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Mr Hancock said the new logo consisted of blue waves in the shape of |
As Australia’s housing boom rolls on, so has the swell in issuance of residential mortage-backed securities.
But because of the rationalisation of the lenders’ mortgage insurance sector there are only two players let, down from five a few years ago.
In Australia there are just GE and PMI insuring mortgages, and investors buying mortgage-backed securities are starting to say they are getting too much exposure to the two insurers.
The problem is that a ratings downgrade of either of the two insurers would have an impact on a large portion of fixed-income portfolios. The issue could be about to get a whole lot worse if the talk is true that GE is planning to either sell or run down its mortgage-insurance business, which would leave only one.
RMBS buyers were voicing their concerns at a conference in Sydney last week about getting “too full” of the present lenders’ mortgage insurers. In this environment, Wide Bay Capricorn Building Society is about to launch a new RMBS issue insured by its own captive, rather than GE or PMI.
The $274 million issue arranged by SG is being sold in five tranches and gives RMBS investors a slightly different product to buy.
The securities are more of a straight play on the Australian mortgage market, or more specifically the state of Wide Bay Capricorn’s mortgage book, rather than the related insurance industry. Providing extra security to investors is the extra level of subordination on the issue.
The first tranche is $238 million of “Super Senior” notes, rated “AAA” by S&P and “Aaa” by Moody’s, which sit about the Class A $6 million issue on the same ratings.
Under that is the Class B $7 million notes issue, rates “AA/Aa1” and the Class C $7 million notes issue, rates “A/A1”.
The Class D$16 million issue is not rated and is being taken up by Wide Bay Capricorn itself.
It is understood that preliminary soundings with fund managers have revealed a positive reaction to the different structure of Wide Bay’s latest RMBS sale. The sale is being launched as early as today, with pricing and settlement in early December.
Tansy Harcourt
Reproduced from The Australian Financial Review, 24/11/03
Financial services group, Wide Bay Capricorn Building Society Ltd announced today that it will be seeking shareholder approval to change its name to Wide Bay Australia Ltd.
Managing Director, Mr Ron Hancock said shareholders will be asked to vote on the proposal at a General Meeting on 2nd December.
“The Board is recommending shareholders pass the motion to change the company name to Wide Bay Australia Ltd,” Mr Hancock said.
“We are proud of our heritage, but believe that a change in corporate identity will reflect our growth and help our further expansion.
”We believe it will be the start of the next exciting phase for our company.”
Mr Hancock said that Wide Bay Australia would legally remain a building society regulated by the Australian Prudential Regulation Authority, but the words ‘building society” would be dropped from the name.
“We want customers, potential customers, the business community and the broader Australian community to see us for what we are – a successful national group focussed on building wealth and providing competitive and useful financial services to Australians from North Queensland through to Adelaide,” Mr Hancock said.
“The change in name, however, will not mean a change in the way we do business. Any change in name will not impact on customers or our focus on excellent customer service.”
Wide Bay, based in Bundaberg, has assets and loans under management of over $1.264 billion and provides mortgages, finance and a range of banking and financial services in Sydney, Melbourne, Adelaide, Brisbane and across regional Queensland.
For more information, please refer to the Wide Bay Update 2003 Newsletter
In accordance with Listing Rule 3.13.2, Mr R Hancock Managing Director advised that the following resolutions proposed at the Annual General Meeting of Shareholders of the Society, held in Bundaberg today were carried.
These Resolutions were
To adopt annual accounts, statements and reports.
To elect directors. Mr JF Pressler and Mrs FM McLeod as nominated.
To approve the Director’s fees for the 12 months commencing 1 July 2003.
In accordance with Listing Rule 3.16.1 – we advise a change of Directors has occurred in that Mr KG McBride has retired from the Board. Mrs FM McLeod has been elected to the Board.
Appendix 3X and 3Z as required in accordance with Listing Rules 3.19A.1 and 3.19A.3 are also lodged herewith.
The Managing Director, Mr Ron Hancock advised that Mrs McLeod was the first woman to be elected to the Board. Her election is as an Executive Director. She has been involved with the Society for some 28 years in varying roles and more recently as Executive Manager. She currently represents the Society as a Director of Mortgage Risk Management Pty Ltd, the Society’s wholly owned captive, Wide Bay Capricorn Financial Planning Services Pty Ltd and Widcap Securities Ltd. She serves on various committees including the Assets and Liabilities Management Committee, The Financial Sector Reform Act Committee and has also been involved in the listing of the Company’s Ordinary Shares and the recent issue of Resetting Convertible Preference Shares as well as being responsible for monitoring Wide Bay’s Corporate Governance practice and compliance.
Wide Bay Capricorn Building Society Ltd‘s Directors and Management are pleased with the results for the 2002/2003 year, showing a profit of $9,198,628 after tax – an increase of 4.23% above the previous year’s results.
A fully franked dividend of 16 cents per ordinary share will be paid on 19th September, 2003.
During the year Wide Bay completed an early wind up of an R&D project - resulting in a write-back of future tax benefits of $261,000 - a direct reduction of after tax profits.
Loans approved for the year totaled $377.6 million - an increase of 23.8% over 2001/2002. Approvals for the six months to June 2003 were $218.9 million – an increase of 38% over the previous six months.
As advised in our Half Year Report, Wide Bay experienced a high level of churning and payouts which slowed the growth of the loans book for the year to 7.8%. While this trend was consistent with the industry, we are now pleased to report that our loans book has shown an increase of $49 million for the past six months.
We are confident - with the increased lending we have experienced in the last six months, entry into the giroPost system providing access to some 3,000 postal outlets throughout Australia and other retention initiatives taken with our existing portfolio - we should see a stronger growth in our loan book for 2003/2004. We continue to source only a small percentage of our loans through broker/introducers.
Our interstate operations continue to develop, with Sydney, Melbourne and Adelaide all showing an increasing contribution to our loans program.
We have recently resolved to install an in-house electronic processing system for our loans processing. This system, which is anticipated to be completed by March 2004, will provide us with much greater access and efficiencies for processing loan applications and will also enable us to complete mortgage documentation in-house at a considerable cost saving.
Our captive lenders’ mortgage insurer, Mortgage Risk Management Pty Ltd has performed well during the year, showing an after tax surplus of $996,755. The captive, which meets Standard and Poor’s “A” model, exclusively insures the Society’s loans and enables the Society to achieve a risk weighting of 50% of the loans’ portfolio for capital adequacy purposes. Premium income is earned on a 10 year spread and with the company now entering its 5th year of operation, together with the current housing market, is expected to show a significantly higher result for the 2003/2004 year.
The Society’s interest in Wide Bay Capricorn Mini Lease Pty Ltd is anticipated to provide a surplus for the ensuing 12 months.
We continue to fund our lending through both retail investments and securitisation programs and will during the December quarter, complete a further off balance sheet securitisation program. It is anticipated this will further reduce our capital requirements.
We have now repaid all the subordinated debt outstanding.
Our capital adequacy now approximates 13%.
Our cost efficiencies have been maintained during the year and are more than comparable to the finance sector. Our costs to income were 60.7% (59.5% - 2001/2002) and our cost to average assets 1.68% (1.65% - 2001/2002)
We have also been able and expect to continue to be able to hold our interest margins steady as in past years.
Basic earnings per share were 32.9 cents per share with diluted earnings per share 35.04 cents per share.
Since January 2003, we have been seeking to complete a Resetting Convertible Preference Share (RCP) buy-back of up to $7 million, but with the lack of liquidity and the pricing in the market have not been able to achieve this to date. To date we have repurchased $1,291,874.10 of RCP’s, the bulk of which was only completed in early August.
The Society’s Board and Management believe that with the actions taken in respect to our loans operations, together with other initiatives, that we will see further improving result for the ensuing 12 months.
Wide Bay Capricorn Building Society Ltd has posted a solid performance for the six months to 31 December 2002. Net operating profit for the period after tax was $4.626 million, which compares with $4.176 million for the six months to 31 December 2001 and represents an increase of 10.77%.
The Board and Management are pleased with the relative performance and cost ratios that the Society has maintained for this period.
Lending has been consistent with the previous corresponding period. Throughout this period there has been a high level of churning and payouts within the Industry, which has had an impact in slowing the growth of the Society’s loan book. We believe the churning can be attributed to the increased activity in the housing market over recent months, resulting in refinancing and payout of existing home mortgages and the activity of brokers within the Industry. The Society is monitoring this trend, ensuring that Wide Bay Capricorn’s products, their features and costings were competitive.
Our assets and loans under management total $1.185 billion.
On 16 August 2002 the Society completed it’s first off balance sheet securitisation for $235 million as opposed to past securitisation programs which have remained on balance sheet.
Wide Bay Capricorn reviewed its overall capital management plan as a result of the off balance sheet securitization and resolved recently to participate in a Resetting Convertible Preference (RCP) share buy-back program of $7 million and to also reduce capital by the redemption of outstanding tier 2 subordinated debt. At this stage the Society has not completed any acquisition of RCP’s as the Board are not prepared to meet the current market price. We will monitor the situation and expect to complete some acquisitions over the remainder of this financial year.
The Society’s subordinated debt matures in March, April and July of this year when they will be fully redeemed for an amount of approximately $14 million.
The Board has declared a fully franked dividend of 16 cents per ordinary share which will be payable on 14 March 2003.
Wide Bay Capricorn continues to expand its operations with branch upgrades in Caboolture and Yeppoon and the opening of a new lending facility in Townsville. We continue to review and develop our range of products and services. Our interstate operations in Sydney, Melbourne and Adelaide are performing soundly, providing a broad geographical spread.
Our captive lenders mortgage insurer - Mortgage Risk Management Pty Ltd, has performed well and is making a solid contribution to the Society’s overall performance. Its capital structure and operations meet the S&P “A” model and is now used exclusively for mortgage insurance of the Society’s loans. All loans are fully insured with either the Society’s captive or an approved Lenders Mortgage Insurer.
Our financial planning activities continue to expand and are receiving steady support. Internet and Telephone Banking facilities have proven very popular with strong growth and acceptance.
Our Board and Management are confident they can maintain the level of performance already achieved to December for the remainder of this financial year, although we do anticipate a slowing in the housing market.
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