News Release
| Results of Operations | ||||||||||||||||||||||
| (in thousands) | For the Three Months Ended | |||||||||||||||||||||
| March 31, 2014 | December 31, 2013 | March 31, 2013 | ||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||
| Gain on sale of loans, net | $ | 4,375 | $ | 7,601 | $ | 16,692 | ||||||||||||||||
| Real estate services fees, net | 3,679 | 4,855 | 4,428 | |||||||||||||||||||
| Servicing income, net | 1,569 | 1,311 | 1,010 | |||||||||||||||||||
| Other | 406 | 3,625 | 1,694 | |||||||||||||||||||
| Total revenues | 10,029 | 17,392 | 23,824 | |||||||||||||||||||
| Expenses: | ||||||||||||||||||||||
| Personnel expense | 9,244 | 12,538 | 16,983 | |||||||||||||||||||
| General, administrative and other | 5,372 | 5,893 | 6,721 | |||||||||||||||||||
| Total expenses | 14,616 | 18,431 | 23,704 | |||||||||||||||||||
| Other income (expense): | ||||||||||||||||||||||
| Net interest (expense) income | (313 | ) | (121 | ) | 444 | |||||||||||||||||
| Change in fair value of long-term debt | (650 | ) | (235 | ) | (49 | ) | ||||||||||||||||
| Change in fair value of net trust assets | 3,038 | (1,301 | ) | (1,500 | ) | |||||||||||||||||
| Loss from discontinued operations, net of tax | (112 | ) | (986 | ) | (841 | ) | ||||||||||||||||
| Total other income (expense) | 1,963 | (2,643 | ) | (1,946 | ) | |||||||||||||||||
| Net loss before income taxes | (2,624 | ) | (3,682 | ) | (1,826 | ) | ||||||||||||||||
| Income tax expense (benefit) | 342 | 34 | (1,088 | ) | ||||||||||||||||||
| Net loss | $ | (2,966 | ) | $ | (3,716 | ) | $ | (738 | ) | |||||||||||||
| Diluted loss per share | $ | (0.33 | ) | $ | (0.42 | ) | $ | (0.08 | ) | |||||||||||||
| Selected Operational Data | |||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||
| Q1 2014 | Q4 2013 |
% Change |
Q1 2013 |
% Change |
|||||||||||||||||||||
| Originations | $ | 353.1 | $ | 516.5 | -32 | % | $ | 673.8 | -48 | % | |||||||||||||||
| Mortgage Servicing Portfolio | $ | 2,239.6 | $ | 3,128.6 | -28 | % | $ | 1,702.5 | 32 | % | |||||||||||||||
| (Quarter end balance) | |||||||||||||||||||||||||
Key Components of Net Earnings
-
Mortgage lending volumes declined in the first quarter of 2014 to
$353.1 million from$673.8 million in the first quarter of 2013 and as compared to$516.5 million in the fourth quarter of 2013. This was primarily the result of the sale of the ‘brick and mortar’ retail branches at the end of the fourth quarter of 2013. -
Mortgage lending revenues and margins declined in the first quarter of
2014 to
$4.4 million , or 131 bps, from$16.7 million , or 267 bps, in the first quarter of 2013 as compared to$7.6 million , or 155 bps, in the fourth quarter of 2013, primarily due to a higher concentration of correspondent originations. -
Mortgage servicing fees increased in the first quarter of 2014 to
$1.6 million from$1.0 million in the first quarter of 2013 and as compared to$1.3 million in the fourth quarter of 2013. -
In the first quarter of 2014, we completed the previously discussed
sale of
AmeriHome Mortgage Corp. (AmeriHome) for a cash price of$10.2 million , resulting in a return on our investment in the entity near 20%. -
We sold mortgage servicing rights in the first quarter at a small
premium to book value generating
$5.8 million in cash proceeds in the first quarter, with additional proceeds to be received at the time of transfer during the second quarter. The mortgage servicing portfolio declined in the first quarter of 2014 to$2.2 billion atMarch 31, 2014 from$3.1 billion atDecember 31, 2013 . This decline was due to servicing sale of$522.2 million as well as the sale of AmeriHome and its servicing portfolio of$702.1 million , partially offset by the servicing retained loan sales in the quarter of$374.4 million . -
Real estate services revenue declined to
$3.7 million in the first quarter of 2014 as compared to$4.4 million in the first quarter of 2013 and$4.9 million in the fourth quarter of 2013, but reduced expenses in this segment resulted in consistent net results. -
In our long-term mortgage portfolio, based on recent improved
performance of the portfolio which was better than expected, we
updated certain assumptions in the portfolio at
March 31, 2014 resulting in$3.0 million increase in the estimated fair value in the first quarter of 2014. -
Expenses decreased in the first quarter of 2014 to
$14.6 million from$23.7 million in the first quarter of 2013 as compared to$18.4 million in the fourth quarter of 2013.
While originations have decreased to
During the first quarter of 2014 our strategy to increase our business to business channel originations resulted in our overall lending margins decreasing from 2013 levels. In the first quarter of 2014, our correspondent channel contributed 65% of originations as compared to 23% in the first quarter of 2013. Therefore, although there was industry wide margin compression during the first quarter, we have seen this compression abate in April. In addition, wholesale margins held fairly flat from the fourth quarter of 2013.
The mortgage servicing portfolio decreased to
While real estate services revenues have declined by approximately 17% in the first quarter of 2014 as compared to the comparable period in the prior year segments, primarily the result of better performance in the long-term mortgage portfolio and the continuing decline in the portfolio from collections and defaults, expenses in the segment have declined at a greater rate, resulting in consistent net results from the segment.
The long-term mortgage portfolio, which primarily includes the residual
interests in securitizations (represented by the difference between
total net trust assets and total trust liabilities), has recently
performed better than expected. The cash received from the residual
interests was approximately
Recent Developments
In the first quarter of 2014, we have been developing non-Qualified Mortgage (QM) loan programs expected to be rolled-out during the second quarter. We have also been developing relationships with other institutions in an effort to forge an alliance with a strategic partner to provide financing sources and exit strategy alternatives. We are currently in discussions with parties interested in funding and investing in these types of products and services that could create an opportunity for the re-emergence of a liquid private securitization market. We believe there is an underserved mortgage market for a borrower with good credit who may not meet the new guidelines of a QM product. In our opinion, as the demand by consumers for a non-QM product grows and the investor appetite increases, non-QM mortgages will be in more demand.
With our strategy to increase our business to business channel
originations, we continue to build our wholesale and correspondent
channels. We have added sales staff and streamlined our operations in an
effort to provide quality customer service to attract broker and
correspondent seller clients, and increase the volume of loans submitted
from repeat customers. With our sales, marketing, and operational
efforts during the first quarter of 2014, to date we have increased our
pipeline to
Furthermore, with our excess warehouse capacity, we are seeking ways to
utilize our re-warehousing business to partner with current wholesale
brokers and existing correspondent sellers to expand volumes and better
serve customers and the borrowers. We have increased outstanding
commitments to
Mr.
Conference Call
The Company will hold a conference call tomorrow morning,
Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements, some of which are based on various assumptions and events that are beyond our control, may be identified by reference to a future period or periods or by the use of forward-looking terminology, such as “may,” “will,” “intends,” “believe,” “expect,” “likely,” ”appear,” “should,” “could,” “seem to,” “anticipate,” “expectations,” “plan,” or similar terms or variations on those terms or the negative of those terms. The forward-looking statements are based on current management expectations. Actual results may differ materially as a result of several factors, including, but not limited to the following: our ability to manage effectively our mortgage lending operations and increase mortgage originations; successful development, marketing, sale and financing of new mortgage products, including the non-Qualified Mortgage loan program; volatility in the mortgage industry; unexpected interest rate fluctuations and margin compression; our ability to manage personnel expenses in relation to mortgage production levels; our ability to successfully use warehousing capacity;; increased competition in the mortgage lending industry by larger or more efficient companies; issues and system risks related to our technology; more than expected increases in default rates or loss severities and mortgage related losses; ability to obtain additional financing, the terms of any financing that we do obtain and our expected use of proceeds from any financing; increase in loan repurchase requests and ability to adequately settle repurchase obligations; failure to create brand awareness; the outcome, including any settlements, of litigation or regulatory actions pending against us or other legal contingencies; and our compliance with applicable local, state and federal laws and regulations and other general market and economic conditions.
For a discussion of these and other risks and uncertainties that could
cause actual results to differ from those contained in the
forward-looking statements, see the annual and quarterly reports we file
with the
About the Company
For additional information, questions or comments, please call
Source:
Impac Mortgage Holdings, Inc.
Justin Moisio, VP Investor Relations
(949)
475-3988
Justin.Moisio@ImpacMail.com
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