Brooke Corporation Reports First Quarter 2008 Earnings
OVERLAND PARK, Kan., May 13 // PRNewswire-FirstCall // -- Brooke Corporation (Nasdaq: BXXX) today reported its first quarter financial results for the quarter ended March 31, 2008.
Leland Orr, Brooke Corporation's president and chief executive officer stated, "Brooke Corporation's operations focus on banking. Additionally, Brooke Corporation owns an investment in Aleritas Capital Corp. (a d/b/a of Brooke Credit Corporation; OTC Bulletin Board: BRCR). This investment represents a 62% ownership interest and therefore Aleritas' financial results are consolidated with Brooke Corporation's financial results for reporting purposes. Because Aleritas reported a significant loss in the first quarter of 2008 due to increased credit reserves, Brooke Corporation's consolidated results were negatively impacted by $14.6 million."
Leland Orr continued, "The current economic environment has been challenging for specialty finance companies like Aleritas. We also own 81% of Brooke Capital Corporation (Amex: BCP), an insurance agency franchisor, and the economic challenges faced by Aleritas have extended to Brooke Capital. With limited loan funding available to Aleritas for funding of new franchise acquisitions, Brooke Capital added few, if any, new franchises in the first quarter."
The consolidated total equity of Brooke Corporation, including minority shareholder interests, was approximately $81 million on March 31, 2008, as compared to consolidated total equity of approximately $67 million on March 31, 2007. Brooke Corporation book value per share of common stock was $1.86 at March 31, 2008.
For accounting purposes, Brooke Corporation currently consolidates the financial results of Aleritas Capital Corp. and Brooke Capital Corporation (its investment activities), with Brooke Corporation's banking and other operations (its non-investment activities).
Brooke Corporation reported a first quarter 2008 consolidated loss of $18.5 million as compared to a first quarter 2007 consolidated profit of $6.8 million. The company reported first quarter 2008 consolidated revenues of approximately $36 million as compared to first quarter 2007 consolidated revenues of $63 million. The decline in consolidated first quarter results from the same period a year ago was primarily driven by an increased provision for credit losses of approximately $12.5 million and an $11.7 million impairment charge for Aleritas.
Aleritas' first quarter 2008 net loss was approximately $24 million as compared to net income of approximately $5 million for first quarter 2007. Aleritas' first quarter 2008 results were adversely affected by increases in loan loss reserves. Brooke Capital's first quarter 2008 net loss was approximately $3 million as compared to profits of approximately $3 million for first quarter 2007. Brooke Capital's first quarter 2008 results were adversely affected by a decrease in initial franchise fees.
Brooke Corporation had previously announced plans to sell some of its Aleritas common stock for the purposes of repaying debt and increasing equity capital of its bank subsidiary. Brooke Corporation has delayed those plans until market conditions improve.
Brooke Corporation's non-investment related activities are focused on banking operations. Banking operations are conducted through Brooke Savings Bank and its parent company, Brooke Bancshares, Inc. Brooke Savings Bank reported total assets of approximately $147 million as of March 31, 2008.
Pretax losses of Brooke Savings Bank were $202,000 in the first quarter 2008, as compared to pretax profits of $152,000 in the first quarter 2007. The reduction in bank profits was directly related to the acquisition of significant agent bank deposits in the first quarter of 2008. 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
Brooke Corporation will host a conference call for analysts and investors on May 13, at 10 a.m. CST. To join the call, please dial (866) 825-3209 in the United States and Canada, or (617) 213-8061 if calling internationally. The conference ID number is 76717932. A live broadcast of the call will be available on the Investor Relations section of Brooke's Web site at http://www.brookebanker.com/.
A replay of this call will be available for eight days by using the dial-in (888)286-8010 in the United States and Canada and (617) 801-6888 if calling internationally. The replay conference ID number is 41279659.
About Brooke Corporation
Brooke Corporation is listed on the NASDAQ Global Market under the symbol "BXXX". Brooke Corporation owns 100 percent of Brooke Savings Bank, a banker agent thrift institution, 81 percent of Brooke Capital Corporation (Amex: BCP), an insurance company and insurance agency, and 62 percent 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