|
|
|
|
|
||||||||
Loans in
foreclosure |
3.34 | 3.25 | 3.55 | 3.62 | 3.79 | 3.36 | 3.39 | |||||||
|
|
|
|
|
|
|
||||||||
Real estate owned | 1.97 | 2.07 | 2.65 | 2.71 | 2.24 | 2.20 | 1.66 | |||||||
|
|
|
|
|
|
|
(A)
|
Includes loans delinquent 30 days or greater
|
Percent Sold
to NovaStar Financial, Inc. |
Percent Sold
to Third Parties |
Percent Sold
in Securitizations |
Percent
Held in Portfolio |
Percent of
Prepayments |
Total
|
||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2000 | |||||||||||||||||||||||||||||||||||
Third quarter | | 9 | % | 60 | % | 30 | % | 1 | % | 100 | % | ||||||||||||||||||||||||
Second quarter | | 12 | 44 | 43 | 1 | 100 | |||||||||||||||||||||||||||||
First quarter | | 20 | 53 | 26 | 1 | 100 | |||||||||||||||||||||||||||||
1999 | |||||||||||||||||||||||||||||||||||
Fourth quarter | | 52 | | 46 | 2 | 100 | |||||||||||||||||||||||||||||
Third quarter | | 54 | | 44 | 2 | 100 | |||||||||||||||||||||||||||||
Second quarter | | 32 | 13 | 54 | 1 | 100 | |||||||||||||||||||||||||||||
First quarter | | 25 | 45 | 29 | 1 | 100 |
·
|
Fees from third parties increased from $706,000 during the nine months ended September 30, 1999 to $5.1 million during the nine
months ended September 30, 2000. The significant increase is due to broker fees received on loans originated through the mortgage brokers of NovaStar Home Mortgage. NovaStar Home Mortgage operates 48 mortgage broker offices in 24 states. The operations of
NovaStar Home Mortgage began in November 1999.
|
·
|
Fees received from, net of paid to, Novastar Financial, Inc. declined from $3.3 million in 1999 to $522,000 in 2000, primarily due
to the cancellation of the administrative fee agreement between NovaStar Financial and NovaStar Mortgage on April 1, 1999. A summary of the intercompany fees by type is included in the Results of Operations of NovaStar Financial, Inc.Nine
Months Ended September 30, 2000 Compared to the Nine Months Ended September 30, 1999 section of this document.
|
·
|
During the nine months ended September 30, 2000, NovaStar Mortgage recognized net gains of $9.9 million on the sale of whole loans.
Of that amount, $6.5 million was recognized in two securitization transactions that closed during the period. The remainder of the gain was primarily due to various whole loan sales to third parties for cash. During the same period of 1999,
|
|
NovaStar Mortgage recognized gains of $9.2 million on the transfer of whole loans, including $1.6 million on the NMFT 1999-1
asset-backed bond transaction.
|
·
|
General and administrative expenses increased from $16.2 million during the first nine months of 1999 to $19.6 million during the
same period of 2000. The increase is primarily attributable to various expenses incurred by the broker branches of NovaStar Home Mortgage, including the net income generated from the branches is expensed to the branch in the form of compensation. NovaStar
Home Mortgage began providing various accounting and compensation services to mortgage brokerage companies during the fourth quarter of 1999.
|
·
|
No income tax expense has been recorded during the first nine months of 2000 because of the existence of substantial net operating
loss carryforwards, which are expected to offset all of the pre-tax income in 2000.
|
For the three months ended September 30, 2000, NFI Holding recorded net income of $795,000 compared with net income of $583,000 for the same period of 1999. The following summarizes the explains the decline in net earnings for the three months ended September 30, 2000 compared with the same period of 1999: |
·
|
Fees from third parties increased from $152,000 during the three months ended September 30, 1999 to $2.8 million during the three
months ended September 30, 2000. The significant increase is due to broker fees received on loans originated through the mortgage brokers of NovaStar Home Mortgage.
|
·
|
Net gains on sales of mortgage assets increased from $3.1 million during the third quarter 1999 to $5.1 million during the third
quarter 2000. During the three months ended September 30, 2000 NovaStar Mortgage recognized a gain of $3.6 million on the first close of the 2000-2 securitization transaction. The remainder of the gain recognized in the third quarter 2000 was primarily on
mortgage loan sales to third parties. During the third quarter of 1999, all of NFI Holdings net gain on sales of mortgage assets were on mortgage loan sales to third parties.
|
·
|
Fees received from, net of paid to, NovaStar Financial, Inc. decreased from $767,000 during the third quarter of 1999 to ($859,000)
during the same period of 2000 as a result of the implementation of additional intercompany agreements July 1, 2000 as discussed under the Results of Operations of NovaStar Financial, Inc.Nine Months Ended September 30, 2000 Compared to the
Nine Months Ended September 30, 1999.
|
·
|
General and administrative expenses increased from $5.2 million during the third quarter 1999 to $7.9 million during the third
quarter 2000. The increase is primarily attributable to various expenses incurred by the broker branches of NovaStar Home Mortgage, including the net income (loss) generated from the branches is expensed to the branch in the form of compensation paid to
|
|
brokers. NovaStar Home Mortgage began providing various accounting and compensation services to mortgage brokerage companies during
the fourth quarter of 1999.
|
·
|
No income tax expense has been recorded in the third quarter of 2000 because of the existence of substantial net operating loss
carryforwards, which are expected to offset all of the pre-tax income in 2000.
|
Maturity
|
Maximum
Borrowing Limit |
Lending
Value of Collateral |
Borrowings
|
Availability
|
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Resource | ||||||||||||||||
Cash | $ | 6,039 | ||||||||||||||
Committed facilities with First Union National Bank (A): | ||||||||||||||||
Warehouse line of credit | 7/27/01 | $ | 75,000 | $ | 43,950 | $ | 21,038 | $ | 22,912 | |||||||
Secured whole loan repurchase agreement | 7/27/01 | $ | 175,000 | $ | 224 | $ | 224 | $ | | |||||||
Residual financing available | 12/17/01 | $ | 25,000 | $ | (B | ) | $ | 10,960 | $ | 14,040 | ||||||
Committed facility with GMAC/Residential Funding
Corporation (A): |
||||||||||||||||
Warehouse line of credit | 12/27/00 | $ | 50,000 | $ | 23,543 | $ | 23,543 | $ | | |||||||
|
|
|
|
|||||||||||||
Total | $ | 335,961 | $ | 81,024 | $ | 55,765 | $ | 42,991 | ||||||||
|
|
|
|
(A)
|
Value of collateral and borrowings include amounts for NovaStar Financial and NovaStar Mortgage, as they are co-borrowers under the
arrangements with First Union National Bank and GMAC/RFC.
|
(B)
|
Management estimates the value of the residuals range from $55 to $70 million and does not include the value of mortgage servicing
rights.
|
·
|
a private placement offering of preferred stock, raising net proceeds of $47 million.
|
·
|
an initial public offering of common stock, raising net proceeds of $67 million, and
|
·
|
a private offering of convertible preferred stock, raising net proceeds of $29 million.
|
effective for recognition and reclassification of collateral and for disclosures relating to securitization transactions and collateral for fiscal years ending after December 15, 2000. Disclosures about securitization and collateral accepted need not be reported for periods ending on or before December 15, 2000, for which financial statements are presented for comparative purposes. Management does not expect the adoption of SFAS No. 140 to have a material impact on the financial statements of NovaStar Financial.
In addition, Note 1 of the consolidated financial statements contained in the annual report on Form 10-K for the fiscal year ended December 31, 1999 describes certain recently issued accounting pronouncements. Management believes the implementation of these pronouncements and others that have gone into effect since the date of these reports will not have a material impact on the consolidated financial statements.
(1)
|
Maintain the net interest margin between assets and liabilities, and
|
(2) |
Diminish the effect of changes in interest rate levels on the market value of NovaStar Financial.
|
In its assessment of the interest sensitivity and as an indication of exposure to interest rate risk, management relies on models of financial information in a variety of interest rate scenarios. Using these models, the fair value and interest rate sensitivity of each financial instrument, or groups of similar instruments is estimated, and then aggregated to form a comprehensive picture of the risk characteristics of the balance sheet. The risks are analyzed on both an income and market value basis.
Basis Point Increase
(Decrease) in Interest Rate(A) |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
As of September 30, 2000
|
(100)
|
Base
|
100
|
|||||||||
Income from: | ||||||||||||
Assets | $ | 84,379 | $ | 86,755 | $ | 88,761 | ||||||
Liabilities (B) | 64,589 | 72,375 | 80,318 | |||||||||
Interest rate agreements | (1,882 | ) | 221 | 3,961 | ||||||||
|
|
|
||||||||||
Net spread income | $ | 17,908 | $ | 14,601 | $ | 12,404 | ||||||
|
|
|
||||||||||
Cumulative change in income from base (C) | $ | 3,307 | | $ | (2,197 | ) | ||||||
|
|
|
||||||||||
Percent change from base spread income (D) | 22.6 | % | | (15.0 | )% | |||||||
|
|
|
||||||||||
Percent change of capital(E) | 3.3 | % | | (2.2 | )% | |||||||
|
|
|
||||||||||
As of December 31, 1999
|
(100)
|
Base
|
100
|
|||||||||
Income from: | ||||||||||||
Assets | $ | 61,610 | $ | 64,419 | $ | 66,954 | ||||||
Liabilities (B) | 42,173 | 47,803 | 53,442 | |||||||||
Interest rate agreements | (1,379 | ) | (1,379 | ) | 1,122 | |||||||
|
|
|
||||||||||
Net spread income | $ | 18,058 | $ | 5,237 | $ | 14,634 | ||||||
|
|
|
||||||||||
Cumulative change in income from base (C) | $ | 2,821 | | $ | (603 | ) | ||||||
|
|
|
||||||||||
Percent change from base spread income (D) | 18.5 | % | | (4.0 | )% | |||||||
|
|
|
||||||||||
Percent change of capital(E) | 2.8 | % | | (0.6 | )% | |||||||
|
|
|
(A)
|
Income of asset, liability or interest rate agreement in a parallel shift in the yield curve, up and down 1%
|
(B)
|
Includes deal expenses, loan premium amortization, mortgage insurance premiums and provisions for credit losses.
|
(C)
|
Total change in estimated spread income, in dollars, from base. Base is the estimated spread income as of
September 30, 2000 and December 31, 1999.
|
(D)
|
Total change in estimated spread income, as a percent, from base.
|
(E)
|
Total change in estimated spread income as a percent of total stockholders equity as of September 30, 2000 and December 31,
1999.
|
Basis Point Increase
(Decrease) in Interest Rate(A) |
||||||
---|---|---|---|---|---|---|
As of September 30, 2000
|
(100)
|
100
|
||||
Change in market values of: | ||||||
Assets | $ | 12,254 | $ | (14,627 | ) | |
Liabilities | (1,820 | ) | 2,020 | |||
Interest rate agreements | (2,611 | ) | 5,522 | |||
|
|
|||||
Cumulative change in market value | $ | 7,823 | $ | (7,085 | ) | |
|
|
|||||
Percent change of market value portfolio equity (B) | 8.4 | % | (7.6 | )% | ||
|
|
|||||
As of December 31, 1999 | ||||||
|
||||||
Change in market values of: | ||||||
Assets | $ | 9,112 | $ | (11,340 | ) | |
Liabilities | (2,068 | ) | 2,376 | |||
Interest rate agreements | (2,809 | ) | 4,723 | |||
|
|
|||||
Cumulative change in market value | $ | 4,235 | $ | (4,241 | ) | |
|
|
|||||
Percent change of market value portfolio equity (B) | 4.4 | % | (4.4 | )% | ||
|
|
(A)
|
Change in market value of assets, liabilities or interest rate agreements in a parallel shift in the yield curve, up and down 1%.
|
(B)
|
Total change in estimated market value as a percent of market value portfolio equity as of September 30, 2000 and December 31, 1999.
|
·
|
Refinancing incentives (the interest rate of the mortgage compared with the current mortgage rates available to the borrower)
|
·
|
Program Type
|
·
|
Borrower credit grades
|
·
|
Loan Term
|
·
|
Loan-to-value ratios
|
·
|
Loan size
|
·
|
Prepayment penalties (length and type)
|
·
|
Estimated closing costs
|
prepayment speed ranges from 20% to 40% and depends on the characteristics of the loan which include type of product (ARM or fixed rate), note rate, credit grade, LTV, gross margin, weighted average maturity and lifetime and periodic caps and floors. This prepayment vector is also multiplied by a factor of 55% to 70% depending on the length and type of penalty periods when a prepayment penalty is in effect on the loan. Prepayment assumptions are also multiplied by a factor of greater than 100% during periods around rate resets and prepayment penalty expirations. These assumptions change with levels of interest rates. The actual historical speeds experienced on NovaStar Financials loans shown in Table 5 are weighted average speeds of all loans in each deal.
As shown in Table 5, actual prepayment rates on loans that have been held in portfolio for shorter periods are slower than long term prepayment rates used in the interest rate sensitivity analysis. This table also indicates that as pools of loans held in portfolio season, the actual prepayment rates are more consistent with the long term prepayment rates used in the interest sensitivity analysis.
PART II. OTHER INFORMATION
Exhibit No.
|
Description of Document
|
||
---|---|---|---|
3.1* | Articles of Amendment and Restatement of the Registrant | ||
3.2* | Articles Supplementary of the Registrant | ||
3.3* | Bylaws of the Registrant | ||
3.3a***** | Amendment to Bylaws of the Registrant, adopted February 2, 2000 | ||
3.4**** | Articles Supplementary of NovaStar Financial, Inc. dated as of March 24, 1999, as filed with the Maryland Department of Assessment and Taxation. | ||
4.1* | Specimen Common Stock Certificate | ||
4.2* | Specimen Warrant Certificate | ||
4.3**** | Specimen certificate for Preferred Stock | ||
10.1* | Purchase Terms Agreement, dated December 6, 1996, between the Registrant and the Placement Agent. | ||
10.2* | Registration Rights Agreement, dated December 9, 1996, between the Registrant and the Placement Agent. | ||
10.3* | Warrant Agreement, dated December 9, 1996, between the Registrant and the Holders of the Warrants Acting Through the Registrant as the Initial Warrant Agent. | ||
10.4* | Founders Registration Rights Agreement, dated December 9, 1996, between the Registrant and the original holders of Common Stock of the Registrant. | ||
10.5* | Commitment Letter dated October 3, 1996 from General Electric Capital Group accepted by the Registrant. | ||
10.6* | Form of Master Repurchase Agreement for mortgage loan financing |
10.7* | Mortgage Loan Warehousing Agreement dated as of November 24, 1997 between First Union National Bank of North Carolina, NovaStar Mortgage, Inc. and the Registrant. | ||
10.7a*** | Amendment No. 6 dated as of February 12, 1999 to Mortgage Loan Warehousing Agreement dated as of February 20, 1997 between First Union National Bank and Registrant. | ||
10.7b***** | Amendment No. 7 dated as of December 17, 1999 to Mortgage Loan Warehousing Agreement dated as of February 20, 1997 between First Union National Bank and Registrant. | ||
10.7c | Amendment No. 10 dated as of July 28, 2000 to Mortgage Loan Warehousing Agreement dated as of February 20, 1997 between First Union National Bank and Registrant. | ||
10.8* | Employment Agreement, dated September 30, 1996, between the Registrant and Scott F. Hartman. | ||
10.9* | Employment Agreement, dated September 30, 1996, between the Registrant and W. Lance Anderson. | ||
10.10* | Promissory Note by Scott F. Hartman to the Registrant, dated December 9, 1996. | ||
10.11* | Promissory Note by W. Lance Anderson to the Registrant, dated December 9, 1996. | ||
10.12* | Stock Pledge Agreement between Scott F. Hartman and the Registrant, dated December 9, 1996. | ||
10.13* | Stock Pledge Agreement between W. Lance Anderson and the Registrant, dated December 9, 1996. | ||
10.14* | 1996 Executive and Non-Employee Director Stock Option Plan, as last amended December 6, 1996. | ||
10.15* | Administrative Services Outsourcing Agreement, dated June 30, 1997, between the Registrant and NovaStar Mortgage, Inc. | ||
10.16* | Mortgage Loan Sale and Purchase Agreement, dated as of June 30, 1997, between the Registrant and NovaStar Mortgage, Inc. | ||
10.17* | Flow Loan Subservicing Agreement, dated as of June 30, 1997, between the |
Registrant and NovaStar Mortgage, Inc. | ||||||
10.18* | Certificate of Incorporation of NFI Holding Corporation. | |||||
10.19* | Agreement of Shareholders of Common Stock NFI Holding Corporation. | |||||
10.20** | Term Loan and Security Agreement between NovaStar Certificates Financing Corporation and Reliance Funding Corporation dated as of October 13, 1998 and related agreements including Guaranty of even date by Registrant. | |||||
10.21*** | Addendum to Master Repurchase Agreement dated as of February 12, 1999 among NovaStar Financial, Inc., NovaStar Capital, Inc. and NovaStar Mortgage, Inc., as sellers, and First Union National Bank, as buyer. | |||||
10.22*** | Form of Addendum to Master Repurchase Agreement dated as of February 12, 1999 between Registrants taxable affiliate, as seller, and First Union Bank, as buyer, with respect to the residual interest on certain asset-backed bonds. | |||||
10.23*** | Warrant Agreement dated as of February 12, 1999 between the Registrant and First Union National Bank. | |||||
10.24**** | Warrant Agreement, dated as of March 10, 1999, by and between NovaStar Financial, Inc. and Residential Funding Corporation , and related Guaranty Warrant, Tag Along Warrant and Registration Rights Agreement as filed with April 6, 1999 8-K of NovaStar Financial, Inc. | |||||
10.25**** | Registration Rights Agreement, dated March 25, 1999 among NovaStar Financial and Stifel, Nicolaus & Company, Incorporated. | |||||
10.26***** | Warehousing Credit and Security Agreement, dated as of December 29, 1999, between NovaStar Financial, Inc., NovaStar Mortgage, Inc., NovaStar Capital, Inc. and Residential Funding Corporation. | |||||
10.27 | Mortgage Loan Sale and Securitization Transaction Administration Personnel and Facilities Agreement, dated as of July 1, 2000 between the Registrant and NovaStar Mortgage, Inc. | |||||
10.28 | Lending and Credit Support Agreement, dated as of July 1, 2000 between the Registrant and NovaStar Mortgage, Inc. | |||||
10.29 | Software License Agreement, dated as of July 1, 2000 between the Registrant and |
NovaStar Mortgage, Inc. | |||||||||
10.30 | Amendment dated as of July 28, 2000 to the Master Repurchase Agreement, dated as of February 12, 1999 between First Union National Bank and the Registrant. | ||||||||
11.1 | Statement regarding computation of per share earnings. | ||||||||
21.1 | Subsidiaries of the Registrant | ||||||||
27.1 | Financial Data Schedule | ||||||||
|
|||||||||
* | Incorporated by reference to the correspondingly numbered exhibit to the Registration Statement on Form S-11 (373-32327) filed by the Registrant with the SEC on July 29 1997, as amended. | ||||||||
** | Incorporated by reference to the correspondingly numbered exhibit to Form 8-K filed by the Registrant with the SEC on December 22, 1998. | ||||||||
*** | Incorporated by reference to the correspondingly numbered exhibit to Form 8-K filed by the Registrant with the SEC on February 23, 1999. | ||||||||
**** | Incorporated by reference to the correspondingly numbered exhibit to Form 8-K filed by the Registrant with the SEC on April 5, 1999. | ||||||||
*****
|
Incorporated by reference to the correspondingly numbered exhibit to Annual Report on Form 10K filed by the Registrant with the SEC
on March 20, 2000.
|
||||||||
NovaStar Financial has filed the following Form 8-Ks: | |||||||||
· | NovaStar Financial filed a Form 8-K on September 29, 2000 regarding NovaStar Financial, Inc.s expansion of its stock repurchase program and the repurchase of 9.7% of its outstanding common stock from GE Capital Equity in a negotiated bulk transaction. | ||||||||
DATE: November 13, 2000 | /s/ Scott F. Hartman |
|
Scott F. Hartman
|
Chairman of the Board, Secretary and
|
Chief Executive Officer
|
(Principal Executive Officer)
|
DATE: November 13, 2000 | /s/ Rodney E. Schwatken |
|
Rodney E. Schwatken
|
Vice President, Treasurer and Controller (Principal Accounting Officer)
|
Exhibit 10.7c
TENTH AMENDMENT TO MORTGAGE LOAN
WAREHOUSING AGREEMENT
THIS TENTH AMENDMENT TO MORTGAGE LOAN WAREHOUSING AGREEMENT (the "Amendment") is made as of the 28th day of July, 2000, by and between NOVASTAR MORTGAGE, INC., a Virginia corporation ("NovaStar Mortgage"), NOVASTAR FINANCIAL, INC., a Maryland corporation ("NovaStar Financial"), NOVASTAR CAPITAL, INC., a Delaware corporation ("NovaStar Capital" and, together with NovaStar Mortgage, and NovaStar Financial, the "Companies") and FIRST UNION NATIONAL BANK (formerly known as First Union National Bank of North Carolina), a national banking association (the "Lender").
WHEREAS, the Companies and the Lender are parties to a Mortgage Loan Warehousing Agreement dated as of November 24, 1997, as amended by a First Amendment to Mortgage Loan Warehousing Agreement dated as of February 19, 1998, by a Second Amendment to Mortgage Loan Warehousing Agreement dated as of April 30, 1998, by a Third Amendment to Mortgage Loan Warehousing Agreement dated as of September 3, 1998, by a Fourth Amendment to and Waiver of Mortgage Loan Warehousing Agreement dated as of October 15, 1998, by a Fifth Amendment to Mortgage Loan Warehousing Agreement dated as of November 30, 1998, by a Sixth Amendment to Mortgage Loan Warehousing Agreement dated as of February 12, 1999, by a Seventh Amendment to Mortgage Loan Warehousing Agreement dated as of December 17, 1999, by an Eighth Amendment to Mortgage Loan Warehousing Agreement dated as of May 30, 2000 and by a Ninth Amendment to Mortgage Loan Warehousing Agreement dated as of June 30, 2000 (as so amended, the "Credit Agreement"); and
WHEREAS, the parties wish to amend the Credit Agreement as set forth below; and
WHEREAS, subject to and upon the terms and conditions herein set forth, the Lender is willing to continue to make available to the Companies the credit facilities provided for in the Credit Agreement; and
WHEREAS, a specific condition to the willingness of the Lender to continue to make available to the Companies the credit facilities provided for in the Credit Agreement is the re-affirmation by the Guarantor of the Guaranty; and
WHEREAS, the Guarantor will derive a material benefit from the continued availability to the Companies of the credit facilities provided for in the Credit Agreement, and therefore the Guarantor is willing to reaffirm the Guaranty;
NOW, THEREFORE, in consideration of the premises and agreements contained herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties hereto hereby agree as follows:
a. The definition of the term "Maturity Date" contained in Section 10 of the Credit Agreement is deleted in its entirety and the following paragraph is substituted in lieu thereof:
3. This Amendment shall become effective as of the date hereof, provided that the Lender shall have received by such date the following items:
a. A copy of this Amendment executed by each of the Companies, the Guarantor and the Lender (whether such parties have signed the same or different copies);
b. A reaffirmation of the Guaranty (the "Reaffirmation") executed by the Guarantor in favor of the Lender;
c. Resolutions of each of the Companies and the Guarantor authorizing the execution of this Amendment and the Reaffirmation, respectively; and
d. A certificate of even date herewith signed by the President, any Vice President or the Treasurer of each of the Companies and the Guarantor certifying that (i) the articles, bylaws and resolutions of each of the Companies and the Guarantor previously delivered to Lender remain in full force and effect except as provided therein, (ii) each of the Companies and the Guarantor remains in good standing, (iii) all representations and warranties of each of the Companies and the Guarantor previously made to Lender remain true, complete and accurate, and (iv) no Event of Default or Potential Default has occurred and is continuing.
4. This Amendment is limited, and except as set forth herein, shall not constitute the modification, acceptance or waiver of any provision of the Credit Agreement, or any other document or instrument entered into in connection therewith.
5. This Amendment may be executed in any number of counterparts by the different parties hereto on separate counterparts, each of which counterparts when executed and delivered shall be an original, but all of which together shall constitute one in the same instrument. A complete set of counterparts shall be lodged with each of the Companies and the Lender.
6. This Amendment and the rights and obligations of the parties hereunder shall be construed in accordance with and governed by the laws of the State of North Carolina.
7. From and after the date hereof, all references in the Credit Agreement and any other document or instrument entered into in connection therewith, to the Credit Agreement shall be named to be references to the Credit Agreement as amended hereby.
8. The Guarantor joins in the execution and delivery of this Amendment to acknowledge and consent to the terms hereof and hereby reaffirms its obligations under the Guaranty.
9. THE LENDER, THE GUARANTOR AND THE COMPANIES EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AMENDMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY RELATING HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER TO ENTER INTO THIS AGREEMENT.
[THE REMAINDER OF THIS PAGE WAS LEFT BLANK INTENTIONALLY]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the day and year first above written.
NOVASTAR MORTGAGE, INC.,
a Virginia corporation
By: ___________________________________
Name: Rodney E. Schwatken
Title: Treasurer
NOVASTAR FINANCIAL, INC.,
a Maryland corporation
By: ___________________________________
Name: Rodney E. Schwatken
Title: Treasurer
NOVASTAR CAPITAL, INC.,
a Delaware corporation
By: ___________________________________
Name: Rodney E. Schwatken
Title: Treasurer
FIRST UNION NATIONAL BANK
(formerly known as First Union National
Bank of North Carolina), a national
banking association
By: ___________________________________
Name: _________________________________
Title: ________________________________
GUARANTOR:
NFI HOLDING CORPORATION,
a Delaware corporation
By: ___________________________________
Name: Rodney E. Schwatken
Title: Treasurer
Exhibit 10.27
MORTGAGE LOAN SALE AND SECURITIZATION
TRANSACTION, ADMINISTRATIVE PERSONNEL
AND FACILITIES AGREEMENT
Dated as of July 1, 2000
NOVASTAR FINANCIAL, INC.
and
NFI HOLDING CORPORATION
TABLE OF CONTENTS
Page Section 1. Transaction Fee............................................ 1 Section 2. Administrative Personnel and Facilities.................... 1 Section 3. Limits of Company Responsibility........................... 2 Section 4. Terms; Termination......................................... 2 Section 5. Action Upon Termination.................................... 2 Section 6. Assignment................................................. 2 Section 7. Notices.................................................... 2 Section 8. No Joint Venture........................................... 3 Section 9. Amendments................................................. 3 Section 10. Severability............................................... 3 Section 11. Entire Agreement........................................... 3 Section 12. Waiver..................................................... 3 Section 13. Governing Law.............................................. 3 Section 14. Headings and Cross References.............................. 3 Section 15. Execution in Counterparts.................................. 3 |
MORTGAGE LOAN SALE AND SECURTIZATION
TRANSACTION, ADMINISTRATIVE PERSONNEL
AND FACILITIES AGREEMENT
THIS AGREEMENT, made effective as of the 1st day of July, 2000 (the "Effective Date"), is by and between NovaStar Financial, Inc., Inc., a Maryland corporation ("REIT"), and NFI Holding Corporation, a Delaware corporation ("NFI Holding"). References to REIT or NFI Holding herein shall include any wholly- owned subsidiaries of REIT or NFI Holding from time to time, unless the context otherwise requires.
BACKGROUND
A. REIT owns all of the preferred stock of NFI Holding;
B. NFI Holding desires that REIT share with NFI Holding, and REIT desires that NFI Holding share with REIT, certain administrative personnel and facilities in connection with the sale and securitization of mortgage loans.
NOW, THEREFORE, in consideration of the mutual agreements herein set forth, the parties hereto agree as follows:
(a) NFI Holding agrees to pay REIT a transaction fee of 0.25% of the aggregate unpaid balance of the mortgage loans subject to sale or securitization on the closing date of the sale or securitization.
(a) REIT and NFI Holding agree to share office space and equipment (including computer equipment), and the services of administrative and other personnel, and items ancillary to the foregoing, as each may require for mortgage loan securitizations and for third-party whole loan sale transactions. REIT and NFI Holding shall monitor the on-going use of facilities and personnel by REIT and NFI Holding, respectively, and within 15 days after the end of each fiscal quarter shall agree upon a written allocation (by time used or other appropriate measure) of facilities used by each and a list of personnel used by each setting forth a percentage allocation of time devoted by each person to each party.
(b) REIT and NFI Holding shall pay to each of their respective share (as determined by their mutual agreement) of the following expenses that relate to the provision of any personnel or facilities pursuant to this Section 1:
(i) rent (including related local property taxes and property insurance costs), telephone, utilities, office furniture, equipment and machinery (including computers, to the extent utilized) and other office expenses not specifically allocated to the activities of REIT or NFI Holding; and
(ii) personnel expense (including salary, bonuses, benefits and taxes); and
(iii) other general overhead expenses related to the foregoing.
Each party shall be responsible for all third-party fees and expenses billed separately to it, such as accounting and legal fees and expenses.
(a) Agree with the other party on written allocations of facilities and personnel covering the period following the date of the last quarterly allocation agreed upon to the date of termination; and
(b) Based on such allocations, pay over to the other party any money due for the account of such party pursuant to this Agreement or otherwise.
REIT: NovaStar Financial, Inc.
1901 W. 47/th/ Place, Suite 105 Westwood, KS 66205 Attn: Rodney E. Schwatken NFI Holding: NFI Holding Company 1901 W. 47/th/ Place, Suite 105 Westwood, KS 66205 Attn: Rodney E. Schwatken |
Either party may at any time give notice in writing to the other party of a change of its address for the purpose of this Section 10.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers as of the day and year first above written.
NOVATAR FINANCIAL, INC.
By: _____________________________
Name: Scott F. Hartman
Title: Chief Executive Officer
NFI HOLDING CORPORATION
By: _____________________________
Name: W. Lance Anderson
Title: President
Exhibit 10.28
LENDING AND CREDIT SUPPORT AGREEMENT
July 1, 2000
NFI HOLDING CORPORATION
NOVASTAR CAPITAL, INC.
NOVASTAR MORTGAGE, INC.
as Borrowers
and
NOVASTAR FINANCIAL, INC.
as Lender
LENDING AND CREDIT SUPPORT AGREEMENT
LENDING AND CREDIT SUPPORT AGREEMENT, dated as of July 1, 2000, between NFI HOLDING CORPORATION, a Delaware corporation ("Holding"), NOVASTAR CAPITAL, INC., a Delaware corporation ("Capital"), NOVASTAR MORTGAGE, INC., a Virginia corporation ("Mortgage"), and such other subsidiaries of Holding as may from time to time execute a copy of this Agreement and the Note (collectively, the "Borrowers" and each individually, a "Borrower") and NOVASTAR FINANCIAL, INC., a Maryland corporation (the "Lender").
RECITALS
The Borrowers have requested that the Lender from time to time consider making revolving credit loans to them for working capital purposes or to finance certain residential and/or commercial mortgage loans owned or to be acquired by the Borrowers, and the Lender is prepared to consider making such loans upon the terms and conditions hereof. The Borrowers have further requested that the Lender from time to time consider lending credit support to the Borrowers to facilitate Borrowers' financings from third-party lenders and Borrowers' hedging arrangements with counterparties. Such credit support may be provided by the Lender by guarantying a Borrower's borrowings from third-party lenders or by entering into co-borrowing or co-obligor arrangements with a Borrower. Furthermore, credit support may be provided by the Lender by guarantying the performance under loan sale agreements, including sales of loans by a Borrower in an asset-securitization transaction executed by a Borrower. In addition, credit support may be provided by the Lender to the mortgage servicing operations of the Borrowers. The Lender is prepared to consider lending such credit support upon the terms and conditions hereof. Accordingly, the parties hereto agree as follows:
"Adjusted Net Worth" shall mean at any date the sum of (1) GAAP Net Worth, plus (2) the amount of reserves of Holding and its consolidated Subsidiaries, if any, for credit losses (as reflected on the financial statements referred to in 6.01 below), minus (3) the amount of the unrealized gains on debt securities (as defined in FASB 115) of Holding and its consolidated Subsidiaries, if any, plus (4) the amount of unrealized losses on debt securities (as defined in FASB 115) of Holding and its consolidated Subsidiaries, if any, plus (5) the amount of Loan Indebtedness, minus (6) the excess of the amount of assets securing nonrecourse indebtedness over the amount of such nonrecourse indebtedness.
"Affiliate" means, (i) with respect to Lender, NAC, NCFC, and NovaStar Capital Access Corporation, and any other wholly-owned subsidiaries in corporate, trust or other form, whether owned directly or indirectly, and (ii) with respect to the Borrowers, any affiliate of any Borrower as such term is defined in the United States Bankruptcy Code in effect from time to time.
"Agreement" shall mean this Lending and Credit Support Agreement, as may be amended, supplemented or otherwise modified from time to time.
"Applicable Margin" shall mean 1.75% unless a different percentage shall be indicated in the related Loan Commitment pursuant to Section 2.03(b) hereof.
"Bankruptcy Code" shall mean the United States Bankruptcy Code of 1978, as amended from time to time.
"Borrower" and "Borrowers" shall have the meanings provided in the heading hereof.
"Business Day" shall mean any day other than (i) a Saturday or Sunday, or
(ii) a day in which the New York Stock Exchange or the Federal Reserve Bank of
New York is authorized or obligated by law or executive order to be closed.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time to time.
"Commitment Amount" shall be the maximum aggregate outstanding principal amount of the Loans as specified in Section 4.02 hereof.
"Credit Support" shall have the meaning specified in Section 2.B. hereof.
"Credit Support Commitment" shall mean a commitment issued pursuant to
Section 2.B. hereof.
"Credit Support Documents" shall mean any form of guarantee or co-borrowing
or co-obligor agreement and related documentation entered into pursuant to
Section 2.B.
"Default" shall mean an Event of Default or an event that with notice or lapse of time or both would become an Event of Default.
"Dollars" and "$" shall mean lawful money of the United States of America.
"Effective Date" shall mean the date set forth in the first paragraph hereof.
"Event of Default" shall have the meaning assigned thereto in Section 7 hereof.
"Funding Date" shall mean the date on which a Loan is made hereunder or a Credit Support becomes effective hereunder.
"GAAP" shall mean generally accepted accounting principles in effect in the United States.
"GAAP Net Worth" shall mean the excess of total assets of Holding and its consolidated Subsidiaries, if any, over Total Liabilities of Holding determined in accordance with GAAP.
"Governmental Authority" shall mean any nation or government, any state or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any court or arbitrator having jurisdiction over a Borrower, any of its Subsidiaries or any of its properties.
"Interest Period" shall mean with respect to any Loan:
(a) initially, the period commencing on the Funding Date, with respect to such Loan and ending one month thereafter; and
(b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Loan and ending one month thereafter.
(i) if any Interest Period pertaining to a Loan would otherwise end on a day which is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;
(ii) any Interest Period that would otherwise extend beyond the Termination Date shall end on the Termination Date; and
(iii) any Interest Period pertaining to a Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the Last Business Day of a calendar month.
"Lender" shall have the meaning assigned thereto in the heading hereto.
"LIBOR" shall mean the arithmetic mean of the London interbank offered rates for one-month U.S. dollar deposits in the London market based on quotations at four major banks selected by the Lender, which rates appear in the display designated as page "LIUS01M" on the Bloomberg Financial Markets Commodities News (or such other comparable displaying LIBOR quotations on the Bloomberg service) as of 11:00 a.m., London Time, on the date of determination. LIBOR shall be determined separately for each Interest Period.
"Lien" shall mean any mortgage, lien, pledge, charge, security interest or similar encumbrance.
"Loan" shall have the meaning specified in Section 2.A. hereof.
"Loan Commitment" shall mean a commitment issued pursuant to Section 2.B. hereof.
"Loan Documents" shall mean, collectively, this Agreement and the Note.
"Loan Indebtedness" shall mean, at any date, the principal amount of Loans outstanding on such date.
"Note" shall mean the promissory note provided for by Section 2.02(a) hereof for Loans and any promissory note delivered in substitution or exchange therefor, in each case as the same shall be modified and supplemented and in effect from time to time.
"Person" shall mean any individual, corporation, company, voluntary association, partnership, joint venture, limited liability company, trust, unincorporated association or government (or any agency, instrumentality or political subdivision thereof).
"Post-Default Rate" shall mean, in respect of any principal of any Loan or any other amount under this Agreement, the Note or any other Loan Document that is not paid when due to the Lender
"Regulations G, T, U and X" shall mean Regulations G, T, U and X of the Board of Governors of the Federal Reserve System (or any successor), as the same may be modified and supplemented and in effect from time to time.
"Requirements of Law" shall mean, as to any person, the Articles or Certificate of Incorporation and Bylaws or other organization or governing documents of such Person, and any law, treaty, rule or regulation, or a final and binding determination of an arbitration or a determination of a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such person or any of its property is subject.
"Responsible Officer" shall mean, as to any Person, the chief executive officer or, with respect to financial matters, the chief financial officer of such Person.
"Subsidiary" shall mean, with respect to any Person, any corporation, partnership or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership or other entity (irrespective of whether or not at the time securities or other ownership interests of any other class or classes of such corporation, partnership or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person.
"Termination Date" shall mean July 1, 2001 or such earlier date on which this Agreement shall terminate in accordance with the provisions hereof or by operation of law.
"Total Indebtedness" shall mean total indebtedness for borrowed monies of Holding and its consolidated Subsidiaries, if any, determined in accordance with GAAP, less the amount of any nonrecourse indebtedness of Holding and its consolidated Subsidiaries.
"Total Liabilities" shall mean total liabilities of Holding and its consolidated Subsidiaries, if any, determined in accordance with GAAP.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in effect on the date hereof in the State of Kansas; provided that if by reason of mandatory provisions of law, the perfection or the effect of perfection or non- perfection of the security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than Kansas, "Uniform Commercial Code" shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection.
(a) The Lender agrees to consider from time to time each Borrower's requests that the Lender make, on the terms and conditions of this Agreement, loans (individually, a "Loan"; collectively, the "Loans") to the Borrower in Dollars, from and including the Effective Date to and including the Termination Date. This Agreement is not a commitment to lend but rather sets forth the procedures to be used in connection with periodic requests for Loans. Each Borrower hereby acknowledges that the Lender is under no obligation to agree to make, or to make, any Loan pursuant to this Agreement.
(b) Subject to the terms and conditions of this Agreement, during such period each Borrower may borrow, repay and reborrow hereunder.
(c) In no event shall a Loan be made when any Default or Event of Default has occurred and is continuing.
(a) The Loans made by the Lender shall be evidenced by a single promissory note of the Borrowers substantially in the form of Exhibit A hereto (the "Note"), dated the date hereof, payable to the Lender in a principal amount equal to the amount of the Loans outstanding from time to time. The Lender shall have the right to have its Note subdivided, by exchange for promissory notes of lesser denominations or otherwise.
(c) The Borrowers shall be jointly and severally liable for all loans made hereunder.
(a) Each Borrower may request a borrowing hereunder, on any Business Day during the period from and including the Effective Date to and including the Termination Date, by delivering to the Lender an irrevocable written request for borrowing, which request must be countersigned by Holding if Holding is not the requesting Borrower and must be received by the Lender prior to 10:00 a.m. (Central time) at least one (1) Business Day prior to the requested Funding Date unless otherwise agreed by the Lender. Such request for borrowing shall specify the requested Funding Date.
(b) Upon the Borrower's request for a borrowing, the Lender may, at its option, offer to make a Loan to the Borrower by confirming to the Borrower (telephonically or via electronic communication) (i) the Funding Date, (ii) the amount of the Loan to be made on such Funding Date, and (iii) the Applicable Margin, and may contain additional terms or conditions which may or may
not be inconsistent with this Agreement (the "Loan Commitment"). In the event there is a conflict between the terms of this Agreement and the terms of the Loan Commitment, the terms of the Loan Commitment shall control. Each Loan Commitment, together with this Agreement, shall be conclusive evidence of the terms of the Loan(s) covered thereby.
(c) The Borrower shall, no later than 3:00 p.m. (Central time) on the Business Day that it receives a Loan Commitment from the Lender, either:
(i) decline the offer contained in such Loan Commitment by notifying the Lender by telephone or electronic communication to that effect; or
(ii) accept such offer contained in such Loan Commitment by notifying the Lender by telephone or electronic communication to that effect.
Notwithstanding the foregoing, the Borrower shall be deemed to have accepted such offer, and such Loan Commitment, together with this Agreement, shall be conclusive evidence of the terms of the Loan covered thereby, unless the Borrower has declined such offer by the time set forth above.
Subject to Section 4 hereof, each loan will be made available to the Borrower by the Lender transferring, via wire transfer, to an escrow account or account maintained by the Borrower prior to 3:00 p.m., (Central time), on the Funding Date, the aggregate amount of such borrowing in funds immediately available to the Borrower.
(a) Each Borrower hereby promises to repay in full the outstanding principal amount of each Loan no later than the date (the "Stated Maturity") which is twelve (12) months after the Funding Date of such Loan.
(a) The Lender agrees to consider from time to time each Borrower's requests that the Lender issue credit support of loans made to the Borrower by third parties or of mortgage sale and/or servicing agreements or hedging or other arrangements to be entered into by the Borrower with counterparties on the terms and conditions of this Agreement from and including the Effective Date to and including the Termination Date. Such credit support could be in the form of guarantees by the Lender or co- borrowing or co-obligor arrangements with the Borrower in which the Lender is jointly and severally liable for the Borrower's obligations thereunder (individually, a "Credit Support"; collectively, the "Credit Supports"). This Agreement is not a commitment to enter into Credit Supports but rather sets forth the procedures to be used in connection with periodic requests for Credit Supports. The Borrowers hereby acknowledge that the Lender is under no obligation to agree to enter into, or to enter into, any Credit Support pursuant to this Agreement.
(b) Subject to the terms and conditions of this Agreement, during such period each Borrower may borrow, repay and reborrow amounts from third parties covered by Credit Supports issued hereunder.
(c) In no event shall Credit Support Documents be entered into when any Default or Event of Default has occurred and is continuing.
(a) Each Borrower may request Credit Support hereunder, on any Business Day during the period from and including the Effective Date to and including the Termination Date, by delivering to the Lender, an irrevocable written request for Credit Support, which request must be received by the Lender prior to 10:00 a.m. (Central time), at least one (1) Business Day prior to the requested Funding Date unless otherwise agreed by the Lender. Such request for Credit Support shall specify the requested Funding Date.
(b) Upon the Borrower's request for Credit Support, the Lender may, at its option, offer to enter into Credit Support Documents in favor of the Borrower by confirming to the Borrower (telephonically or via electronic communication) (i) the Funding Date, (ii) the amount of the Credit Support to be entered into on such Funding Date, (iii) the Applicable Margin, (iv) Credit Support Fee and may contain additional terms and conditions which may or may not be inconsistent with this Agreement (the "Credit Support Commitment"). In the event there is a conflict between the terms of this Agreement and the terms of the Credit Support Commitment, the terms of the Credit Support Commitment shall control. Each Credit Support Commitment, together with this Agreement, shall be conclusive evidence of the terms of the Credit Support(s) covered thereby.
(c) The Borrower shall, no later than 3:00 p.m. (Central time) on the Business Day that it receives a Credit Support Commitment from the Lender, either:
(i) decline the offer contained in such Credit Support Commitment by notifying the Lender by telephone or electronic communication to that effect; or
(ii) accept such offer contained in such Credit Support Commitment by notifying the Lender by telephone or electronic communication to that effect.
Notwithstanding the foregoing, the Borrower shall be deemed to have accepted such offer, and such Credit Support Commitment, together with this Agreement, shall be conclusive evidence of the terms of the Credit Support covered thereby, unless the Borrower has declined such offer by the time set forth above.
(a) The amount of any such expenditure, whether used to repay principal, interest or other amounts due to the third-party lender, shall be treated as principal of a Loan, the Stated Maturity of which is the first Business Day following the date of the expenditure; and
(b) Interest will be payable on such constructive Loan at the Post-Default
Rate and on the same terms as if such Loan was in default with respect to
repayment of principal due on the Stated Maturity thereof as set forth in
(a) above.
(a) Except to the extent otherwise provided herein, all payments of principal, interest and other amounts to be made by the Borrowers under this Agreement and the Note, shall be made in Dollars, in immediately available funds, without deduction, set-off or counterclaim, to the Lender at the account maintained by the Lender and specified in writing to the Borrower, not later than 1:00 p.m., (Central time), on the date on which such payment shall become due (each such payment made after such time on such due date to be deemed to have been made on the next succeeding Business Day). The Borrowers acknowledge that they have no rights of withdrawal from the foregoing account.
(b) Except to the extent otherwise expressly provided herein, if the due date of any payment under this Agreement or the Note would otherwise fall on a day that is not a Business Day, such date shall be extended to the next succeeding Business Day, and interest shall be payable for any principal so extended for the period of such extension.
In addition, the Borrowers shall have taken such other action as the Lender shall have requested in order to perfect the security interests created pursuant to the Agreement; and
(a) no Default or Event of Default shall have occurred and be continuing;
(b) (i) both immediately prior to the making of such Loan or issuance of such Credit Support and also after giving effect thereto and to the intended use thereof, the representations and warranties made by each Borrower in Section 5 hereof, and in each of the other Loan Documents, shall be true and complete on and as of the date of the making of such Loan or issuance of such Credit Support in all material respects with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date) and (ii) with respect to any Credit Support being issued to support a third party borrowing to finance the acquisition or maintenance of assets, the value of such assets must be equal to or greater than the sum of such third party indebtedness plus any Loan obtained to facilitate such acquisition or maintenance. The Lender shall have received an officer's certificate signed by a Responsible Officer of the Borrower certifying as to the truth and accuracy of the above, which certificate shall specifically include a statement that the Borrower is in compliance with all governmental licenses and authorizations and is qualified to do business and in good standing in all required jurisdictions; and
(c) the aggregate outstanding principal amount of the Loans at the time shall not exceed $150,000,000 and the aggregate outstanding principal amount covered by Credit Supports at the time shall not exceed $5,000,000,000.
Each Borrower represents and warrants to the Lender that throughout the term of this Agreement:
Each Borrower covenants and agrees with the Lender that, so long as any Loan or Credit Support is outstanding and until payment in full of all Obligations:
(a) as soon as available and in any event within forty-five (45) days after the end of each of the operations, stockholders' equity and quarterly fiscal periods of each fiscal year of Holdings, the consolidated balance sheets of Holdings and its consolidated Subsidiaries as at the end of such period and the related unaudited consolidated statements of operations,
stockholders' equity and cash flows for Holdings and its consolidated Subsidiaries for such period and the portion of the fiscal year through the end of such period;
(b) as soon as available and in any event within ninety (90) days after the end of each fiscal year of Holdings, the consolidated balance sheets of Holdings and its consolidated Subsidiaries as at the end of such fiscal year and the related consolidated statements of operations, stockholders' equity and cash flows for Holdings and its consolidated Subsidiaries for such year, setting forth in each case in comparative form the figures for the previous year, accompanied by an opinion thereon of independent certified public accountants of recognized national standing previously approved by the Lender, which opinion shall not be qualified as to scope of audit or going concern and shall state that said consolidated financial statements fairly present the consolidated financial condition and results of operations of Holdings and its consolidated Subsidiaries as at the end of, and for, such fiscal year in accordance with GAAP;
(c) from time to time such other information regarding the financial condition, operations, or business of Holding as the Lender may reasonably request, including but not limited to quarterly audited financial statements.
(b) comply with the requirements of all applicable laws, rules, regulations and orders of Government Authorities (including, without limitation, all environmental laws) if failure to comply with such requirements would be reasonably likely (either individually or in the aggregate) to have a material adverse effect on its property, business or financial condition, or prospects;
(c) keep adequate records and books of account, in which complete entries will be made in accordance with GAAP consistently applied; and
(d) not move its chief executive office from the address referred to in
Section 6.11 unless it shall have provided the Lender 30 days prior written
notice of such change.
(a) keep proper books of record and account in which full, true and correct entries in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its business and activities; and
(b) permit: (i) representatives of the Lender to (A) visit and inspect any of its properties and examine and make abstracts from any of its books and records at any reasonable time and as often as may reasonably be desired by the Lender (but, prior to the occurrence of an Event of Default, only upon not less than two (2) Business Days' prior notice), and (B) discuss the business, operations, properties and financial and other condition of the Borrower with officers and employees of the Borrower, and with its independent certified public accountants, and (ii) representatives of the Lender to conduct periodic operational audits of the Borrower's business and operations
(a) promptly of the occurrence of any Default or Event of Default; and
(b) any event or change in circumstances, in each case which could reasonably be expected to have a material adverse effect on the Borrower's property, business or financial condition, or prospects.
Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein and stating what action the Borrower has taken or proposes to take with respect thereto.
Each Borrower covenants and agrees with the Lender that, so long as any Loan or Credit Support is outstanding:
Each of the following events shall constitute an event of default (an "Event of Default") hereunder:
(a) the Borrowers shall default in the payment of any principal of or interest on any Loan when due (whether at Stated Maturity, upon acceleration or at mandatory or optional prepayment) or any Credit Support when due; or
(b) the Borrowers shall default in the payment of any other amount payable hereunder or under any other Loan Document after notification by the Lender of such default, and such default shall have continued unremedied for five Business Days; or
(c) any representation, warranty or certification made or deemed made herein or in any other Loan Document by any Borrower or any certificate furnished to the Lender pursuant to the provisions thereof, shall prove to have been false or misleading in any material respect as of the time made or furnished; or
(d) any Borrower shall fail to comply with the requirements of Section 6.03 (as to existence), Section 6.04, Section 6.05, Section 6.06, Section 6.07 or Section 6.08 hereof; or any Borrower shall otherwise fail to comply with the requirements of Section 6.03 hereof and such default shall continue unremedied for a period of five Business Days; or any Borrower shall fail to observe or perform any other agreement contained in this Agreement or any other Loan Document and such failure to observe or perform shall continue unremedied for a period of seven Business Days; or
(e) a final judgment or judgments for the payment of money in excess of $5,000,000 in the aggregate shall be rendered against any Borrower or any Subsidiary of a Borrower by one or more courts, administrative tribunals or other bodies having jurisdiction over them and the same shall not be discharged (or provision shall not be made for such discharge) or bonded, or a stay of execution thereof shall not be procured, within 60 days from the date of entry thereof and the Borrower or any such Subsidiary shall not, within said period of 60 days, or such longer period during which execution of the same shall have been stayed or bonded, appeal therefrom and cause the execution thereof to be stayed during such appeal; or
(f) any Borrower shall admit in writing its inability to pay its debts as such debts become due; or
(g) any Borrower or any Subsidiary of a Borrower shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee, examiner or liquidator of itself or of all or a substantial part of its property, (ii) make a general assignment for the benefit of its creditors, (iii) commerce a voluntary case under the Bankruptcy Code, (iv) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or winding-up, or composition or readjustment of debts, (v) fail to controvert in a timely and appropriate manner, or acquiesce in writing to, any petition filed against it in an involuntary case under the Bankruptcy Code or (vi) take any corporate or other action for the purpose of effecting any of the foregoing; or
(h) a proceeding or case shall be commenced with respect to any Borrower or any Subsidiary of a Borrower, without the application or consent of the Borrower or any such Subsidiary, in any court of competent jurisdiction, seeking (i) its reorganization, liquidation, dissolution, arrangement or winding-up, or the composition or readjustment of its debts, (ii) the appointment of a receiver, custodian, trustee, examiner, liquidator or the like of the
Borrower or any such Subsidiary or of all or any substantial part of its property, or (iii) similar relief in respect of the Borrower or any such Subsidiary under any law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of 60 or more days; or an order for relief against the Borrower or any such Subsidiary shall be entered in an involuntary case under the Bankruptcy Code; or
(i) any Borrower grants, or suffers to exist, any Lien not contemplated herein; or
(j) any materially adverse change in the properties, business or financial condition, or prospects of any Borrower or any Subsidiary of a Borrower, in each case as determined by the Lender in its sole discretion, or the existence of any other condition which, in the Lender's sole discretion, constitutes a material impairment of the Borrowers' collective ability to perform their obligations under this Agreement, the Note, the Credit Supports or any other Loan Document.
(b) Upon the occurrence of one or more Events of Default, the Lender shall be entitled to specific performance of all agreements of the Borrowers contained in this Agreement.
The powers conferred on the Lender shall not impose any duty upon it to exercise any such powers. The Lender shall be accountable only for amounts that it actually receives as a result of the exercise of such powers, and neither it nor any of its officers, directors, employees or agents shall be responsible to the Borrowers for any act or failure to act hereunder, except for its own gross negligence or willful misconduct.
(a) The Borrowers agree, jointly and severally, to hold the Lender harmless from and indemnify the Lender against all liabilities, losses, damages, judgments, costs and expenses of any kind which may be imposed on, incurred by, or asserted against the Lender, relating to or arising out of, this Agreement, the Note, the Credit Supports, any other Loan Document or any transaction contemplated hereby or thereby, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the Note, the Credit Supports, any other Loan Document or any transaction contemplated hereby or thereby, that, in each case, results from anything other than the Lender's gross negligence or willful misconduct. The Borrowers also agree to reimburse the Lender for all of its costs and expenses incurred in connection with the enforcement or the preservation of the Lender's rights under this Agreement, the Note, the Credit Supports, any other Loan Document or any transaction contemplated hereby or thereby, including without limitation the reasonable fees and disbursements of its counsel. The Borrowers hereby acknowledge that the obligations of the Borrowers under the Note and Credit Supports are nonrecourse obligations of the Borrowers.
(b) The Borrowers agree to pay as and when billed by the Lender all of the out-of-pocket costs and expenses incurred by the Lender in connection with the development, preparation and execution of, and any amendment, supplement or modification to, this Agreement, the Note, the Credit Supports, any other Loan Document or any other documents prepared in connection herewith or therewith. The Borrowers agree to pay as and when billed by the Lender all of the out-of-pocket costs and expenses incurred in connection with the consummation and administration of the transactions contemplated hereby and thereby including, without limitation all the reasonable fees, disbursements and expenses of Tobin & Tobin, counsel to the Lender and any local counsel to the Lender.
Agreement. In addition, each representation and warranty made, or deemed to be made by a request for a borrowing, herein or pursuant hereto shall survive the making of such representation and warranty, and the Lender shall not be deemed to have waived, by reason of making any Loan, any Default that may arise by reason of such representation or warranty proving to have been false or misleading, notwithstanding that the Lender may have had notice or knowledge or reason to believe that such representation or warranty was false or misleading at the time such Loan was made.
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE NOTE, THE CREDIT SUPPORTS, AND THE OTHER LOAN DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF KANSAS, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR KANSAS, AND APPELLATE COURTS FROM ANY THEREOF;
(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW OR THEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH THE LENDER SHALL HAVE BEEN NOTIFIED; AND
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.
(a) the Lender has no fiduciary relationship to the Borrower, and the relationship between the Borrower and the Lender is solely that of debtor and creditor; and
(b) no joint venture exists between the Lender and the Borrower.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.
NFI HOLDING CORPORATION
By: __________________________
Name: W. Lance Anderson
Title: President
1901 West 47/th/ Place, Suite 105
Westwood, Kansas 66205
Attn: Rodney E. Schwatken
Telecopier No.: 913.514.3567
Telephone No.: 913.514.3532
NOVASTAR CAPITAL, INC.
By: __________________________
Name: Mike Bamburg
Title: President
1901 West 47/th/ Place, Suite 105
Westwood, Kansas 66205
Attn: Rodney E. Schwatken
Telecopier No.: 913.514.3567
Telephone No.: 913.514.3532
NOVASTAR MORTGAGE, INC.
By: __________________________
Name: W. Lance Anderson
Title: President
1901 West 47/th/ Place, Suite 105
Westwood, Kansas 66205
Attn: Rodney E. Schwatken
Telecopier No.: 913.514.3567
Telephone No.: 913.514.3532
NOVASTAR FINANCIAL, INC.
By: __________________________
Name: Scott F. Hartman
Title: Chief Executive Officer
1901 West 47/th/ Place, Suite 105
Westwood, Kansas 66205
Attn: Rodney E. Schwatken
Telecopier No.: 913.514.3567
Telephone No.: 913.514.3532
EXHIBIT A
[FORM OF PROMISSORY NOTE]
FOR VALUE RECEIVED, NFI HOLDING CORPORATION, a Delaware corporation ("Holding"), NOVASTAR CAPITAL, INC., a Delaware corporation ("Capital"), NOVASTAR MORTGAGE, INC., a Virginia corporation ("Mortgage"), and each additional subsidiary of Holding that may sign this Note (collectively, the "Borrowers" and each individually, a "Borrower") hereby promise, jointly and severally, to pay to the order of NOVASTAR FINANCIAL, INC., a Maryland corporation (the "Lender"), at the principal office of the Lender at 1901 West 47th Place, Suite 105, Westwood, Kansas, 66205, in lawful money of the United States, and in immediately available funds, the principal sum of the aggregate unpaid principal amount of the Loans made by the Lender to the Borrowers under the Agreement, on the dates and in the principal amounts provided in the related Loan Commitments issued under the Agreement, and to pay interest on the unpaid principal amount of each such Loan, at such office, in like money and funds, for the period commencing on the date of such Loan until such Loan shall be paid in full, at the rates per annum and on the dates provided in each such Loan Commitment.
This Note is the Note referred to in the Lending and Credit Support Agreement dated as of July _, 2000 (as amended, supplemented or otherwise modified and in effect from time to time, the "Agreement") between the Borrowers and the Lender, and evidences Loans made by the Lender thereunder. Terms used but not defined in this Note have the respective meanings assigned to them in the Agreement.
The Borrowers agree to pay all the Lender's costs of collection and enforcement (including reasonable attorneys' fees and disbursements of Lender's counsel) in respect of this Note when incurred, including, without limitation, reasonable attorneys' fees through appellate proceedings.
Each Borrower hereby acknowledges, admits and agrees that the Borrower's obligations under this Note are nonrecourse obligations of the Borrower.
Any reference herein to the Lender shall be deemed to include and apply to every subsequent holder of this Note. Reference is made to the Agreement for provisions concerning prepayments, acceleration and other material terms affecting this Note.
This Note shall be governed by and construed under the laws of the State of Kansas (without reference to choice of law doctrine) whose laws the Borrower expressly elects to apply to this Note. The Borrower agrees that any action or proceeding brought to enforce or arising out of this Note may be commenced in the courts of the State of Kansas.
NFI HOLDING CORPORATION
By: __________________________
Name:_________________________
Title:________________________
NOVASTAR CAPITAL, INC.
By: __________________________
Name:_________________________
Title:________________________
NOVASTAR MORTGAGE, INC.
By:__________________________
Name:________________________
Title:______________________
SCHEDULE OF LOANS
This Note evidences Loans made under the within-described Agreement to the Borrowers, on the dates, in the principal amounts and bearing interest at the rates set forth below, and subject to the payments and prepayments of principal set forth below:
Principal Amount Amount Paid Unpaid Principal Notation Date Made Borrower of Loan Or Prepaid Amount Made By --------- -------- ---------------- ---------- ---------------- -------- |
EXHIBIT B
SCHEDULE OF CREDIT SUPPORT FEES
Description of Credit Support Fee
Credit support for obligations under mortgage loan 1.00% of the outstanding warehouse and repurchase agreements borrowings* Commitment fee for the purchase of residual interests in 0.20% of unpaid principal balance asset-backed bonds issued by Borrower of securitized assets Guaranty of loan sales to third parties 0.125% of the unpaid principal balance of the loans sold, payable upon settlement of the sale Credit support for loan servicing operations 0.1% of the outstanding, unpaid principal balance of loans serviced* Financing commitment fee Annually, 0.25% of the Commitment Amount, payable quarterly |
* Calculated based on the actual number of days Credit Support is in effect and a 360-day year and will be payable monthly, in arrears.
Exhibit 10.29
SOFTWARE LICENSE
NovaStar Financial, Inc., a Maryland corporation ("Supplier"), licenses NovaStar Mortgage, Inc., a Virginia corporation ("Licensee") to copy, market and use the computer programs and related documentation identified below (the "Software") in the territory specified below (the "Territory"). This License is subject to all the attached terms and conditions (the "Terms and Conditions").
The Software consists of the loan submission software used and developed under the mark Internet Underwriter and related user documentation in the form available for distribution on the Effective Date.
Annual License Fee: $50,000
Per Loan Submission License Fee: $15.00
The Annual License Fee is due on the Effective Date and annually thereafter.
Licensee will report and pay Per Loan Submission License Fees monthly as provided in the Terms and Conditions.
Subject to the Terms and Conditions, Supplier will deliver the Software in object code form.
NovaStar Financial, Inc.
1901 West 47/th/ Place, Suite 105
Westwood, Kansas 66205
NovaStar Mortgage, Inc.
1901 West 47/th/ Place, Suite 105
Westwood, Kansas 66205
of or inability to obtain labor, fuel, raw materials or supplies, war, riot, insurrection, epidemic, act of God, or governmental action not the fault of the nonperforming party.
NOVASTAR FINANCIAL, INC. NOVASTAR MORTGAGE, INC. ("Supplier") ("Licensee") By:_______________________________ By:_____________________________________ Name: Scott F. Hartman Name: W. Lance Anderson Title: Chief Executive Officer Title: President |
Exhibit 10.30
First Union National Bank
One First Union Center
301 South College Street
Charlotte, North Carolina 28288-0610
NovaStar Financial, Inc.
NovaStar Capital, Inc.
NovaStar Mortgage, Inc.
1901 West 47/th/ Place, Suite 105
Westwood, Kansas 66205
As of July 28, 2000
Gentlemen
Reference is made to that certain Master Repurchase Agreement dated as of February 12, 1999 (together with the Addendum to the Master Repurchase Agreement dated as of February 12, 1999) among NovaStar Financial, Inc ("NFI"), NovaStar Capital, Inc. ("NCI") and NovaStar Mortgage, Inc. ("NSM" and together with NFI and NCI, each, individually and jointly and severally, "Seller") and First Union National Bank ("Buyer") (as amended, modified, restated or supplemented from time to time, the "Agreement").
Seller has requested that Buyer amend the Agreement as hereinafter set forth and Buyer is willing to do so on the terms and conditions hereinafter set forth.
Seller and Buyer agree that the following definitions set forth in Section 2 of the Agreement are hereby amended in their entirety as follows:
"Term" shall mean the period commencing on February 12, 1999 and ending on July 27, 2001.
Seller represents and warrants that (a) expect as specifically set forth herein, the Agreement, and all other documents, instruments and agreements executed and/or delivered in connection therewith, shall remain in full force and effect, and are hereby ratified and confirmed, (b) this letter and the Agreement, as amended hereby, constitute legal, valid and binding
obligations of Seller and are enforceable against Seller in accordance with their respective terms, (c) no Event of Default or Default has occurred and is continuing or would exist after giving effect to this letter and (d) Seller has no defense, counterclaim or offset with respect to the Agreement.
The execution, delivery and effectiveness of this letter shall not operate as a waiver of any right, power or remedy of Buyer, nor constitute a waiver of any provision of the Agreement, or any other documents, instruments or agreements executed and/or delivered thereunder or in connection therewith.
This letter may be executed by the parties hereto in one or more counterparts, each of which shall be deemed an original and all of which taken together shall constitute one and the same agreement. Any signature delivered by a party via telecopier shall be deemed an original signature hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
If you are in agreement with the foregoing, kindly execute this letter agreement ("Letter Agreement") in the space provided below and return same to the undersigned. This Letter Agreement shall become effective upon Buyer's receipt of four (4) copies of this Letter Agreement executed by each of the undersigned.
Very truly yours,
FIRST UNION NATIONAL BANK
By: /s/ [SIGNATURE ILLEGIBLE]^^ -------------------------------- Name: [ILLEGIBLE] Title Vice President |
CONSENTED AND AGREED TO:
NOVASTAR FINANCIAL, INC., as a Seller
By: /s/ Rodney E. Schwatken ---------------------------------- Name: Rodney E. Schwatken Title:__ Treasurer |
NOVASTAR MORTGAGE, INC., as a Seller
By: /s/ Rodney E. Schwatken ---------------------------------- Name: Rodney E. Schwatken Title:__ Treasurer |
NOVASTAR CAPITAL, INC., as a Seller
By: /s/ Rodney E. Schwatken ---------------------------------- Name: Rodney E. Schwatken Title:__ Treasurer |
[SIGNATURES CONTINUED ON NEXT PAGE]
NOVASTAR MORTGAGE, INC., as a Servicer
By: /s/ Rodney E. Schwatken ---------------------------------- Name: Rodney E. Schwatken Title: Treasurer |
NFI HOLDING CORPORATION, as Guarantor
By: /s/ Rodney E. Schwatken ---------------------------------- Name: Rodney E. Schwatken Title: Treasurer |
Exhibit 11.1
Nine Months Three Months Ended September 30, Ended September 30, ------------------- ---------------------- 2000 1999 2000 1999 ------- ------- ------- ------- Net income (loss) $ 3,336 $ 2,034 $ 1,978 $(1,537) Less: preferred stock dividends (1,575) (1,081) (525) (525) ------- ------- ------- ------- Income (loss) available to common stockholders $ 1,761 $ 953 $ 1,453 $(2,062) ======= ======= ======= ======= Weighted average common shares 7,087 8,130 6,900 8,130 Common equivalent shares: Dilutive preferred stock -- -- 4,286 -- Dilutive stock options 7 19 6 -- Dilutive warrants -- 177 -- -- ------- ------- ------- ------- Common and common equivalent shares 7,094 8,326 11,192 8,130 ======= ======= ======= ======= Net income (loss) per common share $ 0.25 $ 0.12 $ 0.21 $ (0.25) ======= ======= ======= ======= Net income (loss) common equivalent share $ 0.25 $ 0.11 $ 0.18 $ (0.25) ======= ======= ======= ======= |
Exhibit 21.1
NovaStar Financial, Inc., a Maryland corporation, and its subsidiaries
NovaStar Assets Corporation, a Delaware corporation NovaStar Mortgage Funding Corporation, a Delaware corporation NovaStar Certificates Financing Corporation, a Delaware corporation NovaStar Capital Access Corporation, a Delaware corporation
NFI Holding Corporation, a Delaware corporation, and its subsidiaries
NovaStar Mortgage, Inc., a Virginia corporation NovaStar Mortgage Funding Corporation II, a Delaware corporation NovaStar REMIC Financing Corporation, a Delaware corporation NovaStar Home Mortgage, Inc., a Delaware corporation
NovaStar Capital, Inc., a Delaware corporation
ARTICLE 5 |
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NOVA STAR FINANCIAL'S FORM 10Q FOR THE NINE MONTHS AND THREE MONTHS ENDED SEPTEMBER 30, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. |
MULTIPLIER: 1,000 |
PERIOD TYPE | 9 MOS | 3 MOS |
FISCAL YEAR END | DEC 31 1999 | DEC 31 1999 |
PERIOD START | JAN 01 2000 | JUL 01 2000 |
PERIOD END | SEP 30 2000 | SEP 30 2000 |
CASH | 2,767 | 2,767 |
SECURITIES | 41,784 | 41,784 |
RECEIVABLES | 424,547 | 424,547 |
ALLOWANCES | 8,132 | 8,132 |
INVENTORY | 0 | 0 |
CURRENT ASSETS | 0 | 0 |
PP&E | 0 | 0 |
DEPRECIATION | 0 | 0 |
TOTAL ASSETS | 516,717 | 516,717 |
CURRENT LIABILITIES | 0 | 0 |
BONDS | 0 | 0 |
PREFERRED MANDATORY | 0 | 0 |
PREFERRED | 81 | 81 |
COMMON | 43 | 43 |
OTHER SE | 100,739 | 100,739 |
TOTAL LIABILITY AND EQUITY | 516,717 | 516,717 |
SALES | 36,310 | 10,993 |
TOTAL REVENUES | 37,288 | 10,850 |
CGS | 0 | 0 |
TOTAL COSTS | 34,598 | 9,659 |
OTHER EXPENSES | 0 | 0 |
LOSS PROVISION | 4,004 | 1,212 |
INTEREST EXPENSE | 26,881 | 8,240 |
INCOME PRETAX | 3,336 | 1,978 |
INCOME TAX | 0 | 0 |
INCOME CONTINUING | 3,336 | 1,978 |
DISCONTINUED | 0 | 0 |
EXTRAORDINARY | 0 | 0 |
CHANGES | 0 | 0 |
NET INCOME | 3,336 | 1,978 |
EPS BASIC | 0.25 | 0.21 |
EPS DILUTED | 0.25 | 0.18 |