SOURCE: Brooke Capital Corporation

August 18, 2008 19:37 ET

Brooke Capital Corporation Announces Second Quarter 2008 Results

OVERLAND PARK, KS--(Marketwire - August 18, 2008) - Brooke Capital Corporation (AMEX: BCP) today reported its second quarter financial results for the quarter ended June 30, 2008.

"As expected it was a challenging quarter for Brooke Capital Corporation," said Kyle Garst, President of Brooke Capital Corporation. "Our New Era and operating initiatives previously announced have been implemented and management's actions have resulted in Brooke Capital becoming a leaner and more efficient organization. We expect to return to profitability in the third quarter." Garst stated, "Losses were incurred in the second quarter primarily as the result of shrinking the number of Brooke franchise locations by closing, relocating or liquidating poorer performing locations. Difficult credit markets have had a significant adverse affect on the sale of new franchise locations by the Company. Without revenues from the sale of new locations, the Company has been forced to reduce expenses significantly. The resulting expense reductions include personnel layoffs, facility closings and write offs of producer development investments."

Chairman Orr stated, "Kyle Garst and Dane Devlin did a good job of transitioning our company in the second quarter to the limited growth business model required to wait out the current credit markets. To assist in returning Brooke Capital to profitability in the third quarter, I have taken a more active role in the company. Although I remain chairman and Kyle remains president of Brooke Capital, I have assumed the responsibilities of chief executive officer so Kyle can focus on the sale of troubled locations."

Chairman Orr also stated, "While Kyle and Dane were going through a difficult downsizing at Brooke Capital during the second quarter, I had focused my efforts on Aleritas Capital, another company in which both Brooke Corporation and I have significant ownership interests. Now that Aleritas Capital has returned to profitability, I have redirected much of my attention to Brooke Capital with expectations of returning it to profitability in the third quarter."

Chairman Orr also stated, "The value of Brooke Capital Corporation is its insurance distribution system which generates about $1 billion per year in premiums. Until credit markets improve Brooke Capital Corporation is focused on improving the quality of its agency force and distribution channels."

Because capital is not readily available, the Company's expansion plans for selling life insurance and auto insurance policies issued through wholly owned insurance company subsidiaries have been discontinued. The Company believes that its distribution system and recruiting process represents a tremendous asset to insurance companies and the Company will instead pursue a partnership with one or more insurance companies.

The following includes net earnings and revenue information as reported for the three-month period ended June 30, 2008.

Reported Results of Operations

The net loss reported for the three months ended June 30, 2008, totaled $15.0 million, or $1.77 per diluted share, on reported revenues of $26.1 million, compared to reported net income of $1.4 million, or $0.17 cents per diluted share, on reported revenues of $41.9 million for the same period in the prior year. Reserves were established in the second quarter for agency inventory write downs of $3.6 million, lease buyouts and equipment write downs of $3.3 million, producer development write downs of $5.5 million and other restructuring expenses of $338,000.

Discontinued Operations

As announced on July 18, 2008, Brooke Capital Corporation entered into an agreement to sell its wholly-owned life insurance subsidiary, First Life America Corporation ("First Life"), to First Trinity Financial Corporation. Proceeds from the sale of as much as $8 million will be used to reduce short-term debt. Anticipating the closing of such transaction, First Life is presented as a discontinued operation in this quarter's financial statements. All periods presented have been reclassified to reflect this discontinued operation.

Earnings Conference Call

The company will host an investor and analyst conference call on Tuesday, Aug. 19, at 10 a.m. CDT to discuss its financial and operating results for the second quarter of 2008. To join the call, please dial (800) 299-0148 in the United States and Canada, or (617) 801-9711 if calling internationally. The conference ID number is 14918969. A live broadcast of the call will be available on the Investor Relations section of Brooke Capital Corporation's Web site at www.brookeagent.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 32869106.

About Brooke Capital Corporation

Brooke Capital Corporation (AMEX: BCP) is an Overland Park, Kansas-based insurance organization founded in 1997. Brooke Capital is the parent company of First Life America Corporation, a life insurance company, and Brooke Capital Advisors, Inc., a loan broker and consultant for general insurance agencies.

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 recently announced operating initiatives being implemented by the Company will be effective and sufficient, the impact of the continuing restricted credit market environment, the uncertainty that the Company will achieve its short-term and long-term profitability and growth goals, uncertainties associated with market acceptance of and demand for the Company's products and services, the impact of competitive products and pricing, the dependence on third-party suppliers and their pricing, the ability to meet product demand, the availability of funding sources, the exposure to market risks, uncertainties associated with the development of technology, changes in the law and in economic, political and regulatory environments, changes in management, the dependence on intellectual property rights, the effectiveness of internal controls, and risks and factors described from time to time in reports and registration statements filed by Brooke Capital Corporation with the Securities and Exchange Commission. A more complete description of the Company's business is provided in Brooke Capital Corporation's most recent annual, quarterly and current reports, which are available from Brooke Capital Corporation without charge or at www.sec.gov.

Contact Information

  • Contact:
    Investor Relations:
    Karen Haus
    Market Street Partners on behalf of Brooke Capital Corporation
    (415) 445-3238
    Email Contact