News Release
| Results by Segment | For the year ended December 31, | ||||||||||||||
| (in thousands) | 2013 | 2012 | |||||||||||||
|
Net earnings
(loss) |
Diluted |
Net earnings
(loss) |
Diluted |
||||||||||||
| Mortgage Lending | $ | (1,237 | ) | $ | (0.14 | ) | $ | 17,612 | $ | 2.23 | |||||
| Real Estate Services | 13,250 | 1.51 | 12,581 | 1.59 | |||||||||||
| Long-term Mortgage Portfolio | (4,251 | ) | (0.49 | ) | (3,727 | ) | (0.47 | ) | |||||||
| Corporate | (13,940 | ) | (1.59 | ) | (13,048 | ) | (1.65 | ) | |||||||
| Continuing Operations | $ | (6,178 | ) | $ | (0.71 | ) | $ | 13,418 | $ | 1.70 | |||||
| Income tax (benefit) expense from continuing operations | (1,031 | ) | (0.12 | ) | 1,244 | $ | 0.16 | ||||||||
| Continuing Operations, net of tax | $ | (5,147 | ) | $ | (0.59 | ) | $ | 12,174 | $ | 1.54 | |||||
| Discontinued Operations, net of tax | (3,037 | ) | (0.35 | ) | (15,549 | ) | (1.96 | ) | |||||||
| Net loss attributable to IMH | $ | (8,184 | ) | $ | (0.94 | ) | $ | (3,375 | ) | $ | (0.42 | ) | |||
The Company’s continuing operations, which include the mortgage lending,
real estate services, long-term mortgage portfolio and corporate
segments, had a net loss before taxes of
In 2013, mortgage lending net earnings decreased by
Mortgage Lending
After a year of significant expansion of our lending platform in 2012,
2013 was a challenging year. Although lending volume slightly increased
in 2013 to
With the economic conditions experienced in the last few years, the
Federal Reserve has attempted to keep interest rates low to spur
economic growth. The resulting historically low interest rate
environment drove significant refinance volumes in 2012 and in the first
four months of 2013. However, as interest rates rose somewhat
unexpectedly in
| Selected Financial Data | |||||||||
| (in millions) | |||||||||
| YE 2013 | YE 2012 | % Change | |||||||
| Originations | $2,548.5 | $2,419.7 | 5% | ||||||
In 2013, gain on sale margins continued to compress creating challenges
for the mortgage banking industry. Our lending margins, including gain
on sale and fees, declined to 2.17% in 2013 as compared to 3.01% in
2012, resulting in a decline in margin revenue of
In the first half of 2013, we had maintained excess lending operating
capacity for an anticipated increase in volumes. But with the unexpected
increase in interest rates in
In response to the reduced production volumes and revenues, we have taken steps in the third and fourth quarter of 2013 to align the operating expenses with current lending volumes and revenues. Furthermore, we reduced our retail branch lending operations, which were operating at a loss, by shifting our focus to the lower overhead channels of production in wholesale, correspondent and a centralized retail call center.
During 2013, we had 33 retail branches. In the fourth quarter of 2013,
we sold the retail branches and consolidated our lending fulfillment
centers in an effort to reduce costs, streamline our operations and
focus on expanding lending volumes in our wholesale, correspondent and
retail call center. We also have consolidated our lending operations to
one primary fulfillment center in
During 2013, our correspondent channel contributed 34% of originations, the retail channel contributed 28% of originations, with the remaining 38% coming from the wholesale channel, as compared to 16%, 30%, and 54%, respectively, in 2012. We expect that in 2014, the origination mix will move even more heavily to wholesale and correspondent volume. In 2013, we attempted to improve the mix of purchase money transactions as we believe it would create better opportunities to increase our origination market share in a decreasing refinance market. The percentage of purchase money transactions, as compared to refinance transactions, increased to almost 41% of overall originations, as compared to just 31% in 2012. The primary reason for the increase in purchase money transactions in 2013 was due to the alignment with customers that were purchase transaction centric in their lead generation strategies and ability to offer a better customer service experience through our sales and operations.
During 2013, our warehouse borrowing capacity increased to
In the third quarter of 2013, we announced our re-entry into the residential warehouse lending business through our new division, Impac Warehouse Lending (www.impacwarehouse.com). This new division is expected to help diversify our origination base and increase the capture rate of our approved correspondent sellers’ business. Our warehouse lending group offers funding facilities to approved lenders. Our initial focus will be smaller mortgage bankers and credit unions, including some of our current correspondent customers. Offering warehouse lending provides added value for our correspondent customers, which we believe will increase the capture rate from our currently approved customers and increase volumes in our correspondent channel.
| Selected Financial Data | |||||||||
| (in millions) | |||||||||
|
December 31, 2013 |
December 31, 2012 |
% Change | |||||||
| Mortgage Servicing Portfolio | $3,128.6 | $1,492.1 | 110% | ||||||
During 2013, we continued to increase the mortgage servicing portfolio
which has increased to
In 2013, our strategy was to increase our mortgage servicing portfolio given the attractive characteristics of agency loans during a period of historically low interest rates and high credit quality which helps mitigate interest rate risk as well as creates a sustainable earning asset. On a selective basis, we have and will continue to strategically sell servicing to keep the amount of capital invested in servicing at acceptable levels while preserving capital needed for further growth.
Real Estate Services
The real estate services segments continues to earn consistent profits
and posted net earnings of
Long-Term Mortgage Portfolio
As the principal balance of loans in the long-term mortgage portfolio
continues to decline from principal payments from borrowers, payoffs of
loans, as well as the liquidation of defaulted loans, the net interest
income from the loans declines. Because the loan balances in the
long-term mortgage portfolio continue to decline, the estimated fair
value of the net trust assets has continued to decline in 2013. The cash
received from the residual interest in securitizations (represented by
the difference between total trust assets and total trust liabilities)
was
Corporate
To help better present the results of our long-term mortgage portfolio, we have created a new corporate segment. The corporate segment includes all corporate services groups, public company costs, unused office space for future growth as well as debt expense related to the Convertible Notes and capital leases. The corporate services group supports all operating segments, and a portion of the corporate services costs are allocated to the operating segments. The costs associated with being a public company, unused space for growth as well as the interest expense related to the Convertible Notes and capital leases is not allocated to our other segments and remains in this segment.
Outlook
In
In
In response to the increased compliance requirements, including the new
qualified mortgage rules, as promulgated by the Dodd-Frank Act, that
took effect in
We believe there is an underserved mortgage market for a borrower with good credit who may not meet the new guidelines of a Qualified Mortgage (QM). 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. In addition, the origination for home equity lines of credit (HELOC) loans is increasingly creating another new product opportunity for lenders like us. With our excess warehouse capacity, we are seeking ways to utilize our re-warehousing business to partner with wholesale brokers and correspondent sellers to expand volumes and better serve customers and the borrowers. 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.
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 facilities; volatility in the mortgage industry and unexpected interest rate fluctuations and margin compression; our ability to successfully manage operating expenses and reduce redundant activities; our ability to successfully expand volumes in the warehouse lending business; failure to successfully launch or continue to market new loan products, such as non-Qualified Mortgages and HELOC loans; ability of wholesale brokers and correspondent sellers to implement mortgage compliance programs and market and sell our loan products; 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; adequate performance by sub-servicers; failure to create and maintain 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, including the new qualified mortgage rules, 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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