SEC Filing - IMPAC Mortgage Holdings, Inc.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-14100

IMPAC MORTGAGE HOLDINGS, INC.

(Exact name of registrant as specified in its charter)


Maryland		33-0675505
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

19500 Jamboree Road, Irvine, California 92612

(Address of principal executive offices)

(949) 475-3600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	IMH	NYSE American
Preferred Stock Purchase Rights	IMH	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐		Accelerated filer ☐

Non-accelerated filer ☒		Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2) Yes ☐ No ☒

There were 33,268,534 shares of common stock outstanding as of November 4, 2022.

Table of Contents

IMPAC MORTGAGE HOLDINGS, INC. AND SUBSIDIARIES

FORM 10-Q QUARTERLY REPORT

TABLE OF CONTENTS


		Page

PART I. FINANCIAL INFORMATION

ITEM 1.	CONSOLIDATED FINANCIAL STATEMENTS

	Consolidated Balance Sheets as of September 30, 2022 (unaudited) and December 31, 2021	2
	Consolidated Statements of Operations and Comprehensive (Loss) Earnings for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)	3
	Consolidated Statements of Changes in Stockholders’ (Deficit) Equity for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)	4
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021 (unaudited)	6
	Notes to Unaudited Consolidated Financial Statements	7

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	37

	Forward-Looking Statements	37
	The Mortgage Industry and Discussion of Relevant Fiscal Periods	37
	Selected Financial Results	38
	Status of Operations	39
	Liquidity and Capital Resources	43
	Critical Accounting Policies	47
	Financial Condition and Results of Operations	48

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	70

ITEM 4.	CONTROLS AND PROCEDURES	70

PART II. OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	71

ITEM 1A.	RISK FACTORS	71

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	73

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	73

ITEM 4.	MINE SAFETY DISCLOSURES	73

ITEM 5.	OTHER INFORMATION	73

ITEM 6.	EXHIBITS	73

	SIGNATURES	75

	CERTIFICATIONS

Table of Contents

PART I. FINANCIAL INFORMATION


ITEM 1.	CONSOLIDATED FINANCIAL STATEMENTS

IMPAC MORTGAGE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)


	September 30,		December 31,
	2022		2021
ASSETS
Cash and cash equivalents	$	44,008	$	29,555
Restricted cash		4,173		5,657
Mortgage loans held-for-sale		18,443		308,477
Mortgage servicing rights		865		749
Securitized mortgage trust assets		—		1,642,730
Other assets		26,096		35,603
Total assets	$	93,585	$	2,022,771
LIABILITIES
Warehouse borrowings	$	13,292	$	285,539
Convertible notes		15,000		20,000
Long-term debt		33,264		46,536
Securitized mortgage trust liabilities		—		1,614,862
Other liabilities		38,100		45,898
Total liabilities		99,656		2,012,835

Commitments and contingencies (See Note 11)

STOCKHOLDERS’ (DEFICIT) EQUITY
Series A-1 junior participating preferred stock, $0.01 par value; 2,500,000 shares authorized; none issued or outstanding		—		—
Series B 9.375% redeemable preferred stock, $0.01 par value; liquidation value $36,920; 2,000,000 shares authorized, 665,592 cumulative shares issued and outstanding as of September 30, 2022 and December 31, 2021 (See Note 12)		7		7
Series C 9.125% redeemable preferred stock, $0.01 par value; liquidation value $35,127; 5,500,000 shares authorized; 1,405,086 noncumulative shares issued and outstanding as of September 30, 2022 and December 31, 2021 (See Note 12)		14		14
Common stock, $0.01 par value; 200,000,000 shares authorized; 21,500,935 and 21,332,684 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		215		213
Additional paid-in capital		1,238,526		1,237,986
Accumulated other comprehensive earnings, net of tax		33,159		22,044
Total accumulated deficit:
Cumulative dividends declared		(822,520)		(822,520)
Accumulated deficit		(455,472)		(427,808)
Total accumulated deficit		(1,277,992)		(1,250,328)
Total stockholders’ (deficit) equity		(6,071)		9,936
Total liabilities and stockholders’ (deficit) equity	$	93,585	$	2,022,771

See accompanying notes to unaudited consolidated financial statements

Table of Contents

IMPAC MORTGAGE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) EARNINGS

(in thousands, except per share data)

(Unaudited)


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Revenues
Real estate services fees, net	$	290	$	244	$	732	$	932
Gain on mortgage servicing rights, net		196		101		351		102
Servicing fees (expense), net		32		(124)		27		(393)
(Loss) gain on sale of loans, net		(682)		19,608		5,452		50,432
Other		3		(11)		962		308
Total (expenses) revenues, net		(161)		19,818		7,524		51,381
Expenses
Personnel		5,701		12,685		25,646		39,574
General, administrative and other		4,830		4,927		15,287		15,991
Business promotion		545		2,185		4,165		5,146
Total expenses		11,076		19,797		45,098		60,711
Operating (loss) earnings		(11,237)		21		(37,574)		(9,330)

Other (expense) income
Interest income		655		17,197		14,703		49,429
Interest expense		(1,989)		(16,420)		(17,182)		(47,433)
Change in fair value of long-term debt		(435)		(1,803)		3,187		638
Change in fair value of net trust assets, including trust REO gains (losses)		—		3,112		9,248		(702)
Total other (expense) income, net		(1,769)		2,086		9,956		1,932
(Loss) earnings before income taxes		(13,006)		2,107		(27,618)		(7,398)
Income tax expense		7		21		46		63
Net (loss) earnings	$	(13,013)	$	2,086	$	(27,664)	$	(7,461)

Other comprehensive (loss) earnings
Change in fair value of instrument specific credit risk of long-term debt		3,347		631		11,115		(1,574)
Total comprehensive (loss) earnings	$	(9,666)	$	2,717	$	(16,549)	$	(9,035)

Net (loss) earnings per common share:
Basic	$	(0.62)	$	0.08	$	(1.34)	$	(0.37)
Diluted	$	(0.62)	$	0.08	$	(1.34)	$	(0.37)

See accompanying notes to unaudited consolidated financial statements

Table of Contents

IMPAC MORTGAGE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ (DEFICIT) EQUITY

(in thousands, except share amounts)

(Unaudited)


	Preferred			Common			Additional		Cumulative				Accumulated Other		Total
	Shares	Preferred		Shares	Common		Paid-In		Dividends		Accumulated		Comprehensive		Stockholders’
	Outstanding	Stock		Outstanding	Stock		Capital		Declared		Deficit		Earnings, net of tax		(Deficit) Equity
Balance, December 31, 2021	2,070,678	$	21	21,332,684	$	213	$	1,237,986	$	(822,520)	$	(427,808)	$	22,044	$	9,936

Stock based compensation	—		—	—		—		260		—		—		—		260
Issuance of restricted stock units	—		—	122,486		2		—		—		—		—		2
Other comprehensive loss	—		—	—		—		—		—		—		(2,269)		(2,269)
Net loss	—		—	—		—		—		—		(1,184)		—		(1,184)
Balance, March 31, 2022	2,070,678	$	21	21,455,170	$	215	$	1,238,246	$	(822,520)	$	(428,992)	$	19,775	$	6,745

Stock based compensation	—		—	—		—		137		—		—		—		137
Issuance of restricted stock units	—		—	30,765		—		—		—		—		—		—
Issuance of deferred stock units	—		—	15,000		—		—		—		—		—		—
Other comprehensive earnings	—		—	—		—		—		—		—		10,037		10,037
Net loss	—		—	—		—		—		—		(13,467)		—		(13,467)
Balance, June 30, 2022	2,070,678	$	21	21,500,935	$	215	$	1,238,383	$	(822,520)	$	(442,459)	$	29,812	$	3,452

Stock based compensation	—		—	—		—		143		—		—		—		143
Other comprehensive earnings	—		—	—		—		—		—		—		3,347		3,347
Net loss	—		—	—		—		—		—		(13,013)		—		(13,013)
Balance, September 30, 2022	2,070,678	$	21	21,500,935	$	215	$	1,238,526	$	(822,520)	$	(455,472)	$	33,159	$	(6,071)

Table of Contents

IMPAC MORTGAGE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ (DEFICIT) EQUITY

(in thousands, except share amounts)

(Unaudited)


	Preferred			Common			Additional		Cumulative				Accumulated Other		Total
	Shares	Preferred		Shares	Common		Paid-In		Dividends		Accumulated		Comprehensive		Stockholders’
	Outstanding	Stock		Outstanding	Stock		Capital		Declared		Deficit		Earnings, net of tax		Equity
Balance, December 31, 2020	2,070,678	$	21	21,238,191	$	212	$	1,237,102	$	(822,520)	$	(423,930)	$	24,766	$	15,651

Stock based compensation	—		—	—		—		218		—		—		—		218
Issuance of restricted stock units	—		—	94,493		1		—		—		—		—		1
Other comprehensive loss	—		—	—		—		—		—		—		(1,667)		(1,667)
Net loss	—		—	—		—		—		—		(683)		—		(683)
Balance, March 31, 2021	2,070,678	$	21	21,332,684	$	213	$	1,237,320	$	(822,520)	$	(424,613)	$	23,099	$	13,520

Stock based compensation	—		—	—		—		224		—		—		—		224
Issuance of restricted stock units	—		—	—		—		—		—		—		—		—
Other comprehensive loss	—		—	—		—		—		—		—		(538)		(538)
Net loss	—		—	—		—		—		—		(8,864)		—		(8,864)
Balance, June 30, 2021	2,070,678	$	21	21,332,684	$	213