Brooke Corporation Announces Earnings

Brooke Corporation Announces Earnings

OVERLAND PARK, Kan., March 17 // PRNewswire-FirstCall // -- Brooke Corporation (NASDAQ: BXXX) today reported its financial results for the quarter and year ended Dec. 31, 2007.

"We were a better managed, better capitalized and better organized company on December 31, 2007 than we were on December 31, 2006," said Robert Orr, Chairman of Brooke Corporation. To illustrate his point, Orr noted:


  • Management delivered on its 2007 plans to acquire an agent banker network, to transfer ownership of its lending subsidiary into a separate public company and to improve the quality of agents in its insurance network.

  • The consolidated total equity of Brooke Corporation, including minority shareholder interests, was approximately $116,547,000 on Dec. 31, 2007, as compared to consolidated total equity of approximately $61,992,000 on Dec. 31, 2006. Brooke Corporation book value per share of common stock increased to $3.66 from $3.24, a 13% increase since Dec. 31,2006.

  • Brooke Corporation has been organized to provide more clarity and flexibility to investors by consolidating all lending into a separate public company (OTC: BRCR) (BULLETIN BOARD: BRCR) , consolidating most insurance activities into another separate public company(AMEX: BCP) and focusing Brooke Corporation operations on agent banking.



Financial Presentation

For accounting purposes, in 2007 and 2006 Brooke Corporation consolidated the financial results of Aleritas Capital Corp. (a d/b/a of Brooke Credit Corporation) and Brooke Capital Corporation (its investment activities), with Brooke Corporation's banking and other operations (its non-investment activities). A dividend of approximately 2,300,000 shares of Aleritas stock was recently declared payable to Brooke Corporation shareholders, which will reduce Brooke Corporation's ownership in Aleritas to less than 50% and which is expected to eliminate the requirement for accounting consolidation of Aleritas with Brooke Corporation in future accounting periods.

Financial Results

Brooke Corporation reported a 2007 consolidated profit of $1,595,000, as compared to a 2006 consolidated profit of $10,742,000. Brooke Corporation reported 2007 consolidated revenues of $214,017,000 as compared to 2006 consolidated revenues of $177,081,000.

Brooke Corporation reported a fourth quarter 2007 consolidated loss of $7,257,000 as compared to a fourth quarter 2006 consolidated profit of $1,689,000. Brooke Corporation reported fourth quarter 2007 consolidated revenues of $39,333,000 as compared to fourth quarter 2006 consolidated revenues of $41,635,000. Consolidated fourth quarter revenues declined because Aleritas reduced fourth quarter revenues for a $5,500,000 impairment loss and because Aleritas reduced fourth quarter revenues with an expense offset of $3,200,000 that had not previously been presented as such.

Robert Orr noted, "We had expected to receive additional shares of Aleritas as merger consideration for Aleritas achieving a 2007 earnings benchmark of approximately $15,000,000. However, primarily as a result of impairment and credit losses, the earnings benchmark was not achieved, which correspondingly had an adverse affect on our consolidated earnings. Additionally, the New Era initiatives implemented by Brooke Capital in the fourth quarter of 2007, which included a reduction of franchise royalties, has had an adverse affect on consolidated earnings."

Investment Activities

With its investment activities now conducted through two public companies, Brooke Corporation is better positioned for the possible sale of part or all of its investments in Aleritas or Brooke Capital. Such a sale could potentially monetize what are currently unrealized gains, which were up to $50,000,000 in the fourth quarter. As of Dec. 31, 2007, Brooke Corporation owned 62% of Aleritas outstanding shares and, during the fourth quarter, the share price of Aleritas ranged from a high of $5.30 to a low $4.70. As of Dec. 31, 2007, Brooke Corporation owned 81% of Brooke Capital's outstanding shares and, during the fourth quarter, the share price of Brooke Capital ranged from a high of $7.00 to a low of $3.50.

Aleritas' 2007 profits were $6,300,000 on revenues of $32,900,000, as compared to profits of $7,000,000 on revenues of $24,200,000 for 2006. Brooke Capital's 2007 profits were $2,300,000 on revenues of $172,000,000, as compared to profits of $3,500,000 on revenues of $144,000,000 for 2006.

Robert Orr stated, "With combined 2007 profits of $8,600,000 and revenues of $205,000,000, the management and employees of Aleritas and Brooke Capital performed well in a challenging business environment, confirming these two companies as valuable investments for Brooke Corporation".

Non-Investment Activities

Brooke Corporation's non-investment related activities are limited primarily to banking operations and brokerage activities. Banking operations are conducted through Brooke Savings Bank and its parent company, Brooke Bancshares, Inc. Brokerage operations are conducted through CJD & Associates, LLC and its parent company, Brooke Brokerage Corporation.

Brooke Savings Bank completed the acquisition of certain deposits and a network of bank agents from Bank of the West in January 2008. As a result of this transaction, Brooke Savings Bank reported total assets of approximately $141,000,000 as of January 31, 2008.

Pre tax profits of Brooke Savings Bank totaled $222,000 in 2007 and pretax losses of CJD & Associates totaled $279,000 in 2007. Although Brooke Corporation believes the future development of Brooke Savings Bank's banker agent network will increasingly contribute to its profits, these activities are not expected to significantly impact overall financial results for Brooke Corporation in the near future.

Earnings Conference Call

The company will host conference call today, March 17, at 1:00 PM EDT to discuss Brooke Corporation's financial results for the fourth quarter of 2007. To join the Brooke Corporation call, please dial (866) 770-7120 in the United States and Canada, or (617) 213-8065 if calling internationally. The conference ID number is 97285668. A live broadcast of the call will be available on the Investor Relations section of Brooke Capital Corporation's Web site at http://www.brookeagent.com/conference_call.html. A replay of this call will be available for eight days by using the dial-in 1-888-286-8010 in the United States and Canada and 1-617-801-6888 if calling internationally. The replay conference ID number is 97025912.

About Brooke Corporation

Brooke Corporation is listed on the NASDAQ Global Market under the symbol "BXXX". Brooke Corporation owns 100% of Brooke Savings Bank, a banker agent thrift institution, 81% of Brooke Capital Corporation (AMEX: BCP), an insurance company and insurance agency, and 62% of Aleritas Capital Corp. (a d/b/a of Brooke Credit Corporation; OTC Bulletin Board: BRCR), a finance company specializing in insurance lending.

This press release contains forward-looking statements. All forward-looking statements involve risks and uncertainties, and several factors could cause actual results to differ materially from those in the forward-looking statements. The following factors, among others, could cause actual results to differ from those indicated in the forward-looking statements: the uncertainty that the company will be able to sell its investments in Aleritas or Brooke Capital or finance such investments on terms it finds acceptable; the share price of Aleritas and Brooke Capital common stock; whether Brooke Savings Bank will succeed in expanding its banker agent network and if it does, whether it will achieve anticipated results from the network; the impact of competitive products and pricing; dependence on third-party suppliers and their pricing; the availability of funding sources; changes in the law and in economic, political and regulatory environments; changes in management; the effectiveness of internal controls; and risks and factors described from time to time in reports and registration statements filed by Brooke Corporation with the Securities and Exchange Commission. A more complete description of Brooke's business is provided in Brooke Corporation's most recent annual, quarterly and current reports, which are available from Brooke Corporation without charge or at http://www.sec.gov/.

SOURCE: Brooke Corporation

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