Onyx Acceptance Corporation announced today its financial and operational results for the quarter ended Sept. 30, 2000. Net income and earnings per diluted share were $1.7 million and $0.32 respectively, compared to $2.6 million and $0.39 for the same period in 1999.

The reduction in net income and earnings per share was the result of an increase in the loss reserve rate coupled with interest rate spread compression on contracts securitized in the third quarter. These factors reduced the gain on sale as a percentage of contracts securitized to 2.75 percent for the third quarter of 2000, compared to 3.42 percent for the same period in 1999.

Total revenues increased by 4.4 percent to $26.2 million during the third quarter of 2000, compared to $25.1 million in the same period in 1999. Service fee income increased 69.5 percent to $13.9 million for the third quarter 2000 compared to $8.2 million for the same period in 1999.

Service fee income comprised 53.0 percent of total third quarter revenues, up from 32.8 percent during the third quarter of 1999. This increase marks a milestone for the company: for the first time, servicing income for the quarter surpassed gain-on-sale revenue.

The company continues to become less reliant on the initial gain-on-sale for its reported financial results. Higher service fees, late fees and document fees related to the growth in the servicing portfolio was the predominant reason for this increase. The average servicing portfolio for the three months ended Sept. 30, 2000 was $2.5 billion, compared to $1.8 billion for the same period in 1999.

Contract purchases were $367.6 million for the quarter, compared to $398.8 million for the same period in 1999. The reduction in volume reflects management's decision to focus on credit quality rather than volume. The reduction also reflects the increased competition for near prime paper in the current market.

Onyx recorded a gain on sale of $12.1 million (2.75 percent of the issue amount) on its third quarter securitization of $440.0 million, compared to a gain of $13.7 million (3.42 percent of the issue amount) on $400.0 million of contracts securitized during the same period of 1999. The reduction of the gain was due to an increase in the loss reserve rate and reduced net interest spread on the securitization compared to the third quarter of 1999. Off balance sheet reserves as a percentage of securitized assets increased to 4.60 percent as of Sept. 30, 2000 compared to 4.45 percent for the same period in 1999.

Net interest income was $283 thousand for the third quarter of 2000, compared to $3.1 million during the same period in 1999. The reduction in net interest income was primarily due to the prefunded structure of the securitization executed during the third quarter of 2000. A prefunded securitization reduces the time period that the contracts are held for sale, and, as a result, reduces the interest income earned on the related contracts.

Total operating expenses as a percentage of average servicing portfolio declined to 3.45 percent for the third quarter 2000, compared to 4.16 percent for the quarter ended Sept. 30, 1999. Total delinquencies as a percentage of the period-end servicing portfolio increased to 3.88 percent from 3.24 percent at year-end 1999. Annualized net charge-offs as a percent of the average servicing portfolio increased to 2.20 percent during the third quarter of 2000, from 1.80 percent for the same period in 1999.

The company recently completed an additional residual warehouse facility in the amount of $35.0 million with Credit Suisse First Boston. The line will be used as an additional liquidity source to fund its operations. The line is similar in its operation to the Company's existing residual lines totaling $70.0 million with Salomon Smith Barney and Merrill Lynch related entities.

During the third quarter, the company purchased 51,000 shares of its Common Stock as a part of its stock repurchase program authorized by its Board of Directors in May of 2000. As of Sept. 30, 2000, the company has retired approximately 942,000 shares of its Common Stock, and has expended approximately $4.4 million in connection with this program. Repurchases may continue from time to time at prevailing market prices, through open market or unsolicited negotiated transactions, depending upon market conditions. The company may discontinue purchases at any time that management determines additional purchases are not warranted.

Onyx Acceptance Corporation is a specialized automobile finance company based in Foothill Ranch, Calif. Onyx provides financing to franchised and select independent dealerships throughout the United States.

For more information about Onyx Acceptance Corporation, visit www.onyxco.com.