10-K/A 1 x68237a1e10-ka.txt AMENDMENT NO. 1 TO FORM 10-K -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ AMENDMENT NO. 1 TO FORM 10-K ------------------
(MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NO. 0-23381 BINGHAM FINANCIAL SERVICES CORPORATION (Exact name of registrant as specified in its charter) STATE OF MICHIGAN 38-3313951 State of Incorporation I.R.S. Employer I.D. No.
260 EAST BROWN STREET SUITE 200 BIRMINGHAM, MICHIGAN 48009 (248) 644-8838 (Address of principal executive offices and telephone number) Securities Registered Pursuant to Section 12(b) of the Act: NONE Securities Registered Pursuant to Section 12(g) of the Act: COMMON STOCK, NO PAR VALUE Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] As of March 15, 2002, the aggregate market value of the Registrant's voting stock held by non-affiliates of the Registrant was approximately $1,466,532, based on the closing sales price of one share of common stock on such date as reported by the Nasdaq SmallCap Market. As of March 15, 2002, there were 2,476,321 shares of the Registrant's common stock issued and outstanding. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Explanatory note: This Form 10-K/A is being filed to correct the Company's Consolidated Balance Sheet to reflect the following: recourse liability in the amount of $7.9 million; allowance for loan loss, a component of loans receivable, in the amount of $1.8 million; total assets in the amount of $167.1 million; and total liabilities in the amount of $136.6 million. The Summary Compensation Table in Item 11, which is restated in its entirety, has also been corrected. ITEM 6. SELECTED FINANCIAL DATA
YEAR ENDED THREE MONTHS YEAR ENDED PERIOD DECEMBER 31, ENDED SEPTEMBER 30, JANUARY 2 TO ------------------- DECEMBER 31, ------------------ SEPTEMBER 30, 2001 2000 1999 1999 1998 1997 ---- ---- ------------ ---- ---- ------------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) Statement of Operations Data: Revenue....................... $ 29,673 $ 25,486 $ 7,066 $ 16,277 $ 6,141 $ 280 Income (loss) before income taxes...................... (18,449) (24,629) 576 1,217 (793) (110) Income (loss) before cumulative effect of change in accounting principle.... (19,694) (16,255) 378 776 (574) (110) Net income (loss)............. (19,694) (16,255) (185) 776 (574) (110) Income (loss) per common share, diluted............. (7.63) (6.19) (0.07) 0.36 (0.46) -- Balance Sheet Data: Total assets.................. $167,092 $147,881 $162,873 $128,473 $94,859 $ 9,652 Total debt.................... 122,999 113,617 124,802 101,070 78,230 9,747 Stockholders' equity (deficit).................. (9,242) 10,840 26,139 26,068 13,457 (110) Selected Ratios: Return on average assets...... (15.68)% (9.32)% (0.12)% 0.85% (1.23)% (2.28)% Return on average equity...... (165.30)% (80.9)% (0.71)% 5.36% (4.13)% (100.00)% Average equity to average assets..................... 4.22% 11.52% 17.33% 15.87% 29.77% (1.14)%
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK MARKET RISK Market risk is the risk of loss arising from adverse changes in market prices and interest rates. Our market risk arises from interest rate risk inherent in our financial instruments. We are not currently subject to foreign currency exchange rate risk or commodity price risk. In the normal course of business, we also face risks that are either nonfinancial or nonquantifiable. Such risks principally include credit risk and legal risk and are not included in the following table. 1 The following table shows the contractual maturity dates of our assets and liabilities. For each maturity category in the table the difference between interest-earning assets and interest-bearing liabilities reflects an imbalance between repricing opportunities for the two sides of the balance sheet. The consequences of a negative cumulative gap at the end of one year suggests that, if interest rates were to rise, liability costs would increase more quickly than asset yields, placing negative pressure on earnings.
MATURITY ---------------------------------------------------------------- 0 TO 3 4 TO 12 1 TO 5 OVER 5 MONTHS MONTHS YEARS YEARS TOTAL ------ ------- ------ ------ ----- (IN THOUSANDS) ASSETS Cash and equivalents................. $ 440 $ -- $ -- $ -- $ 440 Restricted cash...................... 1,739 -- -- -- 1,739 Loans receivable..................... 301 847 7,957 117,486 126,591 Servicing rights..................... 282 652 5,329 592 6,855 Servicing advances................... 7,952 1,988 -- -- 9,940 Furniture, fixtures and equipment, net................................ 198 594 1,009 -- 1,801 Deferred federal income taxes........ -- 1,181 5,819 -- 7,000 Loan sale proceeds receivable........ 372 973 2,747 1,631 5,723 Other assets......................... 3,350 494 2,029 1,130 7,003 ------- --------- -------- -------- -------- Total assets....................... $14,634 $ 6,729 $ 24,890 $120,839 $167,092 ======= ========= ======== ======== ======== LIABILITIES AND STOCKHOLDERS' DEFICIT Accounts payable and accrued expenses........................... $ 3,279 $ 2,342 $ 88 $ -- $ 5,709 Recourse liability................... 868 3,038 3,520 434 7,860 Advances under repurchase agreements......................... -- 105,564 -- -- 105,564 Notes payable........................ 17,435 -- -- -- 17,435 ------- --------- -------- -------- -------- Total liabilities.................. 21,582 110,944 3,608 434 136,568 Non-controlling members' interests in subsidiary......................... -- -- -- 39,766 39,766 Common stock, no par value, 10,000,000 shares authorized; 2,542,988 shares issued and Outstanding........................ -- -- -- 26,478 26,478 Paid-in capital...................... -- -- -- 322 322 Accumulated deficit.................. -- -- -- (36,042) (36,042) ------- --------- -------- -------- -------- Total stockholders' equity (deficiency).................... -- -- (9,242) (9,242) ------- --------- -------- -------- -------- Total liabilities and stockholders' equity (deficiency)............. $21,582 $ 110,944 $ 3,608 $ 30,958 $167,092 ======= ========= ======== ======== ======== Reprice difference................... $(6,948) $(104,215) $ 21,282 $ 89,881 Cumulative gap....................... $(6,948) $(111,163) $(89,881) -- Percent of total assets.............. (8.98)% (143.61)% (116.11)%
Our operations may be directly affected by fluctuations in interest rates. While we monitor interest rates and have in the past employed strategies designed to hedge some of the risks associated with changes in interest rates, such as the use of forward interest rate swaps and Treasury rate locks, no assurance can be given that our results of operations and financial condition will not be adversely affected during periods of fluctuations in interest rates. We currently have no open hedge positions on our loans held for sale. Our present strategy is to securitize or sell all new production within three to nine months of origination. Because the interest rates on our lines of credit used to fund and acquire loans are variable and the rates charged on loans we originate are fixed, increases in the interest rates after the loans are originated but before they are sold may reduce the gain on loan sales. 2 The following table shows the Company's financial instruments that are sensitive to changes in interest rates, categorized by expected maturity, and the instruments' fair values at December 31, 2001.
CONTRACTUAL MATURITY ---------------------------------------------------------------------------- TOTAL 2002 2003 2004 2005 2006 THEREAFTER FAIR VALUE ---- ---- ---- ---- ---- ---------- ---------- (DOLLARS IN THOUSANDS) Interest sensitive assets: Loans receivable............ $ 1,148 $1,373 $1,500 $1,719 $1,835 $120,902 $128,477 Average interest rate....... 10.85% 10.85% 10.85% 10.85% 10.85% 10.85% 10.85% Interest bearing deposits... 1,902 -- -- -- -- -- 1,902 Average interest rates...... 5.73% -- -- -- -- -- 5.73% -------- ------ ------ ------ ------ -------- -------- Total interest sensitive assets.... $ 3,050 $1,373 $1,500 $1,719 $1,835 $120,902 $130,379 ======== ====== ====== ====== ====== ======== ======== Interest sensitive liabilities: Borrowings: Advances under repurchase agreements............. $105,564 $ -- $ -- $ -- $ -- $ -- $105,564 Average interest rate.... 3.63% -- -- -- -- -- 3.63% Note payable............. 17,435 -- -- -- -- -- 17,435 Average interest rate.... 8.45% -- -- -- -- -- 8.45% -------- ------ ------ ------ ------ -------- -------- Total interest sensitive liabilities......... $122,999 $ -- $ -- $ -- $ -- $ -- $122,999 ======== ====== ====== ====== ====== ======== ========
3 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA BINGHAM FINANCIAL SERVICES CORPORATION FINANCIAL STATEMENTS FURNISHED PURSUANT TO THE REQUIREMENTS OF FORM 10-K AND REPORTS OF INDEPENDENT ACCOUNTANTS FOR THE YEARS AND PERIOD ENDED DECEMBER 31, 2001, 2000 AND 1999, AND THE YEAR ENDED SEPTEMBER 30, 1999 4 BINGHAM FINANCIAL SERVICES CORPORATION INDEX TO FINANCIAL STATEMENTS
PAGE ---- Independent Auditor's Report................................ 6 Financial Statements: Consolidated Balance Sheets -- December 31, 2001, and December 31, 2000...................................... 7 Consolidated Statements of Operations for the years and period ended December 31, 2001, 2000 and 1999, and the year ended September 30, 1999.......................... 8 Consolidated Statement of Changes in Stockholders' Equity (Deficit) for the years and period ended December 31, 2001, 2000 and 1999 and the year ended September 30, 1999................................................... 9 Consolidated Statement of Cashflows for the years and period ended December 31, 2001, 2000 and 1999 and the year ended September 30, 1999.......................... 10 Notes to Consolidated Financial Statements................ 11
5 INDEPENDENT AUDITOR'S REPORT To the Board of Directors Bingham Financial Services Corporation We have audited the accompanying consolidated balance sheets of Bingham Financial Services Corporation as of December 31, 2001 and December 31, 2000 and the related consolidated statements of changes in stockholders' equity (deficit), operations and cash flows for the periods ended December 31, 2001, December 31, 2000, December 31, 1999 and September 30, 1999. These consolidated financial statements are the responsibility of the corporation's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Bingham Financial Services Corporation as of December 31, 2001 and, December 31, 2000 and the consolidated results of their operations and their cash flows for the periods ended December 31, 2001, December 31, 2000, December 31, 1999 and September 30, 1999, in conformity with accounting principles generally accepted in the United States of America. As more fully discussed in Note A, during the three months ended December 31, 1999, the Company changed its method of accounting for organizational costs. /s/ PLANTE & MORAN, LLP March 28, 2002 Auburn Hills, MI 6 BINGHAM FINANCIAL SERVICES CORPORATION CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT FOR SHARES)
DECEMBER 31, ------------ 2001 2000 ---- ---- ASSETS Cash and equivalents........................................ $ 440 $ 3,521 Restricted cash............................................. 1,739 1,628 Loans receivable............................................ 126,591 98,633 Servicing rights............................................ 6,855 9,143 Servicing advances.......................................... 9,940 9,103 Furniture, fixtures and equipment, net...................... 1,801 2,554 Deferred federal income taxes............................... 7,000 8,446 Loan sale proceeds receivable............................... 5,723 6,603 Other assets................................................ 7,003 8,250 -------- -------- Total assets........................................... $167,092 $147,881 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Liabilities: Accounts payable and accrued expenses..................... $ 5,709 $ 14,111 Recourse liability........................................ 7,860 9,313 Advances under repurchase agreements...................... 105,564 67,256 Subordinated debt, net of debt discount of $-- and $336, respectively........................................... -- 3,664 Notes payable............................................. 17,435 42,697 -------- -------- Total liabilities...................................... 136,568 137,041 -------- -------- Non-controlling members' interest in subsidiary............. 39,766 -- -------- -------- Stockholders' equity (deficit) Preferred stock, no stated value, 10,000,000 shares authorized; no shares issued and outstanding........... -- -- Common Stock, no stated value, 10,000,000 shares authorized; 2,542,988 and 2,631,681, shares issued and outstanding at December 31, 2001 and 2000, respectively........................................... 26,478 27,488 Paid-in capital........................................... 322 727 Accumulated other comprehensive income.................... -- 115 Unearned stock compensation............................... -- (1,142) Accumulated deficit....................................... (36,042) (16,348) -------- -------- Total stockholders' equity (deficit)................... (9,242) 10,840 -------- -------- Total liabilities and stockholders' equity (deficit)... $167,092 $147,881 ======== ========
The accompanying notes are an integral part of these financial statements. 7 BINGHAM FINANCIAL SERVICES CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT FOR SHARES)
THREE MONTHS YEAR ENDED DECEMBER 31, ENDED YEAR ENDED ----------------------- DECEMBER 31, SEPTEMBER 30, 2001 2000 1999 1999 ---- ---- ------------ ------------- REVENUES Interest income on loans..................... $ 9,493 $ 14,593 $ 4,069 $ 9,477 Mortgage origination and servicing fees...... 12,001 10,800 1,319 2,069 Gain on sale and securitization of loans..... 5,186 27 1,603 4,399 Gain on sale of assets....................... 1,600 -- -- -- Arbitration settlements...................... 1,126 -- -- -- Other income................................. 267 66 75 332 ---------- ---------- ---------- ---------- Total revenues............................ 29,673 25,486 7,066 16,277 ---------- ---------- ---------- ---------- COSTS AND EXPENSES Interest expense............................. 7,875 14,202 2,832 6,856 Provision for credit losses and recourse liability................................. 8,595 7,671 362 653 Write down of residual interest.............. 9,523 -- -- -- General and administrative................... 19,408 23,353 2,352 5,215 Unrealized loss on interest rate swap........ -- 1,300 -- -- Loss on interest rate swap................... 510 -- -- -- Acquisition costs............................ -- 2,071 -- -- Other operating expenses..................... 1,903 1,518 944 2,336 ---------- ---------- ---------- ---------- Total costs and expenses.................. 47,814 50,115 6,490 15,060 ---------- ---------- ---------- ---------- Income (loss) before income tax expense (benefit) and allocation of subsidiary net income in non-controlling members' interests................................. (18,141) (24,629) 576 1,217 Allocation of subsidiary net income in non- controlling members' interests............ (308) -- -- -- ---------- ---------- ---------- ---------- Income (loss) before income tax expense (benefit)................................. (18,449) (24,629) 576 1,217 Federal income tax expense (benefit)...... 1,245 (8,374) 198 441 ---------- ---------- ---------- ---------- Income (loss) before cumulative effect of change in accounting principle............ (19,694) (16,255) 378 776 Cumulative effect of change in accounting principle, net of tax..................... -- -- (563) -- ---------- ---------- ---------- ---------- Net income (loss)............................ $ (19,694) $ (16,255) $ (185) $ 776 ========== ========== ========== ========== Weighted average common shares outstanding... 2,579,844 2,625,765 2,539,716 1,966,288 ========== ========== ========== ========== Weighted average common shares outstanding, diluted................................... 2,579,844 2,625,765 2,539,716 2,145,939 ========== ========== ========== ========== Earnings (loss) per share before cumulative effect of change in accounting principle: Basic..................................... $ (7.63) $ (6.19) $ 0.15 $ 0.39 ========== ========== ========== ========== Diluted................................... $ (7.63) $ (6.19) $ 0.15 $ 0.36 ========== ========== ========== ========== Cumulative effect of change in accounting principle: Basic..................................... $ -- $ -- $ (0.22) $ -- ========== ========== ========== ========== Diluted................................... $ -- $ -- $ (0.22) $ -- ========== ========== ========== ========== Earnings (loss) per share: Basic..................................... $ (7.63) $ (6.19) $ (0.07) $ 0.39 ========== ========== ========== ========== Diluted................................... $ (7.63) $ (6.19) $ (0.07) $ 0.36 ========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements. 8 BINGHAM FINANCIAL SERVICES CORPORATION CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (IN THOUSANDS, EXCEPT FOR SHARES)
ACCUMULATED TOTAL OTHER UNEARNED RETAINED STOCKHOLDER'S COMMON PAID-IN COMPREHENSIVE STOCK EARNINGS EQUITY STOCK CAPITAL INCOME (LOSS) COMPENSATION (DEFICIT) (DEFICIT) ------ ------- ------------- ------------ --------- ------------- Balance, September 30, 1998...... $13,608 $ 533 $ -- $ -- $ (684) $ 13,457 Issuance of 867,001 shares common stock.......................... 11,968 -- -- -- -- 11,968 Issuance of 84,658 stock awards......................... 1,120 -- -- (1,120) -- -- Stock award amortization......... -- -- -- 85 -- 85 Option amortization.............. -- 86 -- -- -- 86 Net income....................... -- -- -- -- 776 776 Comprehensive income: Unrealized loss on securities available for sale, net of tax............................ -- -- (304) -- -- (304) -------- Total comprehensive income.................... 472 ------- ----- ----- ------- -------- -------- Balance, September 30, 1999...... $26,696 $ 619 $(304) $(1,035) $ 92 $ 26,068 Issuance of 11,243 stock awards......................... 103 -- -- (103) -- -- Stock award amortization......... 36 36 Option amortization.............. -- 22 -- -- -- 22 Net loss......................... -- -- -- -- (185) (185) Comprehensive income: Unrealized gain on securities Available for sale, net of tax......................... -- -- 198 -- -- 198 -------- Total comprehensive income.................... 13 ------- ----- ----- ------- -------- -------- Balance, December 31, 1999....... $26,799 $ 641 $(106) $(1,102) $ (93) $ 26,139 Issuance of 44,138 stock awards......................... 336 -- -- (336) -- -- Issuance of 66,005 shares of Common stock for BAC earnout... 503 -- -- -- -- 503 Cancellation of 10,178 stock awards......................... (150) -- -- 150 -- -- Stock award amortization......... -- -- -- 146 -- 146 Option amortization.............. -- 86 -- -- -- 86 Net loss......................... -- -- -- -- (16,255) (16,255) Comprehensive income: Unrealized gain on securities available for sale, net of tax......................... -- -- 221 -- -- 221 -------- Total comprehensive loss.... (16,034) ------- ----- ----- ------- -------- -------- Balance, December 31, 2000....... $27,488 $ 727 $ 115 $(1,142) $(16,348) $ 10,840 Cancellation of 96,693 stock awards......................... (1,010) -- -- 1010 -- -- Stock award amortization......... -- -- -- 132 -- 132 Cancellation of stock options.... -- (270) -- -- -- (270) Recapitalization costs........... -- (135) -- -- -- (135) Net loss......................... -- -- -- -- (19,694) (19,694) Comprehensive income: Reclassification adjustment.... -- -- (115) -- -- (115) -------- Total comprehensive loss.... (20,082) ------- ----- ----- ------- -------- -------- Balance, December 31, 2001....... $26,478 $ 322 $ -- $ -- $(36,042) $ (9,242) ======= ===== ===== ======= ======== ========
The accompanying notes are an integral part of these financial statements. 9 BINGHAM FINANCIAL SERVICES CORPORATION CONSOLIDATED STATEMENT OF CASHFLOWS (IN THOUSANDS)
YEAR ENDED THREE MONTHS DECEMBER 31, ENDED YEAR ENDED --------------------- DECEMBER 31, SEPTEMBER 30, 2001 2000 1999 1999 ---- ---- ------------ ------------- Cash flows from operating activities: Net income (loss).............................. $ (19,694) $ (16,255) $ (185) $ 776 Adjustments to reconcile net income (loss) to net Cash provided by operating activities: Provision for unrealized hedge loss......... -- -- -- (2,400) Unrealized loss on interest rate swaps...... -- 1,300 -- -- Provision for credit losses and recourse liability................................. 8,595 7,671 362 653 Impairment of residual interest............. 9,523 -- -- -- Depreciation and amortization............... 2,103 3,600 1,637 1,135 Provision for deferred taxes................ 1,245 (8,374) (84) 914 Originations of loans held for sale......... (222,410) (207,171) (126,789) (144,344) Principal collections on loans held for sale...................................... 16,339 19,363 1,709 3,256 Proceeds from sale of loans held for sale... 166,730 223,128 100,888 113,494 Loss (gain) on sale of investment securities................................ (254) -- 35 (3) Gain on sale and securitization of loans.... (5,186) (27) (1,603) (1,999) Increase in retained interest............... (9,523) -- -- -- Increase in other assets.................... (2,330) (13,374) (3,366) (6,234) Increase (decrease) in other liabilities.... (8,402) 5,835 7,028 3,860 --------- --------- --------- --------- Net cash provided by (used in) operating activities............................. (63,264) 15,696 (20,368) (30,892) --------- --------- --------- --------- Cash flows from investing activities: Purchase of Hartger & Willard............... -- -- -- (1,900) Purchase of Origen Inc...................... -- -- (4,001) -- Purchase of investment securities........... -- -- -- (1,529) Proceeds from the sale of investment securities................................ 1,782 -- 24 369 Proceeds from the sale of the assets of Bloomfield Acceptance and Bloomfield Servicing................................. 9,609 -- -- -- Capital expenditures........................ (520) (911) (98) (485) --------- --------- --------- --------- Net cash provided by (used in) investing activities............................. 10,871 (911) (4,075) (3,545) --------- --------- --------- --------- Cash flows from financing activities: Proceeds from issuance of common stock...... -- -- -- 11,968 Proceeds from recapitalization of Origen Inc. ..................................... 40,000 -- -- -- Proceeds from advances under repurchase agreements................................ 158,926 154,041 102,876 98,990 Repayment of advances under repurchase agreements................................ (120,617) (167,254) (91,434) (86,855) Proceeds from advances on note payable...... 321,009 252,664 100,364 109,164 Repayment of note payable................... (350,006) (250,715) (88,093) (100,079) --------- --------- --------- --------- Net cash provided by (used in) financing activities............................. 49,312 (11,264) 23,713 33,188 --------- --------- --------- --------- Net change in cash and cash equivalents.......... (3,081) 3,521 (730) (1,249) Cash and cash equivalents, beginning of period... 3,521 -- 730 1,979 --------- --------- --------- --------- Cash and cash equivalents, end of period......... $ 440 $ 3,521 $ -- $ 730 ========= ========= ========= ========= Supplemental disclosures of cash flow information: Interest paid.................................. $ 8,086 $ 13,875 $ 2,828 $ 6,785 Federal income taxes paid...................... $ -- $ -- $ -- $ 420
The accompanying notes are an integral part of these financial statements. 10 BINGHAM FINANCIAL SERVICES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE OF OPERATIONS: The Company's principal operations involve origination, underwriting, securitization or sale, and servicing of manufactured home loans. The Company's manufactured home loans are made through its subsidiaries, Origen Inc. and Origen LLC, primarily to finance the purchase of manufactured homes. These loans are generally conventionally amortizing loans that range in amount from $10,000 to $100,000 and have terms of seven to 30 years. The Company also provides warranty and disability insurance through one of its subsidiaries. Manufactured home loan servicing is also performed by Origen Inc. and Origen LLC. The Company's commercial real estate mortgage loans were made through its subsidiary, Bloomfield Acceptance Company, L.L.C. ("Bloomfield Acceptance"). Commercial real estate loan servicing was performed by Bloomfield Servicing Company, L.L.C. ("Bloomfield Servicing"), a subsidiary of the Company. On June 13, 2001 the Company sold certain of the assets of both Bloomfield Acceptance and Bloomfield Servicing to Wells Fargo Bank, National Association and Wells Fargo & Company and ceased originating and servicing commercial mortgage loans. The Company generally sells, securitizes or places the manufactured home loans it originates with institutional investors and retains the rights to service loans sold on behalf of those investors. PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the accounts and transactions of the Company and its subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation. Although the Company retains only a 20% interest in Origen LLC, as disclosed in Note B, no change in control of the management and operations of the Company's manufactured home loan operations has occurred for accounting purposes and the financial position and results of operations of Origen LLC are presented on a consolidated basis in the accompanying financial statements. REVENUE RECOGNITION: Interest and origination fee revenue from loans receivable is recognized using the interest method. Certain loan origination costs on loans receivable are deferred and amortized using the interest method over the term of the related loans as a reduction of interest income on loans. The accrual of interest on loans receivable is discontinued at the time a loan is determined to be impaired. Servicing fees are recognized when earned. The Company periodically sells loans either as whole loans or through securitizations. Estimated gains or losses from such sales or securitizations are recognized in the period in which the sale or securitization occurs. In determining the gain or loss on each qualifying sale of loans receivable, the Company's investment in each loan pool is allocated between the portion sold and any retained interests based on their relative fair values at the date of sale. The retained interests include interest-only strips, restricted cash held by securitization trusts, recourse liabilities and servicing rights. CHANGE IN FISCAL YEAR END: On February 4, 2000 the Company changed its fiscal year end from a twelve month period ending September 30 to a twelve month period ending December 31. The consolidated statements of operations and cash flows are presented for the years ended December 31, 2001 and December 31, 2000, the three months ended December 31, 1999, and the year ended September 30, 1999. USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period, including significant estimates regarding allowances for loan losses, recourse liabilities and deferred tax asset realization. Actual results could differ from those estimates. 11 BINGHAM FINANCIAL SERVICES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CASH AND CASH EQUIVALENTS: Cash and cash equivalents represent short-term highly liquid investments with original maturities of three months or less and include cash and interest bearing deposits at banks. The Company has restricted cash related to loans serviced for others which is held in trust for subsequent payment to the owners of those loans. LOANS RECEIVABLE: Loans receivable consist of manufactured home loans and floor plan loans. Manufactured home loans are primarily conventional fixed rate loans under contracts collateralized by the borrowers' manufactured homes. All loans receivable are held for sale and are carried at the lower of aggregate cost or fair value. Loans receivable include accrued interest and are presented net of deferred loan origination costs and an allowance for estimated loan losses. DERIVATIVE FINANCIAL INSTRUMENTS: The Company has periodically used derivative instruments, including forward sales of U.S. Treasury securities, U.S. Treasury rate locks and forward interest rate swaps to mitigate interest rate risk related to its loans receivable and anticipated sales or securitizations. Prior to January 1, 2001 deferral (hedge) accounting was applied if a derivative financial instrument reduced the risk of the underlying hedged item, was designated at inception as a hedge and was expected to be effective as a hedge. Effective January 1, 2001 the Company adopted the provisions of Statement of Financial Accounting No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"). Under SFAS 133, all derivative instruments are recorded on the balance sheet at fair value and changes in fair value will be recorded in current earnings or other comprehensive income, depending on whether a derivative instrument qualifies for hedge accounting and, if so, whether the hedge transaction represents a fair value or cash flow hedge. Hedges are measured for effectiveness both at inception and on an ongoing basis, and hedge accounting is terminated if a derivative instrument ceases to be effective as a hedge or its designation as a hedge is terminated. In the event of termination of a hedge, any gains or losses during the period that a derivative instrument qualified as a hedge are recognized as a component of the hedged item and subsequent gains or losses are recognized in earnings. Derivative financial instruments that do not qualify for hedge accounting are carried at fair value and changes in fair value are recognized currently in earnings. There were no derivative instruments designated as hedges at January 1, 2001 and the adoption of SFAS 133 had no effect on the Company's financial position or results of operations. ALLOWANCE FOR CREDIT LOSSES: The allowance for possible credit losses is maintained at a level believed adequate by management to absorb potential losses in the Company's loan portfolio. The Company's loan portfolio is comprised of homogenous manufactured home loans with average loan balances of less than $50,000. The allowance for credit losses is determined at a portfolio level and computed by applying loss rate factors to the loan portfolio on a stratified basis using current portfolio performance and delinquency levels (0-30 days, 31-60 days, 61-90 days and more than 90 days delinquent). The Company's loss rate factors are based on the Company's historical loan loss experience and are adjusted for economic conditions and other trends affecting borrowers' ability to repay and estimated collateral value. The allowance for credit losses represents an unallocated allowance. There are no elements of the allowance allocated to specific individual loans or to impaired loans. SERVICING RIGHTS: The Company accounts for loan servicing rights related to originated and sold loans by recognizing a separate servicing asset or liability. These servicing assets or liabilities are determined by allocating the carrying amount of the loans sold between the loan and the servicing rights based on the relative fair values of each at the date of sale. The fair value of servicing rights is based on discounted cash flows incorporating estimated servicing fees and costs as well as ancillary servicing revenue and projected prepayment rates. The Company capitalized approximately $1.4 million, $1.5 million, $7.6 million and $2.0 million, respectively, of loan servicing rights for the years ended December 31, 2001 and 2000, the three months ended December 31, 1999, and the year ended September 30, 1999, respectively. 12 BINGHAM FINANCIAL SERVICES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The carrying amount of loan servicing rights is assessed for impairment each quarter by comparison to fair value and a valuation allowance is established in the event the carrying amount exceeds the fair value. Fair value is estimated based on the present value of expected future cash flows and periodically by independent appraisal. There was no valuation allowance recognized at December 31, 2001 or 2000. The estimated fair value of loan servicing rights was approximately $9.7 million at December 31, 2001. INTEREST ON LOANS: Interest on loans is credited to income when earned. An allowance for interest on loans is provided when a loan becomes more than 90 days past due as the collection of these loans is considered doubtful. LOAN FEES: Loan origination fees and certain direct loan origination costs are deferred and recognized over the lives of the related loans as an adjustment of the yields using a level-yield method. REPOSSESSED HOMES: Manufactured homes acquired through foreclosure or similar proceedings are recorded at the lesser of the related loan balance plus any operating expenses of such homes or the estimated fair value of the home. OTHER ASSETS: Other assets is comprised of prepaid expenses, deferred financing costs, goodwill and other miscellaneous receivables. Prepaid expenses are amortized over the expected service period. Deferred financing costs are capitalized and amortized over the life of the corresponding obligation. LOAN SALE PROCEEDS RECEIVABLE: The loan sale proceeds receivable relates to the sale of approximately $114.4 million principal balance of manufactured home loans. The loans were sold with recourse and with a deferred proceeds component equal to 1.5% of the outstanding principal balance at the time of sale. Bingham receives on a monthly basis .125% (an annual rate of 1.5% divided by 12) of the outstanding principal balance of eligible loans (loans on which a payment was received from the obligor during the month). The deferred loan sale proceeds receivable is assessed for impairment on a periodic basis based on the fair value of the receivable calculated on a discounted basis. LOANS SOLD UNDER AGREEMENTS TO REPURCHASE: The Company enters into loan sales under agreements to repurchase the loans. The agreements are short-term and are accounted for as secured borrowings. The obligations to repurchase the loans sold are reflected as a liability and the loans that collateralize the agreements are reflected as assets in the balance sheet. RECOURSE LIABILITY: The Company periodically sells manufactured home loans on a whole-loan basis. At the time of such loan sales, recourse liabilities are recognized pursuant to future obligations based on the underlying provisions of the respective sale agreements. The liability is computed based on estimated obligations under recourse provisions on a discounted basis. The obligations are provided for in the recourse liability and transferred to the allowance for credit losses at the time of repurchase. The loan purchasers have no recourse to our other assets for failure of debtors to pay when due. DEPRECIATION: Provisions for depreciation are computed using the straight-line method over the estimated useful lives of office properties and equipment, as follows: leasehold improvements -- life of the lease; furniture and fixtures -- seven years; capitalized software -- five years; computers -- five years. INCOME TAXES: The Company uses the liability method in accounting for income taxes. Deferred tax assets or liabilities are recognized for temporary differences between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements and net operating loss carryforwards. Deferred tax assets and liabilities are measured using currently enacted tax rates. A valuation allowance is established if, based on the insight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. PER SHARE DATA: Basic earnings per share are computed by dividing net income (loss) available to common shareholders by the weighted average common shares outstanding. At December 31, 2001, 2000, 13 BINGHAM FINANCIAL SERVICES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 1999 and September 30, 1999 there were approximately 0, 911,000, 921,000 and 868,000 potential shares of common stock from stock options and warrants outstanding. The following table presents a reconciliation of the numerator (income applicable to common shareholders) and denominator (weighted average common shares outstanding) for the basic loss per share calculation:
YEAR ENDED DECEMBER 31, THREE MONTHS ------------------------------------------ ENDED YEAR ENDED 2001 2000 DECEMBER 31, 1999 SEPTEMBER 30, 1999 ------------------- ------------------- ------------------- ------------------- EARNINGS EARNINGS EARNINGS EARNINGS (LOSS) (LOSS) (LOSS) (LOSS) SHARES PER SHARE SHARES PER SHARE SHARES PER SHARE SHARES PER SHARE ------ --------- ------ --------- ------ --------- ------ --------- (SHARES IN THOUSANDS) Basic earnings (loss) per share before Cumulative effect of change in accounting principle........... 2,580 $(7.63) 2,626 $(6.19) 2,540 $ 0.15 1,966 $ 0.39 Cumulative effect of change in accounting principle........... -- -- -- -- -- (0.22) -- -- Net dilutive effect of: Options.......................... -- -- -- -- -- -- 22 -- Warrants......................... -- -- -- -- -- -- 158 (0.03) ----- ------ ----- ------ ----- ------ ----- ------ Diluted loss per share............. 2,580 $(7.63) 2,626 $(6.19) 2,540 $(0.07) 2,146 $ 0.36 ===== ====== ===== ====== ===== ====== ===== ======
SECURITIES: Marketable securities are classified as available for sale. Securities classified as available for sale are carried at market value with a corresponding market value adjustment carried as a separate component of stockholders' on a net of tax basis. At December 31, 2001 and 2000 securities consisted of a single equity security with a carrying amount of $1,300 and $1.7 million, respectively which are included in other assets. The adjusted cost of the securities would be used to compute realized gains or losses if the securities are sold. CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE: In April 1998 the Financial Accounting Standards Board issued Statement of Position Number 98-5 (SOP 98-5) "Reporting on the Cost of Start-Up Activities". This statement, which is required to be adopted for fiscal years beginning after December 15, 1998 establishes guidance for the accounting of start-up activities. It states that the cost of start-up activities, including organizational costs, should be expensed as incurred. The Company had deferred organizational costs related to the formation of its manufactured home lending subsidiary and the filing of its application to become a unitary thrift holding company and for the formation of a federally charted savings bank. In the period ended December 31, 1999 the Company expensed approximately $563,000 net of federal income tax benefit of previously capitalized organizational costs. RECENT ACCOUNTING PRONOUNCEMENTS: During July 2001, Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142") was issued. The statement provides the accounting and reporting standards for goodwill. SFAS 142 will not impact the Company's financial position or results of operations because the Company had no goodwill on its balance sheet at December 31, 2001. B. RECAPITALIZATION In July 2001, the Company entered into an investment agreement with three investors -- SUI TRS, Inc., Shiffman Family LLC and Woodward Holding LLC -- under which the Company agreed to recapitalize its remaining operating subsidiaries. Certain of the Company's officers and directors are affiliated with SUI TRS and Shiffman Family LLC. 14 BINGHAM FINANCIAL SERVICES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Under the investment agreement and a merger agreement entered into on December 18, 2001, SUI TRS, Shiffman Family LLC and Woodward Holding made capital contributions totaling $40 million in Origen LLC. The Company will merge Origen Inc. and its other wholly-owned operating subsidiaries into Origen LLC. The mergers will be completed when Origen LLC and its subsidiaries obtain all material licenses and permits they need to continue to operate the Company's business. Notwithstanding the actual date of the mergers, the parties have agreed that the merger will be treated as effective as of January 1, 2002. It is expected that the mergers will occur in the second quarter of 2002. Pending the mergers, each of Origen Inc. and Origen LLC is conducting that portion of its business which it is licensed to do. After the mergers, Origen LLC and its subsidiaries, as the surviving entities of the mergers, will conduct all of the Company's business in the same manner as it has been conducted in the past. The Company obtained an initial 20% ownership interest in the net assets and profits of Origen LLC and the three investors received an initial 80% aggregate interest in Origen LLC. These interests are subject to dilution resulting from (a) grants of up to 11.5% of the membership interests to key employees of the recapitalized subsidiaries, and (b) potential future issuance of additional membership interests in the recapitalized subsidiaries in connection with the raising of additional capital. After the mergers, the Company's primary asset will be its interest in Origen LLC. The company will also retain a loan receivable of approximately $2.5 million related to the sale of MHFC in March 2000. The proceeds from the receivable will be used to fund the Company's operating expenses, such as expenses associated with SEC reporting compliance and legal and accounting fees. The above transactions have been accounted for as a recapitalization of the Company's operating subsidiaries and, accordingly, there is no adjustment to the historical cost basis carrying amounts of the assets and liabilities transferred to Origen LLC by the Company. Although the Company retains only a 20% interest (33.33% voting interest) in Origen LLC, the recapitalization has not resulted in a change in control of Origen LLC for accounting purposes and the financial position and results of operations of Origen LLC continue to be presented on a consolidated basis in the accompanying financial statements. An allocation of income or losses attributable to the non-controlling members under the provisions of the Origen LLC operating agreement is accounted for in a manner similar to the minority interest. C. ACQUISITIONS On July 1, 1999 pursuant to a Reorganization Agreement dated as of June 30, 1999 the Company acquired all of the issued and outstanding stock of Hartger and Willard from DMR Financial Services, Inc. ("DMRFS"), an affiliate of Detroit Mortgage and Realty Company ("DMR"). Pursuant to the terms of the agreement, 66,667 shares of Bingham common stock, without par value, were issued to DMRFS. In connection with the acquisition of Hartger & Willard the Company loaned $1.5 million to DMRFS pursuant to a Promissory Note dated July 31, 1999. The loan was guaranteed by DMR and secured by the pledge of the 66,667 shares of Bingham common stock DMRFS received in the acquisition. The Company foreclosed on the pledged shares in full payment of the principal amount of the loan. The effect of this transaction is that the Company acquired the Hartger & Willard shares for $1.5 million in cash. The Hartger & Willard acquisition was accounted for as a purchase. The results of operations for the year ended September 30, 1999 include the results of operations for the acquired company since the date of the acquisition. The aggregate purchase price for the acquisition of $1.9 million, including expenses of the acquisition, was allocated to the assets acquired and liabilities assumed based on the related fair values at the date of acquisition. The excess of the aggregate purchase price over the fair values of the assets acquired and liabilities assumed has been allocated to goodwill and was being amortized on a straight-line method over 20 years. Hartger & Willard was sold in 2001 (see Note N). 15 BINGHAM FINANCIAL SERVICES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) In conjunction with the acquisition in July 1999, liabilities assumed and other non-cash consideration were as follows (in thousands, unaudited): Fair value of assets acquired............................... $ 1,642 Goodwill.................................................... 262 Cash paid in consideration and expenses of company acquired.................................................. (1,900) ------- Liabilities assumed......................................... $ 4 =======
The following table summarizes pro forma unaudited results of operations as if the acquisition completed during 1999 had occurred at the beginning of each year presented:
SEPTEMBER 30, 1999 ------------------ (IN THOUSANDS, EXCEPT EARNINGS PER SHARE) Revenues.................................................... $16,933 Income (loss) before income taxes........................... 1,158 Net income (loss)........................................... 733 Basic earnings (loss) per share............................. 0.37 Diluted earnings (loss) per share........................... 0.34
In December 1999, the Company completed the acquisition of Origen Inc. from Dynex Holding, Inc., a subsidiary of Dynex Capital, Inc. ("DCI"). The Company acquired certain manufactured home loans from Origen Inc. all of the issued and outstanding stock of Origen Inc. and all of the rights to DCI's manufactured home lending business for approximately $4.0 million in cash funded by borrowings on the Company's demand lines of credit. Origen Inc. specializes in lending to buyers of manufactured homes and has corporate and regional offices in four states. In addition Origen Inc. provides servicing for manufactured home and land/home loans. The Origen Inc. acquisition was accounted for using the purchase method. The consideration and acquisition costs for the Origen Inc. acquisition were allocated to the acquired assets and assumed liabilities, resulting in an excess of fair value of the acquired net assets over the purchase price of approximately $3.2 million, which was recognized as a reduction in the amount allocated to purchased loan servicing rights. During the quarter ended March 31, 2000, Bingham revised its initial estimates of the fair value of the assets acquired, specifically the manufactured home loan portfolio associated with the transaction, effectively reducing the excess of fair value of acquired net assets by $2.0 million. Accordingly, the Company recognized the revised estimate by retroactively adjusting the purchase price allocation with an increase to the amount previously allocated to purchased loan servicing rights. In connection with the Origen Inc. acquisition, Bingham recognized accrued liabilities of $5.0 million related to its plans to close certain of Origen Inc.'s regional and district offices and terminate or relocate certain of its employees. During the year ended December 31, 2000, there were approximately $2.5 million of costs paid related to the accrued acquisition liabilities. Such costs consisted of $1.4 million for severance payments and personnel costs and $1.1 in costs connected with closed locations incurred subsequent to the cessation of operations. As of December 31, 2000, Bingham revised its estimate of the costs to implement its plan and as a result, made an adjustment to the purchase price allocation. The change in estimate resulted in an increase of $2.3 million in the fair value of the net assets acquired. Bingham recognized this increase as an adjustment to the amount previously allocated to purchased loan servicing rights. 16 BINGHAM FINANCIAL SERVICES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table summarizes pro forma unaudited results of operations for the Origen Inc. acquisition as if it had occurred at the beginning of each period presented:
THREE MONTHS ENDED YEAR ENDED DECEMBER 31, SEPTEMBER 30, 1999 1999 ------------ ------------- (IN THOUSANDS, EXCEPT EARNINGS PER SHARE) Revenues.................................................... $ 9,114 $36,047 Income (loss) before cumulative effect of change in accounting principle...................................... (2,141) 1,236 Cumulative effect of change in accounting principle, net of tax....................................................... (563) -- Net income (loss)........................................... (2,704) 1,236 Basic earnings (loss) per share............................. $ (1.06) $ 0.63 Diluted earnings (loss) per share........................... (1.06) 0.58
In the year ended December 31, 2000 the Company attempted a merger with Franklin Bank, N.A. which was unsuccessful. Costs incurred totaled $2.1 million all of which were charged to operations in the fourth quarter of 2000 when the merger attempt was terminated. D. LOANS RECEIVABLE The carrying amounts and fair value of loans receivable consisted of the following:
DECEMBER 31, ------------------- 2001 2000 ---- ---- (IN THOUSANDS) Manufactured home loans..................................... $128,208 $95,234 Commercial loans............................................ -- 3,547 Floor plan loans............................................ 1,094 1,731 Accrued interest receivable................................. 903 794 Deferred fees............................................... (1,850) (869) Deferred hedge loss......................................... -- 364 Allowance for loan loss..................................... (1,764) (2,168) -------- ------- $126,591 $98,633 ======== =======
The following table sets forth the average loan balance, weighted average loan yield and weighted average initial term:
MANUFACTURED HOME --------------------------------------------------------- YEAR ENDED DECEMBER THREE MONTHS 31, ENDED YEAR ENDED ---------------------- DECEMBER 31, SEPTEMBER 30, 2001 2000 1999 1999 ---- ---- ------------ ------------- (DOLLARS IN THOUSANDS) Principal balance loans receivable, net........ $128,208 $ 95,234 $ 75,321 $ 64,501 Number of loans receivable..................... 3,117 2,304 1,907 2,190 Average loan balance........................... $ 41 $ 41 $ 38 $ 29 Weighted average loan yield.................... 10.85% 11.75% 10.90% 11.33% Weighted average initial term.................. 26 years 26 years 25 years 22 years
17 BINGHAM FINANCIAL SERVICES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
COMMERCIAL MORTGAGE --------------------------------------------------------- THREE MONTHS YEAR ENDED DECEMBER 31, ENDED YEAR ENDED ------------------------ DECEMBER 31, SEPTEMBER 30, 2001 2000 1999 1999 ---- ---- ------------ ------------- (DOLLARS IN THOUSANDS) Principal balance loans receivable, net....... $ -- $ 3,547 $ 65,930 $ 53,157 Number of loans receivable.................... -- 2 27 20 Average loan balance.......................... $ -- $ 1,773 $ 2,442 $ 2,645 Weighted average loan yield................... -- 8.7% 9.8% 8.5% Weighted average initial term................. -- 6.9 years 6.5 years 5.8 years
The following table sets forth the concentration by state of the loan portfolio:
MANUFACTURED HOME ------------------------------------------ DECEMBER 31, ------------------------------------------ 2001 2000 ------------------- ------------------- PRINCIPAL % PRINCIPAL % --------- - --------- - (DOLLARS IN THOUSANDS) Texas................................................... $ 30,581 23.9% $23,338 24.5% Georgia................................................. 11,322 8.8% 7,587 8.0% Alabama................................................. 9,900 7.7% 4,768 5.0% Mississippi............................................. 7,980 6.2% 4,052 4.3% Florida................................................. 7,356 5.8% 4,013 4.2% Michigan................................................ 7,093 5.5% 6,446 6.7% South Carolina.......................................... 5,530 4.3% 4,084 4.3% Other................................................... 48,446 37.8% 40,946 43.0% -------- ------ ------- ------ Total............................................ $128,208 100.0% $95,234 100.0% ======== ====== ======= ======
COMMERCIAL MORTGAGE DECEMBER 31, ---------------------------------------- DECEMBER 31, ---------------------------------------- 2001 2000 ------------------ ------------------ PRINCIPAL % PRINCIPAL % --------- - --------- - (DOLLARS IN THOUSANDS) Michigan................................................... $ -- -- $ -- -- Indiana.................................................... -- -- -- -- Arizona.................................................... -- -- 2,466 69.5% Texas...................................................... -- -- -- -- Florida.................................................... -- -- 1,081 30.5% California................................................. -- -- -- -- Other...................................................... -- -- -- -- -------- ----- ------ ----- Total............................................... $ -- --% $3,547 100.0% ======== ===== ====== =====
The manufactured home contracts are collateralized by manufactured homes which range in age from 1973 to 2002, with approximately 90.1% of the manufactured homes built since 1999. 18 BINGHAM FINANCIAL SERVICES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table sets forth the number and value of loans for various terms for the manufactured home loan portfolio:
DECEMBER 31, ------------------------------------------------ 2001 2000 ---------------------- ---------------------- TERM NUMBER OF PRINCIPAL NUMBER OF PRINCIPAL (YEARS) LOANS BALANCE LOANS BALANCE ------- --------- --------- --------- --------- (DOLLARS IN THOUSANDS) 5 or less............................................ 2 $ 22 3 $ 24 6-10................................................. 142 2,683 90 1,727 11-12................................................ 15 410 8 155 13-15................................................ 243 7,211 144 3,853 16-20................................................ 811 27,711 265 7,908 21-25................................................ 269 9,747 345 11,720 26-30................................................ 1635 80,424 1449 69,847 ----- -------- ----- ------- Total......................................... 3,117 $128,208 2,304 $95,234 ===== ======== ===== =======
Delinquency statistics for the manufactured home loan portfolio are as follows:
DECEMBER 31, --------------------------------------------------------------- 2001 2000 ------------------------------ ------------------------------ NO. OF PRINCIPAL % OF NO. OF PRINCIPAL % OF LOANS BALANCE PORTFOLIO LOANS BALANCE PORTFOLIO ------ --------- --------- ------ --------- --------- (DOLLARS IN THOUSANDS) Days delinquent 31-60....................................... 71 $3,346 2.6% 24 $ 944 1.0% 61-90....................................... 18 791 0.6% 19 811 0.9% Greater than 90............................. 57 2,608 2.0% 83 3,352 3.5%
E. ALLOWANCE FOR CREDIT LOSSES The allowance for credit losses and related additions and deductions to the allowance for the years ended December 31, 2001 and 2000, the period ended December 31, 1999 and the year ended September 30, 1999 were as follows:
YEAR ENDED THREE MONTHS DECEMBER 31, ENDED YEAR ENDED ------------------- DECEMBER 31, SEPTEMBER 30, 2001 2000 1999 1999 ---- ---- ------------ ------------- (IN THOUSANDS) Balance at beginning of period.................. $ 2,168 $ 274 $ 258 $ 185 Provision for loan losses....................... 3,528 7,671 362 653 Transfers from recourse liability............... 6,070 77 -- -- Gross chargeoffs................................ (17,822) (10,261) (698) (1,060) Recoveries...................................... 7,820 4,407 352 480 -------- -------- ----- ------- Balance at end of year........................ $ 1,764 $ 2,168 $ 274 $ 258 ======== ======== ===== =======
19 BINGHAM FINANCIAL SERVICES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) F. MORTGAGE SERVICING RIGHTS Changes in servicing rights are summarized as follows:
YEAR ENDED THREE MONTHS DECEMBER 31, ENDED YEAR ENDED ----------------- DECEMBER 31, SEPTEMBER 30, 2001 2000 1999 1999 ---- ---- ------------ ------------- (IN THOUSANDS) Balance at beginning of period.................... $ 9,143 $ 9,736 $2,120 $ 156 Purchased servicing rights........................ -- -- 6,846 1,376 Purchase price adjustments........................ -- 424 -- -- Loans sold and securitized........................ 1,132 1,112 825 735 Amortization...................................... (1,279) (2,129) (55) (94) Sale of servicing rights.......................... (2,141) -- -- (53) ------- ------- ------ ------ Balance at end of period........................ $ 6,855 $ 9,143 $9,736 $2,120 ======= ======= ====== ======
Bloomfield Servicing serviced commercial real estate loans that Bloomfield Acceptance originated as well as commercial real estate loans on behalf of 29 institutional investors. The principal balance of commercial real estate loans serviced totaled approximately $1.2 billion. In June 2001 the Company sold the servicing rights to its commercial loan portfolio serviced for others with a carrying amount of approximately $2.1 million, to Wells Fargo Bank and Wells Fargo & Company as part of the sale of certain of the assets of its commercial loan origination and servicing operations. Origen Inc. and Origen LLC service the manufactured home loans originated by the Company and held in its loan portfolio as well as manufactured home loans originated by the Company and securitized or sold with the servicing rights retained. The principal balances of manufactured home loans serviced totaled approximately $1.2 billion at December 31, 2001, $1.1 billion at December 31, 2000 and $1.0 billion at December 31, 1999. G. PROPERTY AND EQUIPMENT Property and equipment are summarized as follows:
DECEMBER 31, -------------------------- 2001 2000 1999 ---- ---- ---- (IN THOUSANDS) Cost: Furniture and fixtures.................................... $1,694 $2,191 $2,197 Leasehold improvements.................................... 179 213 46 Capitalized Software...................................... 255 493 322 Computer equipment........................................ 3,137 3,071 643 ------ ------ ------ 5,265 5,968 3,208 Less accumulated depreciation............................... 3,464 3,414 179 ------ ------ ------ Total.................................................. $1,801 $2,554 $3,029 ====== ====== ======
Depreciation expense was approximately $910,000 for the year ended December 31, 2001, $987,000 for the year ended December 31, 2000, $288,000 for the three months ended December 31, 1999 and $105,970 for the year ended September 30, 1999. 20 BINGHAM FINANCIAL SERVICES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) H. RESIDUAL INTEREST IN LOANS SOLD AND SECURITIZED On March 27, 2001 Bingham completed its first securitization of manufactured home loans through a consolidated special purpose subsidiary of Origen Inc. The Company sold manufactured home loans it originated and purchased to a trust for cash and the trust sold asset-backed bonds secured by the loans to investors. The Company records certain assets and income based upon the difference between all principal and interest received from the loans sold and the following factors (i) all principal and interest required to be passed through to the asset-backed bond investors, (ii) all excess contractual servicing fees, (iii) other recurring fees and (iv) an estimate of losses on loans. At the time of the securitization the Company estimates these amounts based upon a declining principal balance of the underlying loans, adjusted by an estimated prepayment and loss rate, and capitalizes these amounts using a discount rate that market participants would use for similar financial instruments. These capitalized assets are recorded as retained interests. The Company believes the assumptions it has used are appropriate and reasonable. The Company retained the right to service the loans it securitized. Fees for servicing the loans are based on a contractual percentage of 1.00% per annum of the unpaid principal balance of the associated loans. The Company has recognized a servicing asset in addition to its gain on sale of loans. The servicing asset is calculated as the present value of the expected future net servicing income in excess of adequate compensation for a substitute servicer, based on common industry assumptions and the Company's historical experience. These factors include default and prepayment speeds. The servicing asset recorded on the completed securitization represents a 25 basis point strip of net servicing cash flows. Key assumptions used in measuring the retained interest at December 31, 2001 are as follows: Prepayment Speed 150.00% MHP Weighted average life (months) 317 Discount rate 15.00% Expected credit losses 17.28%
The Company assesses the carrying value of its retained interest on a monthly basis. During the fourth quarter of 2001 the pool of securitized loans has experienced defaults and losses in excess of the Company's expectations and it has been concluded that such defaults are likely to be higher than expected in future periods as well. Initially the Company estimated total life time defaults as a percentage of initial pool balance to be 19.81% and net lifetime losses to be 10.32%. Based on the actual performance of the loans through December 31, 2001 it is now estimated that lifetime defaults will be 29.63% and estimated net losses will be 17.28%. The increased defaults and losses are due in part to the economic downturn that began in the third quarter of 2001, was made worse by the events of September 11 and has continued into 2002, and to some aggressive underwriting practices and credit decisions at the time the loans were originated. As a result of the changes in valuation assumptions in the retained interest, the Company has recognized an impairment of approximately $9.5 million. I. DEBT Through December 18, 2001, the Company had three separate financing facilities with Sun Communities Operating Limited Partnership: a $4.0 million subordinated term loan, a $10.0 million subordinated demand line of credit a $50.0 million subordinated demand line of credit. As of December 18, 2001 there was $51.3 million outstanding in the aggregate under these loans. On December 18, 2001, in connection with the recapitalization, the Company received capital contributions totaling $40 million which was used to repay a substantial portion of the Company's debt to Sun Communities Operating Limited Partnership. 21 BINGHAM FINANCIAL SERVICES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The remaining balance of the debt to Sun Communities Operating Limited Partnership (approximately $11.4 million) was restructured into a $21.25 million line of credit extended by Sun Communities Operating Limited Partnership to Origen Inc. and Origen LLC, as co-borrowers. The line of credit will terminate on December 18, 2002 and the outstanding balance bears interest at a rate of LIBOR plus 700 basis points, with a minimum interest rate of 11% and a maximum interest rate of 15%. The line of credit is collateralized by a security interest in substantially all of each borrower's assets. Sun Communities Operating Limited Partnership and Woodward Holding, a member of Origen LLC, have entered into a participation agreement under which Sun Communities Operating Limited Partnership will loan up to approximately 59% of the borrowing limit (or $12.5 million) and Woodward Holding will loan up to approximately 41% of the borrowing limit (or $8.75 million) under the line of credit. Sun Communities Operating Limited Partnership and Woodward Holding jointly administer the line of credit. Bingham has guaranteed the obligations of the borrowers under the line of credit and has granted the lenders a security interest in substantially all of its assets as security for the guaranty. In accordance with the original subordinated debt facility provided by Sun Communities Operating Limited Partnership, we issued detachable warrants to Sun covering 400,000 shares of common stock at a price of $10.00 per warrant share. The detachable warrants had a term of seven years and could have been exercised at any time after the fourth anniversary of the issuance. Upon the restructuring of the subordinated loan agreement, the detachable warrants were canceled. None of the detachable warrants had been exercised prior to the time they were canceled. In March 2000, Origen Inc. and Bloomfield Acceptance entered into an amended and restated repurchase arrangement with Lehman Commercial Paper, Inc. Under this agreement, Origen Inc. was able to transfer loans from time to time to Lehman against the transfer of funds from Lehman. In June 2001 this agreement was terminated and the aggregate amount advanced by Lehman was repaid in full. At December 31, 2000, the amounts advanced by Lehman was $67.3 million. In April 2000, Bloomfield Acceptance and Bloomfield Servicing entered into a warehousing credit agreement with Residential Funding Corporation. Under the credit agreement, Bloomfield Acceptance and Bloomfield Servicing could borrow up to $25.0 million to fund the acquisition and origination of FNMA loans, FHLMC loans, bridge mortgage loans and similar mortgage loans. In June 2001, the agreement was terminated. At the time the agreement was terminated Bloomfield Acceptance and Bloomfield Servicing had no advances outstanding under the agreement. At December 31, 2000, there were no advances outstanding under this agreement. Bingham and Origen Inc. are borrowers under a revolving credit facility with Standard Federal Bank (as successor to Michigan National Bank). Under this facility, Bingham and Origen Inc. may borrow up to $10.0 million. Interest at a rate of 30-day LIBOR plus a spread is payable on the outstanding balance. The outstanding principal balance on this credit facility as of December 31, 2001 and 2000 was approximately $6.3 million and $6.8 million, respectively. To secure the loan from Standard Federal Bank, Origen Inc. and Bingham have granted Standard Federal Bank a security interest in their rights under three servicing agreements under which Origen Inc. services manufactured home loans. This facility will terminate on June 30, 2002. Based on discussions with Standard Federal Bank and other lenders, the Company expects this facility to be extended or replaced at the end of its current term. In December 2001, Credit Suisse First Boston Mortgage Capital and Origen LLC, through its special purpose subsidiary Origen Special Holdings, LLC entered into a master repurchase agreement to replace the prior master repurchase agreement between Credit Suisse First Boston and Origen Special Holdings Corporation, a special purpose subsidiary of Origen Inc. The aggregate amount advanced under the prior facility was transferred to the new facility. Under the new agreement, Origen LLC contributes manufactured home loans it originates or purchases to Origen Special Holdings, LLC. Origen Special Holdings, LLC then transfers the manufactured home loans to Credit Suisse First Boston against the transfer of funds from Credit 22 BINGHAM FINANCIAL SERVICES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Suisse First Boston and Origen Special Holdings, LLC transfers the funds to Origen LLC for operations. Bingham guaranteed the obligations of Origen Special Holdings, LLC under this agreement. The maximum financing limit on the facility is $150.0 million. The annual interest rate on the facility is a variable rate equal to LIBOR plus a spread. The loans are financed on the facility at varying advance rates on the lesser of the then current face value or market value of the loans. The advance rates depend on the characteristics of the loans financed. The facility will terminate on May 28, 2002, but may be terminated earlier upon an event of default under the master repurchase agreement. At December 31, 2001, the aggregate amount advanced by Credit Suisse First Boston under the facility was $105.6 million. At December 31, 2001 and December 31, 2000 debt outstanding was as follows:
DECEMBER 31, -------------------- 2001 2000 ---- ---- (IN THOUSANDS) Loans sold under agreements to repurchase................... $105,564 $ 67,256 Revolving credit facility................................... 6,250 6,848 Demand loans................................................ -- 35,849 Term loan, net of discount.................................. 11,185 3,664 -------- -------- $122,999 $113,617 ======== ========
J. DEALER AGREEMENT As of September 30, 1997 the Company entered into a preferred dealer agreement with Sun Communities. Pursuant to the agreement, stock options were granted to Sun that would have vested if, and only if, Sun was a party to and in compliance with the terms of the agreement on the vesting date and on December 31 of the immediately preceding year. The options would have vested in eight equal annual amounts, each consisting of 41,250 options, on January 31, 2001 through 2008. The options could have been exercised at any time after vesting until expiration ten years after the date of vesting. Each option vesting January 31, 2001 to 2003 would have entitled the holder to purchase one share of common stock for a purchase price of $10. Each option vesting on January 31, 2004, 2005 and 2006 would have entitled the holder to purchase one share of common stock for $12. Each option vesting on January 31, 2007 and 2008 would have entitled the holder to purchase one share of common stock for $14. The preferred dealer agreement was terminated as of December 18, 2001 in connection with the Company's recapitalization. Accordingly all options related to the preferred dealer agreement were canceled. None of the options vested under the agreement had been exercised. The Company had recognized service costs related to the options based on the fair value method as prescribed by Statement of Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based Compensation". Service costs were amortized based on the vesting periods of the options. All previously recognized service costs, approximately $270,000, were derecognized in the year ended December 31, 2001. K. STOCK OPTION PLAN The Company's stock option plan has 247,632 shares of common stock reserved for issuance. Under the plan, the exercise price of the options will not be less than the fair market value of the common stock on the date of grant. The date on which the options are first exercisable is determined by the administrator of the Company's stock option plan, the Compensation Committee of the Board of Directors or the entire Board of Directors, and options generally have vested over a three-year period from the date of grant. The term of an option may not exceed ten years from the date of grant. As of December 31, 2001 all options that had been issued under the plan were terminated. 23 BINGHAM FINANCIAL SERVICES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company has adopted the disclosure requirements of SFAS 123. Accordingly, the fair value of each option granted in 2000 and 1999 was estimated using the Black-Scholes option pricing model based on the assumptions stated below:
DECEMBER 31, ----------------- 2000 1999 ---- ---- Estimated weighted average fair value per share of options granted................................................... $4.21 $4.40 Assumptions: Annualized dividend yield................................. --% --% Common stock price volatility............................. 55.84% 55.62% Weighted average risk free rate of return................. 6.82% 6.53% Weighted average expected option term (in years).......... 6.0 6.0
The Company has elected to measure compensation cost using the intrinsic value method, in accordance with APB Opinion No. 25, "Accounting for Stock Issued to Employees." Accordingly since all options were granted at a fixed price not less than the fair market value of the Company's common stock on the date of grant, no compensation cost has been recognized for its stock option plan. Had stock option costs of the plan been determined based on the fair value at the grant dates for awards under those plans consistent with the methodology of SFAS 123, the pro forma effects on the Company's net income and earnings per share would be as follows. No options were granted in the year ended December 31, 2001.
THREE MONTHS YEAR ENDED DECEMBER 31, ENDED YEAR ENDED -------------------------- DECEMBER 31, SEPTEMBER 30, 2001 2000 1999 1999 ---------- ---------- ------------- ------------- (IN THOUSANDS, EXCEPT EARNINGS PER SHARE) Net income (loss) as reported.................. $(19,694) $(16,255) $ (185) $ 776 Stock option compensation cost................. (606) 185 50 228 -------- -------- ------ ----- Pro forma net income (loss).................. $(19,088) $(16,440) $ (235) $ 548 ======== ======== ====== ===== Basic income (loss) per share as reported...... $ (7.63) $ (6.19) $(0.07) $0.39 Stock option compensation cost................. (0.23) 0.07 0.02 0.12 -------- -------- ------ ----- Pro forma earnings (loss) per share.......... $ (7.40) $ (6.26) $(0.09) $0.27 ======== ======== ====== ===== Diluted earnings (loss) per share as reported..................................... $ (7.63) $ (6.19) $(0.07) $0.36 Stock option compensation cost................. (0.23) 0.07 0.02 0.11 -------- -------- ------ ----- Pro forma fully diluted earnings (loss) per share..................................... $ (7.40) $ (6.26) $(0.09) $0.25 ======== ======== ====== =====
24 BINGHAM FINANCIAL SERVICES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following tables set forth changes in options outstanding:
YEAR ENDED DECEMBER 31, -------------------------------------------- 2001 2000 --------------------- -------------------- WEIGHTED WEIGHTED AMOUNT AVG. PRICE AMOUNT AVG. PRICE ------ ---------- ------ ---------- Shares under option: Outstanding at beginning of year.................... 181,350 $9.34 191,068 $10.14 Granted............................................. -- -- 35,000 7.00 Forfeited/canceled.................................. (181,350) 9.34 (44,718) 11.04 Exercised........................................... -- -- -- -- -------- ----- ------- ------ Outstanding at end of year.......................... -- $ -- 181,350 $ 9.34 ======== ===== ======= ====== Exercisable at end of year.......................... -- -- 90,359 $10.03 ======== ===== ======= ======
THREE MONTHS ENDED YEAR ENDED DECEMBER 31, SEPTEMBER 30, -------------------- -------------------- 1999 1999 -------------------- -------------------- WEIGHTED WEIGHTED AMOUNT AVG. PRICE AMOUNT AVG. PRICE ------ ---------- ------ ---------- Shares under option: Outstanding at beginning of year..................... 137,818 $11.15 109,900 $10.65 Granted.............................................. 53,250 7.54 29,250 13.19 Forfeited/canceled................................... -- -- (1,832) 12.25 Exercised............................................ -- -- -- -- ------- ------ ------- ------ Outstanding at end of year........................... 191,068 $10.14 187,818 $10.14 ======= ====== ======= ====== Exercisable at end of year........................... 98,309 $10.36 65,917 $10.36 ======= ====== ======= ======
The following table sets forth details of options outstanding at December 31, 2000.
DECEMBER 31, 2000 ------------------------------------------------------------------------------------------- OPTIONS OUTSTANDING OPTIONS EXERCISABLE -------------------------------------------- -------------------------------------------- WEIGHTED WEIGHTED AVERAGE AVERAGE RANGE OF REMAINING RANGE OF REMAINING EXERCISE PRICES NUMBER CONTRACTUAL LIFE EXERCISE PRICES NUMBER CONTRACTUAL LIFE --------------- ------ ---------------- --------------- ------ ---------------- $ 7.00 35,000 9.35 Years $ -- -- -- 7.25 40,000 8.97 Years 7.25 13,333 8.97 Years 7.75 8,250 8.96 Years 7.75 2,749 8.96 Years 9.75 1,500 8.67 Years 9.75 500 8.67 Years 10.00 60,500 6.94 Years 10.00 58,833 6.89 Years 11.00 3,250 8.61 Years 11.00 1,083 8.61 Years 12.50 1,250 7.81 Years 12.50 1,250 7.81 Years 13.00 18,750 7.09 Years 13.00 8,331 6.99 Years 13.50 7,100 8.48 Years 13.50 2,364 8.48 Years 14.50 5,750 8.28 Years 14.50 1,916 8.28 Years ------------- ------- ---------- ------------- ------ ---------- $7.00 - 14.50 181,350 8.69 Years $7.25 - 14.50 90,359 7.38 Years ============= ======= ========== ============= ====== ==========
There were no options outstanding at December 31, 2001. 25 BINGHAM FINANCIAL SERVICES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) L. FEDERAL INCOME TAXES Federal income tax expense consisted of the following:
YEAR ENDED THREE MONTHS DECEMBER 31, ENDED YEAR ENDED ------------ DECEMBER 31, SEPTEMBER 30, 2001 2000 1999 1999 ---- ---- ------------ ------------- (IN THOUSANDS) Current tax provision.............................. $ -- $ -- $ (8) $(473) Deferred tax provision (benefit)................... 1,245 (8,374) (84) 914 ------ ------- ---- ----- Federal income tax expense (benefit)............. $1,245 $(8,374) $(92) $ 441 ====== ======= ==== =====
A reconciliation of the statutory federal income tax rate to the effective income tax rate follows:
YEAR ENDED THREE MONTHS DECEMBER 31, ENDED YEAR ENDED ---------------- DECEMBER 31, SEPTEMBER 30, 2001 2000 1999 1999 ---- ---- ------------ ------------- Statutory tax rate................................ 34.00% 34.00% 34.00% 34.00% Effect of: Nondeductible expenses.......................... -- -- -- 2.22 Other........................................... (1.96) -- -- -- Change in valuation allowance................... (38.9) -- -- -- ----- ----- ----- ----- Effective tax rate................................ (6.86)% 34.00% 34.00% 36.22% ===== ===== ===== =====
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company's net deferred tax asset has increased to $14.8 million at December 31, 2001, compared to $8.4 million at December 31, 2000. The Company recognized a valuation allowance on its net deferred tax asset at December 31, 2001, taking into consideration changes in economic conditions, the recapitalization and restructuring that occurred in December 2001, projections of future taxable income and available tax planning strategies. Significant components of the Company's deferred tax assets and liabilities are as follows:
YEAR ENDED THREE DECEMBER 31, MONTHS ENDED YEAR ENDED ------------------ DECEMBER 31, SEPTEMBER 30, 2001 2000 1999 1999 ---- ---- ------------ ------------- (IN THOUSANDS) Deferred Tax Assets: Option amortization............................ $ 121 $ 91 $ 62 $ 55 Reserve for loan losses........................ 1,557 1,081 285 230 Recourse liability............................. 3,341 3,294 128 -- Net operating loss carryforward................ 12,782 7,210 -- -- Other items, net............................... 1,124 1,170 591 273 ------- ------- ------ ---- Total deferred tax assets................... 18,925 12,846 1,066 558 Less: valuation allowance...................... (7,665) -- -- -- Deferred Tax Liabilities: Net deferral required by SFAS 91............... 584 403 281 169 Deferred closing costs......................... 79 59 167 148 Restructuring charges.......................... 915 844 -- --
26 BINGHAM FINANCIAL SERVICES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEAR ENDED THREE DECEMBER 31, MONTHS ENDED YEAR ENDED ------------------ DECEMBER 31, SEPTEMBER 30, 2001 2000 1999 1999 ---- ---- ------------ ------------- (IN THOUSANDS) Loan sale proceeds receivable.................. 1,946 2,245 -- -- Gain on sale of MSR required by SFAS 125....... 736 849 546 253 ------- ------- ------ ---- Total deferred tax liabilities.............. 4,260 4,400 994 570 ------- ------- ------ ---- Total net deferred tax assets (liabilities)...... $ 7,000 $ 8,446 $ 72 $(12) ======= ======= ====== ====
M. STOCKHOLDERS' EQUITY The Company consummated an initial public offering of 1,200,000 shares of common stock on November 19, 1997. The initial offering price was $10.00 per share, which provided approximate proceeds to the Company of $11.2 million. On December 16, 1997, an additional 70,000 shares were issued which provided approximate proceeds to the Company of $651,000. Prior to the initial public offering, on October 27, 1997 the Company sold 25,000 shares to Sun Communities, Inc. for gross proceeds of $250,000. In April, 1999, the Company issued 800,330 shares of its common stock in private equity raises. The stock issuances resulted in proceeds of approximately $12 million. During the years ended December 31, 2001 and 2000, the three months ended December 31, 1999, and the year ended September 30, 1999 the Company awarded 0 restricted shares, 44,138 restricted shares, 11,243 restricted shares and 84,658 restricted shares, respectively, to executive officers and senior management that vest over three years. In the years ended December 31, 2001 and 2000, 96,693 and 10,178 of previously issued restricted shares, respectively, were canceled. Upon completion of the Company's recapitalization plan, 17,739 of unvested restricted shares issued to executive officers and senior management became immediately vested. As of December 31, 2001, 140,039 restricted stock awards had been issued; 33,168 have vested and 106,871 have been canceled. The compensation cost for the restricted shares was amortized over the respective vesting periods. N. DISPOSITION OF ASSETS On June 13, 2001, Bingham sold certain of the assets of its commercial mortgage financing and servicing subsidiaries and other related assets to Wells Fargo Bank, National Association and Wells Fargo & Company for cash consideration of approximately $9.6 million. The assets sold consisted of commercial loans receivable with a carrying amount of approximately $3.5 million, mortgage servicing rights with a carrying amount of approximately $2.1 million and furniture and equipment with carrying amounts of approximately $303,000. The pre-tax gain on the sale of assets of approximately $1.4 million is net of the write-off of $1.3 million in goodwill related to the purchase of the commercial mortgage operations and approximately $1.1 million in costs related to the transaction. Proceeds from the sale were used to pay down Bingham's existing lines of credit. The sale was completed pursuant to an Agreement dated May 8, 2001, as amended, among Bingham, Bloomfield Acceptance, Bloomfield Servicing, Hartger & Willard, Wells Fargo Bank and Wells Fargo & Company. The terms of the transaction were determined on the basis of arm's length negotiations between the parties. O. COMMITMENTS AND CONTINGENCIES LEASE COMMITMENTS: At December 31, 2001 aggregate minimum rental commitments under noncancelable leases having terms of more than one year were $1.2 million payable (2002), $593,000 (2003), $370,000 (2004) and $58,000 (2005). Total rental expense for the years ended December 31, 2001 and 2000, the three months ended December 31, 1999 and the year ended September 30, 1999 was $1.3 million, $1.2 million, 27 BINGHAM FINANCIAL SERVICES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) $251,000 and $420,000, respectively. These leases are for office facilities and equipment and generally contain either clauses for cost of living increases and/or options to renew or terminate the lease. LOAN COMMITMENTS: At December 31, 2001 and 2000, the Company had commitments to originate manufactured home installment contracts approximating $24.2 million and $48.6 million, respectively. Commercial mortgage loan commitments totaled $0 and $90.5 million at December 31, 2001 and 2000, respectively. P. FINANCIAL INSTRUMENTS AND OFF-BALANCE SHEET ACTIVITY FINANCIAL INSTRUMENTS: As part of its interest rate risk management strategy, the Company has in the past attempted to hedge the interest rate risk on its loan portfolio by entering into Treasury rate locks and forward interest rate swaps. The Company has classified these transactions as hedges on specific classes of loan receivables. Any gross unrealized gains or losses on these hedge positions were an adjustment to the basis of the mortgage loan portfolio and were used in the lower of cost or market valuation to establish a valuation allowance as shown in Note D. As of December 31, 2001 the Company had no outstanding hedge positions. The following table identifies the gross unrealized gains and losses of the hedge positions as of December 31, 2001, December 31, 2000 and December 31, 1999:
THREE MONTHS YEAR ENDED DECEMBER 31, ENDED YEAR ENDED -------------------------------- DECEMBER 31, SEPTEMBER 30, 2001 2000 1999 1999 -------------- -------------- -------------- -------------- GROSS GROSS GROSS GROSS UNREALIZED UNREALIZED UNREALIZED UNREALIZED HEDGE TYPE REFERENCE RATE/TREASURY GAINS (LOSSES) GAINS (LOSSES) GAINS (LOSSES) GAINS (LOSSES) ---------- ----------------------- -------------- -------------- -------------- -------------- (IN THOUSANDS) Interest Rate Swap... 10 Year Swap $-- $(364) $609 $(146) Treasury Lock........ U.S. Treasury 4.750% -- 11/08 -- -- -- 126 Treasury Lock........ U.S. Treasury 5.625% -- 5/08 -- -- -- 115 Treasury Lock........ U.S. Treasury 5.500% -- 5/09 -- -- -- 6 Treasury Lock........ 10 Year Treasury -- -- -- 2
FAIR VALUE OF FINANCIAL INSTRUMENTS: Statement of Financial Accounting Standards No. 107 ("SFAS 107") requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate such value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. 28 BINGHAM FINANCIAL SERVICES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table shows the carrying amount and estimated fair values of the Company's financial instruments:
DECEMBER 31, ---------------------------------------------- 2001 2000 --------------------- --------------------- ESTIMATED ESTIMATED CARRYING FAIR CARRYING FAIR AMOUNT VALUE AMOUNT VALUE -------- --------- -------- --------- (IN THOUSANDS) Assets Cash and equivalents............................... $ 440 $ 440 $ 3,521 $ 3,521 Restricted cash.................................... 1,739 1,739 1,628 1,628 Loans receivable................................... 126,591 128,477 98,633 105,416 Loan sale proceeds receivable...................... 5,723 5,723 6,603 6,603 Other.............................................. 9,540 9,540 9,102 9,102 Liabilities Accounts payable and accrued expenses.............. 5,709 5,709 14,111 14,111 Recourse liability................................. 7,860 7,860 9,313 9,313 Interest rate swap................................. -- -- 2,640 2,640 Advances under repurchase.......................... 105,564 105,564 67,256 67,256 Subordinated debt.................................. -- -- 3,664 3,664 Note payable....................................... 17,435 17,435 42,697 42,697
The carrying amount for cash and cash equivalents and other assets is a reasonable estimate of their fair value. Fair values for the Company's loans are estimated using quoted market prices for loans with similar interest rates, terms and borrowers credit quality as those being offered by the Company. The carrying amount of accrued interest approximates its fair value. Due to their short maturity, accounts payable and accrued expense carrying values approximate fair value. Fair value of the Company's loan sale proceeds receivable approximates its carrying value. The fair value is based on a discounted cash flow analysis with prepayment assumptions based on historical performance and industry standards. The fair value of the Company's recourse liability approximates its carrying value. The fair value is based on a discounted cash flow analysis with prepayment assumptions based on historical performance and industry standards. Fair value of loan commitments valued on the basis of fees currently charged for commitments for similar loan terms to new borrowers with similar credit profiles is not considered material. The fair value of the Company's fixed rate subordinated debt at December 31, 2000 was based on quoted market prices for debt with similar terms and remaining maturities. The fair value of the variable rate debt is based on its carrying amount. 29 BINGHAM FINANCIAL SERVICES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Q. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
FIRST SECOND THIRD FOURTH QUARTER QUARTER QUARTER QUARTER ------- ------- ------- ------- (IN THOUSANDS, EXCEPT EARNINGS PER SHARE) YEAR ENDED DECEMBER 31, 2001: Interest income........................................ $ 3,384 $ 795 $ 2,194 $ 3,120 Interest expense....................................... 2,914 1,224 1,717 2,020 Net income (loss)...................................... 865 (755) (2,959) (16,845) Diluted income (loss) per share........................ .33 (0.29) (1.16) (6.62) YEAR ENDED DECEMBER 31, 2000: Interest income........................................ $ 4,118 $ 4,650 $ 3,296 $ 2,529 Interest expense....................................... 3,538 4,232 3,267 3,165 Net loss............................................... (2,897) (2,506) (2,859) (7,993) Diluted loss per share................................. (1.12) (0.95) (1.08) (3.03) YEAR ENDED SEPTEMBER 30, 1999: Interest income........................................ $ 2,118 $ 2,617 $ 2,521 $ 2,221 Interest expense....................................... 1,699 1,841 1,953 1,363 Net income (loss)...................................... 764 480 304 (772) Diluted income (loss) per share........................ 0.43 0.26 0.13 (0.30) THREE MONTHS ENDED DECEMBER 31, 1999: Interest income........................................ $ -- $ -- $ -- $ 4,069 Interest expense....................................... -- -- -- 2,832 Net loss............................................... -- -- -- (185) Diluted loss per share................................. -- -- -- (0.07)
R. SUBSEQUENT EVENTS In March 2002, the Company completed a securitization of manufactured home loans with principal balances totaling approximately $135.0 million. These loans will serve as collateral for bonds issued by Origen Manufactured Housing Trust 2002-A. The securitization is expected to qualify as a sale of loans for accounting purposes and the Company expects to recognize a gain on the transaction of approximately $2.5 million. The Company received proceeds of approximately $128.6 million at closing which were used to reduce amounts outstanding under the Company's credit facilities. 30 BINGHAM FINANCIAL SERVICES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) ITEM 11. EXECUTIVE COMPENSATION The following table sets forth all compensation paid to our Chief Executive Officer and our four highest paid other executive officers whose remuneration from Bingham exceeded $100,000 during the last three fiscal years (the "Named Executive Officers"). Effective February 4, 2000, Bingham changed its fiscal year end from September 30 to December 31. The information in the following tables is presented for the fiscal year ended September 30, 1999, the three months ended December 31, 1999 (the "Stub Period"), the fiscal year ended December 31, 2000, and the fiscal year ended December 31, 2001. SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION -------------------------- ANNUAL COMPENSATION RESTRICTED SHARES -------------------- STOCK UNDERLYING ALL OTHER NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS AWARDS OPTIONS(#) COMPENSATION --------------------------- ----------- ------ ----- ---------- ---------- ------------ Ronald A. Klein, 9/30/1999 $105,000 $ 50,000 $145,000(1) 5,000(2) -- President and Chief Stub Period 37,500 50,000 -- 30,000(2) -- Executive Officer 12/31/2000 250,000 150,000 -- -- -- 12/31/2001 275,000 50,000 -- -- -- Daniel E. Bober,(3) 9/30/1999 155,625 150,000(4) -- -- $25,000(5) Vice President Stub Period 65,846 -- -- -- 25,000(5) 12/31/2000 165,375 105,882 -- -- 25,000(5) 12/31/2001 79,587 167,647 -- -- 10,416(5) Creighton J. Weber,(6) 9/30/1999 155,625 150,000(7) -- -- 25,000(8) Vice President Stub Period 65,846 -- -- -- 25,000(8) 12/31/2000 165,375 105,882 -- -- 25,000(8) 12/31/2001 79,587 257,866 -- -- 10,416(8) W. Anderson Geater, Jr., 9/30/1999 -- -- -- -- -- Chief Financial Officer Stub Period -- -- -- -- -- 12/31/2000 106,250 50,000 -- 10,000(9) -- 12/31/2001 165,000 175,000 -- -- -- J. Peter Scherer, 9/30/1999 -- -- -- -- -- Chief Operating Officer Stub Period 31,250 1,442 100,000(10) 2,500(11) -- 12/31/2000 131,250 55,000 -- 10,000(11) -- 12/31/2001 160,000 150,000 -- -- --
------------------------- (1) On April 14, 1999, Bingham granted Mr. Klein 10,000 shares of restricted stock of which 5% vested on April 14 of each of 2000 and 2001 and 25% vests on April 14 of each of 2002 and 2003 and the balance vests on April 14, 2004. As of December 31, 2001, the value of these restricted shares (as determined in accordance with the rules promulgated by the SEC) was $15,000. If dividends on Bingham's common stock are paid, Mr. Klein has the right to receive any dividends paid on these restricted shares. (2) These options were terminated as of December 31, 2001. (3) Mr. Bober resigned as a director and executive officer of Bingham as of June 13, 2001. (4) Mr. Bober earned this bonus for services rendered to Bingham for the period from March of 1998 through March of 1999. This bonus was paid in 17 equal monthly installments beginning September 1, 1999. (5) Represents contribution to an annuity plan of Mr. Bober's choice. 31 BINGHAM FINANCIAL SERVICES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (6) Mr. Weber resigned as a director and executive officer of Bingham as of June 13, 2001. (7) Mr. Weber earned this bonus for services rendered to Bingham for the period from March of 1998 through March of 1999. This bonus was paid in 17 equal monthly installments beginning September 1, 1999. (8) Represents contribution to an annuity plan of Mr. Weber's choice. (9) These options were terminated as of December 31, 2001. (10) On October 1, 1999, Bingham granted Mr. Scherer 9,709 shares of restricted stock of which 5% vested on October 1 of each of 2000 and 2001 and 25% vests on October 1 of each of 2002 and 2003 and the balance vests on October 1, 2004. As of December 31, 2001, the value of these restricted shares (as determined in accordance with the rules promulgated by the SEC) was $14,564. If dividends on Bingham's common stock are paid, Mr. Scherer has the right to receive any dividends paid on these restricted shares. (11) These options were terminated as of December 31, 2001. STOCK OPTIONS All stock options held by Named Executive Officers were terminated as of December 31, 2001. DIRECTOR COMPENSATION Directors who are not employees of Bingham are entitled to an annual retainer fee of $12,000, payable $3,000 per calendar quarter. Each of Mark A. Gordon, Brian M. Hermelin and Robert H. Orley earned directors' fees of $12,000 for services during the fiscal year ended December 31, 2001. Although Arthur A. Weiss earned director's fees of the same amount for services during that period, he declined such fees. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Since December 13, 2000, the members of the Compensation Committee of our board of directors have been Messrs. Hermelin, Weiss and Orley. Mr. Weiss' law firm provided services to Bingham in fiscal year ended December 31, 2001. Please see "Certain Relationships and Related Party Transactions". EMPLOYMENT AGREEMENTS We have entered into an employment agreement with Ronald A. Klein under which Mr. Klein serves as Bingham's Chief Executive Officer and President. Mr. Klein's employment agreement is for an initial term of three years ending December 31, 2002. The term is automatically renewed for successive one year periods unless either party terminates the agreement. Mr. Klein's annual base salary in the first, second and third year of the agreement is $250,000, $275,000 and $300,000, respectively. After the third year, the base salary will be increased by 5% or more per year as determined by our board. Mr. Klein will be paid an annual bonus under the terms of an executive bonus plan to be agreed upon by us and Mr. Klein. The agreement provides for a cash payment of up to 2.99 times Mr. Klein's base salary if there is a change in control of Bingham. Mr. Klein's employment agreement precludes him for the term of the agreement plus 18 months, from diverting business from Bingham or its subsidiaries or inducing anyone to leave the employment of Bingham or its subsidiaries. In connection with the recapitalization of Bingham, Mr. Klein and the Company have been in negotiations regarding his employment agreement. No definitive agreement has been signed. 32 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: May 7, 2002 BINGHAM FINANCIAL SERVICES CORPORATION By: /s/ RONALD A. KLEIN ------------------------------------ Ronald A. Klein President and Chief Executive Officer By: /s/ W. ANDERSON GEATER, JR. ------------------------------------ W. Anderson Geater, Jr. Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) 33 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION ------- ----------- 2.1 Agreement and Plan of Merger dated as of February 17, 1998 by and among Bingham Financial Services Corporation, BAC Acquiring Corp., BSC Acquiring Corp., Bloomfield Acceptance Company, L.L.C., and Bloomfield Acceptance Company, L.L.C. (Incorporated by reference to Exhibit 2.1 to Bingham's Current Report on Form 8-K dated March 5, 1998) 2.2 Purchase Agreement dated as of November 27, 1999 by and among DFI Acquiring Corp., Dynex Capital, Inc., Dynex Holding, Inc. (Incorporated by reference to Exhibit 2.1 to Bingham's Report on Form 8-K filed December 30, 1999) 2.3 Reorganization Agreement dated as of June 30, 1999, by and among Bingham Financial Services Corporation, DMR Financial Services, Inc., Hartger & Willard Mortgage Associates, Inc. and Detroit Mortgage and Realty Company (Incorporated by reference to Exhibit 2.1 to Bingham's Current Report on Form 8-K dated July 14, 1999) 2.4 Agreement dated May 8, 2001 among Bingham Financial Services Corporation, Bloomfield Acceptance Company, L.L.C., Bloomfield Servicing Company, L.L.C., Hartger & Willard Mortgage Associates, Inc., Wells Fargo Bank, National Association, and Wells Fargo & Company. (Incorporated by reference to Exhibit 2.1 to Bingham's Current Report on Form 8-K filed May 25, 2001.) 2.5 Amendment No. 1 to Agreement dated June 13, 2001 among Bingham Financial Services Corporation, Bloomfield Acceptance Company, L.L.C., Bloomfield Servicing Company, L.L.C., Hartger & Willard Mortgage Associates, Inc., Wells Fargo Bank, National Association, and Wells Fargo & Company. (Incorporated by reference to Exhibit 2.2 to Bingham's Current Report on Form 8-K filed June 26, 2001) 2.6 Stock Purchase Agreement dated as of March 17, 2000 between Bingham and Gwenuc, LLC (Incorporated by reference to Exhibit 2.2 to Bingham's Report on Form 8-K filed March 23, 2000) 2.7 Merger Agreement dated December 17, 2001 among Bingham Financial Services Corporation, Origen Financial, Inc., Origen Manufactured Home Financial, Inc., Dynex Insurance Agency, Inc., Origen Financial L.L.C., Origen Manufactured Home Financial, L.L.C. and Origen Insurance Agency, L.L.C. (Previously filed with Form 10-K on April 1, 2002) 3.1 Amended and Restated Articles of Incorporation of Bingham Financial Services Corporation (Incorporated by reference to Exhibit 3.1 to Bingham's Registration Statement on Form S-1; File No. 333-34453) 3.2 Amended and Restated Bylaws of Bingham Financial Services Corporation (Incorporated by reference to Exhibit 3.3 to Bingham's Registration Statement on Form S-1; File No. 333-34453) 4.1 Shareholders Agreement dated March 5, 1998 (Incorporated by reference to Exhibit 2.7 to Bingham's Current Report on Form 8-K dated March 13, 1998) 4.2 Amendment to Merger Agreement, Shareholders Agreement and Employment Agreements, dated February 21, 1999 (Incorporated by reference to Exhibit 4.2 to Bingham's Annual Report on Form 10-K dated December 29, 1999) 4.3 Form of Registration Rights Agreement dated April 27, 1999 with respect to an aggregate of 800,330 shares (Incorporated by reference to Exhibit 4.1 to Bingham's Quarterly Report on Form 10-Q dated August 14, 2000) 4.4 Bingham Financial Services Corporation Third Amended and Restated 1997 Stock Option Plan (Incorporated by reference to Exhibit 4.1 to Bingham's Quarterly Report on Form 10-Q dated August 14, 2001) 10.1 Participants Support Agreement between Bingham and Sun Communities, Inc. (assigned to Sun Communities Operating Limited Partnership as of December 31, 1997) entered into on September 30, 1997, but effective as of July 1, 1997 (Incorporated by reference to Exhibit 10.1 to Bingham's Registration Statement on Form S-1; File No. 333-34453)
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EXHIBIT NO. DESCRIPTION ------- ----------- 10.2 Amendment to Participants Support Agreement between Bingham Financial Services Corporation and Sun Communities Operating Limited Partnership, dated as of April 1, 1999 (Incorporated by reference to Exhibit 10.2 to Bingham's Annual Report on Form 10-K dated December 29, 1999) 10.3 Administration Agreement between Bingham Financial Services Corporation and Sun Communities, Inc., dated July 1, 1997 (Incorporated by reference to Exhibit 10.3 to Bingham's Registration Statement on Form S-1; File No. 333-34453) 10.4 Form of Indemnification Agreement between Bingham and its directors (Incorporated by reference to Exhibit 10.4 to Bingham's Registration Statement on Form S-1; File No. 333-34453) 10.5 Security Agreement dated December 13, 1999 between Bingham and Sun Communities Operating Limited Partnership (Incorporated by reference to Exhibit 10.3 to Bingham's Quarterly Report on Form 10-Q dated August 14, 2000) 10.6 Amended and Restated Security Agreement dated as of December 13, 1999 between Sun Communities Operating Limited Partnership and Bingham (Incorporated by reference to Exhibit 10.14 to Sun Communities, Inc.'s Registration Statement on Form S-3 dated January 31, 2001; File No. 333-54718) 10.7 Amendment to Amended and Restated Security Agreement dated as of October 20, 2000 between Sun Communities Operating Limited Partnership and Bingham (Incorporated by reference to Exhibit 10.20 to Sun Communities, Inc.'s Registration Statement on Form S-3 dated January 31, 2001; File No. 333-54718) 10.8 Supplemental Agreement Regarding Assignment of Notes, Loan Agreements and Security Agreements as Collateral Security between Sun Communities Operating Limited Partnership and Bingham effective as of December 13, 1999 and December 17, 1999 (Incorporated by reference to Exhibit 10.16 to Sun Communities, Inc.'s Registration Statement on Form S-3 dated January 31, 2001; File No. 333-54718) 10.9 Supplemental Agreement Regarding Assignment of Note, Loan Agreement and Security Agreement as Collateral Security between Sun Communities Operating Limited Partnership and Bingham effective as of December 13, 1999 (Incorporated by reference to Exhibit 10.22 to Bingham's Annual Report on Form 10-K for the year ended December 31, 2000) 10.10 Supplemental Agreement Regarding Assignment of Note, Loan Agreement and Security Agreement as Collateral Security between Sun Communities Operating Limited Partnership and Bingham effective as of December 13, 1999 (Incorporated by reference to Exhibit 10.23 to Bingham's Annual Report on Form 10-K for the year ended December 31, 2000) 10.11 Supplemental Agreement Regarding Assignment of Note and Security Agreement as Collateral Security between Sun Communities Operating Limited Partnership and Bingham effective as of March 16, 2000 (Incorporated by reference to Exhibit 10.18 to Sun Communities, Inc.'s Registration Statement on Form S-3 dated January 31, 2001; File No. 333-54718) 10.12 Employment Agreement dated January 1, 2000 between Bingham and Ronald A. Klein (Incorporated by reference to Exhibit 10.5 to Bingham's Quarterly Report on Form 10-Q dated August 14, 2000) 10.13 Credit Agreement dated March 31, 2000 among Bingham, Dynex Financial, Inc., and Michigan National Bank (Incorporated by reference to Exhibit 10.8 to Bingham's Quarterly Report on Form 10-Q dated August 14, 2000) 10.14 Secured Promissory Note dated March 31, 2000 executed by Bingham and Dynex Financial, Inc. in favor of Michigan National Bank (Incorporated by reference to Exhibit 10.9 to Bingham's Quarterly Report on Form 10-Q dated August 14, 2000) 10.15 Security Agreement dated March 31, 2000 between Michigan National Bank and Dynex Financial, Inc. (Incorporated by reference to Exhibit 10.10 to Bingham's Quarterly Report on Form 10-Q dated August 14, 2000) 10.16 Security Agreement dated March 31, 2000 between Michigan National Bank and Bingham (Incorporated by reference to Exhibit 10.11 to Bingham's Quarterly Report on Form 10-Q dated August 14, 2000)
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EXHIBIT NO. DESCRIPTION ------- ----------- 10.17 Membership Pledge Agreement dated December 13, 1999 between Sun Communities Operating Limited Partnership and Bingham (Incorporated by reference to Exhibit 10.13 to Sun Communities, Inc.'s Registration Statement on Form S-3 dated January 31, 2001; File No. 333-54718) 10.18 Stock Pledge Agreement dated December 13, 1999 between Sun Communities Operating Limited Partnership and Bingham (Incorporated by reference to Exhibit 10.15 to Sun Communities, Inc.'s Registration Statement on Form S-3 dated January 31, 2001; File No. 333-54718) 10.19 Stock Pledge Agreement dated October 20, 2000 between Sun Communities Operating Limited Partnership and Bingham (Incorporated by reference to Exhibit 10.19 to Sun Communities, Inc.'s Registration Statement on Form S-3 dated January 31, 2001; File No. 333-54718) 10.20 Pooling and Servicing Agreement dated as of February 1, 2001 among Lehman ABS Corporation, Origen Financial, Inc., Vanderbilt Mortgage and Finance, Inc. and LaSalle Bank National Association (Incorporated by reference to Exhibit 4.1 to Lehman ABS Corporation's Current Report on Form 8-K filed April 12, 2001) 10.21 Manufactured Housing Contract Purchase Agreement dated as of February 1, 2001 among Lehman ABS Corporation, Origen Financial, Inc., and Bingham Financial Services Corporation (Incorporated by reference to Exhibit 10.1 to Lehman ABS Corporation's Current Report on Form 8-K filed April 12, 2001) 10.22 Investment Agreement dated July 20, 2001 among Bingham, Woodward Holding, LLC, SUI TRS, Inc. and Shiffman Family LLC (Incorporated by reference to Exhibit 10.59 to Sun Communities, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2001) 10.23 Amendment to Investment Agreement dated August 13, 2001 among Bingham, Woodward Holding, LLC, SUI TRS, Inc. and Shiffman Family LLC (Incorporated by reference to Exhibit 10.59 to Sun Communities, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2001) 10.24 Limited Liability Company Agreement of Origen Financial L.L.C. dated December 18, 2001 among Bingham, Woodward Holding, LLC, SUI TRS, Inc., and Shiffman Family LLC (Incorporated by reference to Exhibit 10.60 to Sun Communities, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2001) 10.25 Amended and Restated Subordinated Loan Agreement dated February 1, 2002 among Origen Financial, Inc., Origen Financial, L.L.C. and Sun Communities Operating Limited Partnership (Incorporated by reference to Exhibit 10.51 to Sun Communities, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2001) 10.26 First Amendment to Amended and Restated Subordinated Loan Agreement dated March 22, 2002 among Origen Financial, Inc., Origen Financial, L.L.C. and Sun Communities Operating Limited Partnership (Incorporated by reference to Exhibit 10.51 to Sun Communities, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2001) 10.27 Third Amended and Restated Promissory Note dated March 22, 2002 executed by Origen Financial, Inc. and Origen Financial, L.L.C. in favor of Sun Communities Operating Limited Partnership (Incorporated by reference to Exhibit 10.52 to Sun Communities, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2001) 10.28 Amended and Restated Security Agreement dated February 1, 2002 between Origen Financial, Inc. and Sun Communities Operating Limited Partnership (Incorporated by reference to Exhibit 10.53 to Sun Communities, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2001) 10.29 Amended and Restated Stock Pledge Agreement dated February 1, 2002 between Origen Financial, Inc. and Sun Communities Operating Limited Partnership (Incorporated by reference to Exhibit 10.54 to Sun Communities, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2001)
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EXHIBIT NO. DESCRIPTION ------- ----------- 10.30 Amended and Restated Limited Liability Company Interest Security and Pledge Agreement dated February 1, 2002 between Origen Financial, Inc. and Sun Communities Operating Limited Partnership (Incorporated by reference to Exhibit 10.55 to Sun Communities, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2001) 10.31 Security Agreement dated February 1, 2002 between Origen Financial, L.L.C. and Sun Communities Operating Limited Partnership (Incorporated by reference to Exhibit 10.56 to Sun Communities, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2001) 10.32 Limited Liability Company Interest Security and Pledge Agreement dated February 1, 2002 between Origen Financial, L.L.C. and Sun Communities Operating Limited Partnership (Incorporated by reference to Exhibit 10.57 to Sun Communities, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2001) 10.33 Amended and Restated Guaranty made February 1, 2002 by Bingham in favor of Sun Communities Operating Limited Partnership (Incorporated by reference to Exhibit 10.58 to Sun Communities, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2001) 10.34 Participation Agreement dated February 28, 2002 between Sun Communities Operating Limited Partnership and Woodward Holding, LLC (Incorporated by reference to Exhibit 10.61 to Sun Communities, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2001) 10.35 Master Repurchase Agreement dated December 18, 2001 between Credit Suisse First Boston Mortgage Capital LLC and Origen Special Purpose, L.L.C. (Previously filed with Form 10-K on April 1, 2002) 10.36 Annex I to Master Repurchase Agreement dated December 18, 2001 between Credit Suisse First Boston Mortgage Capital LLC and Origen Special Purpose, L.L.C. (Previously filed with Form 10-K on April 1, 2002) 10.37 Guaranty dated December 18, 2001 made by Bingham Financial Services Corporation in favor of Credit Suisse First Boston Mortgage Capital LLC (Previously filed with Form 10-K on April 1, 2002) 21 List of Subsidiaries (Previously filed with Form 10-K on April 1, 2002) 24 Power of Attorney (contained on the signature page to this Annual Report on Form 10-K)
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