Meta Financial Group, Inc. Reports Expected Loss of Insurance on Student Loan Portfolios but Expects Only Slightly Lower Yields Than Previously Disclosed, Net of Credit Losses
As indicated in its notice, until the hearing has concluded and a court order has been entered, ReliaMax will continue its business operations with regard to the Company’s purchased student loan portfolios, including the areas of default prevention and acceptance of claim filings. ReliaMax further noted that the impact on outstanding insurance coverage will be clearer sometime after the hearing and after the Division’s liquidation plan is finalized.
"ReliaMax and its predecessor companies have been providing private student loan insurance for over 25 years, and we are disappointed to learn of their pending insolvency," said Chairman and CEO
In light of the potential impact to the Company’s insurance coverage, the Company is adjusting the allowance for loan losses attributable to its student loan portfolios for the current quarterly period ending
Depending on the level of estate liquidation recoveries and authorized distributions, recoveries from a state insurance guarantee fund and other recovery sources, the Company anticipates realized pre-tax yields, net of on-going provision for credit losses and direct servicing costs, for the portfolios to range between 7.50% and 5.50%. These yield estimates are derived from historical default rates for these portfolios and are based on current interest rates and will increase or decrease, however, based on future Fed Funds rates over the life of the variable rate portfolios. The Company expects to receive substantial recoveries of unearned premiums from the estate of ReliaMax and also anticipates additional recoveries from a state guarantee fund, to which the Company believes it is entitled based upon the structure of the purchases of the student loan portfolios.
Forward Looking Statements
This Press Release includes statements which may constitute forward-looking statements made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding the Company’s expected recoveries with respect to its purchased student loan portfolios and the estimated impact on the Company’s provision for loan losses and consolidated pre-tax net income for the Company’s third fiscal quarter of 2018 and future periods, as well as anticipated realized pre-tax yields, net of credit losses and direct servicing costs, with respect to its purchased student loan portfolios. The accuracy of these statements are necessarily subject to risks, uncertainties, and assumptions as to future events that may not prove to be accurate. Various factors could cause actual results to differ materially from those expressed or implied herein, including the risk that the amount of recoveries, whether as a result of the ReliaMax liquidation plan, the state insurance guarantee fund or otherwise, is less than expected (including that the Company does not recover any such amounts at all); the risk that the Company may recognize loan losses or direct servicing costs in excess of the Company’s estimates with respect to its third fiscal quarter of 2018 or in future periods, whether as a result of the ReliaMax liquidation proceeding or otherwise; actual changes in interest rates and the Fed Funds rate; and the factors discussed in the Company’s most recent Annual Report on Form 10-K and other filings with the
|Media Contact:||Investor Relations Contact:|
|Katie LeBrun||Brittany Kelley Elsasser|
|Corporate Communications Director||Director of Investor Relations|