THE RYLAND GROUP, INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements
(amounts in thousands, except share data, in all notes unless
otherwise noted)
NOTE E: FINANCIAL SERVICES SHORT-TERM NOTES PAYABLE
Financial services had outstanding borrowings at December 31 as follows:
The Company's bank facility, which matures in June 2000, provides up to $260 million
for mortgage warehouse funding and $30 million for working capital advances. Warehouse
advances are secured by mortgage loans held-for-sale, and working capital advances are
secured by certain loan servicing rights and loan servicing advances. Borrowings
outstanding under this bank facility totaling $106,699 at December 31, 1998, were
collateralized by mortgage loans held-for-sale with outstanding principal balances of
$121,079. Borrowings outstanding under this bank facility totaling $191,352 at December
31, 1997, were collateralized by mortgage loans held-for-sale with outstanding principal
balances of $159,358, servicing rights of $10,252 and certain loan servicing advances of
$21,906. The effective interest rates on these borrowings were 4.1 percent, 3.0 percent
and 3.1 percent for 1998, 1997 and 1996, respectively. The agreement contains certain
financial covenants, which the Company met at December 31, 1998.
The repurchase agreements represent short-term borrowings that are collateralized by
mortgage loans, mortgage-backed securities and investments in securities issued by the
Company's limited-purpose subsidiaries with outstanding balances at December 31, 1998 and
1997, of $64,129 and $88,198, respectively, with related fair values of $66,653 and
$91,806. As of December 31, 1998, $40 million of the Company's variable-rate short-term
borrowings had been effectively converted by interest rate swap and collar agreements to
fixed-rate borrowings. The notional amount of the swap and collar agreements will decline
to $30 million in 1999. The effective interest rates on the repurchase agreements,
including the effect of the interest rate swap and collar agreements, were 5.9 percent,
6.0 percent and 5.8 percent for 1998, 1997 and 1996, respectively.
In May 1998, the Company renewed and extended its $100 million credit facility used to
finance investment securities in the financial services segment. The agreement was
extended through March 1999, bears interest at market rates and is collateralized by
investment portfolio securities. Borrowings outstanding under this facility, totaling
$52,039 and $53,542, were collateralized by investment portfolio securities with principal
balances of $52,700 and $53,482 at December 31, 1998 and 1997, respectively. The fair
values of the investment securities at December 31, 1998 and 1997 were $54,668 and
$56,207, respectively.
The weighted-average interest rates at the end of the period on all short-term
borrowings were 5.3 percent, 4.9 percent and 4.2 percent for 1998, 1997 and 1996,
respectively. The weighted-average interest rates during the period on all short-term
borrowings were 5.2 percent, 4.6 percent and 4.3 percent for 1998, 1997 and 1996,
respectively.
