News Release
Estimated taxable earnings for the third quarter were $25.5 million, or $0.61 per diluted share, as compared to $18.2 million, or $0.45 per diluted share, during the second quarter of 2002. Estimated taxable earnings for the first nine months of 2002 were $59.8 million, or $1.51 per diluted share, as compared to $19.6 million, or $0.73 per diluted share, during the same period of 2001. Refer to the accompanying financial statements for the calculation of estimated taxable earnings and a reconciliation of estimated taxable earnings to net earnings.
Third Quarter Highlights
-- Total assets increased 86% since December 31, 2001 to $5.4 billion
from $2.9 billion
-- Declared a regular cash dividend of $0.45 per share, a 5% increase
over the regular dividend of $0.43 per share declared during the
second quarter of 2002
-- Completed the sale of 2.5 million common shares which raised cash
proceeds of $27.2 million
-- Acquired $1.1 billion of non-conforming Alt-A mortgage loans for
long-term investment from Impac Funding Corporation ("IFC"), the
Company's taxable REIT subsidiary and mortgage operations
-- Issued $696.5 million of collateralized mortgage obligations ("CMOs")
including the first fixed rate CMO since 1998
-- Allowance for loan losses increased to $21.6 million, or
41 basis points of total loans receivable, as compared to
$11.7 million, or 43 basis points of total loans receivable, as of
December 31, 2001
-- Constant prepayment rate ("CPR") on the CMO portfolio was 24% CPR as
compared to 26% CPR for the second quarter of 2002 and 36% CPR for the
third quarter of 2001
-- Average finance receivables to non-affiliates increased to
$347.7 million, or 39% over second quarter of 2002
-- IFC's total loan acquisitions and originations increased to
$1.7 billion, or 21% over second quarter of 2002 acquisitions and
originations of $1.4 billion
Joseph R. Tomkinson, Chairman and Chief Executive Officer of Impac Mortgage
Holdings, Inc., commented, "We believe that the financial strength of our core
operating businesses has never been better. Because of the solid financial
footing and synergies that we have created within our core operating businesses,
we expect to realize our goal of generating consistent and reliable earnings for
distribution to our shareholders during changing business climates. In regards
to the remainder of 2002, we expect to exceed our original earnings target of
$1.55 to $1.65 per share and revise our 2002 earnings estimate to $1.75 to $1.85
per share and year-end total assets to exceed $6.0 billion. We also expect to
pay a fourth quarter dividend at least equal to the dividend paid for the third
quarter which will result in total dividend declarations of at least $1.73 per
share for the year."
Mr. Tomkinson further commented, "A further decrease in mortgage rates during the quarter resulted in another refinancing wave and contributed to record mortgage acquisitions and originations. Although in the near term, we believe that mortgage demand for both fixed and adjustable rate mortgages will remain high, we are mindful that this may not always be the case. Therefore, we believe that we must take advantage of this market opportunity and continue the growth of our balance sheet. By doing this, we believe that we can generate more consistent revenue from our mortgage loan investment portfolio as opposed to revenue generated from gain on sale of loans which are more susceptible to fluctuations in mortgage activity.
"To sustain our strategy of growing the balance sheet, it has become apparent that we need to raise capital more quickly through the block sale of common shares as opposed to raising capital through the sale of common shares via our Sales Agency Agreement. Therefore, we completed the sale of 2.5 million common shares in August at a public offering price of $11.25, which was accretive to earnings per share as we were able to quickly deploy cash proceeds into the acquisition of mortgage loans. Some of the cash proceeds from the stock offering were immediately used to acquire fixed rate mortgages, which were subsequently securitized in our first fixed rate CMO since 1998. The fixed rate CMO utilizes matched fixed rate borrowings that provides a locked-in interest spread over the life of the mortgage loans which, we believe, will have a longer life than adjustable rate assets. We expect to continue to access the capital markets through our Sales Agency Agreement or periodically issue shares from our shelf registration as the market, economics and sound business practice dictates."
Mr. Tomkinson continued to say, "In addition to issuing common shares to finance our growth, we added $650.0 million of new warehouse facilities this year. The new warehouse facilities provide us with a higher aggregate credit limit to fund the acquisition and origination of mortgage loans at terms comparable to those we have received in the past and the flexibility of having financial relationships with a larger cross-section of financial institutions. However, we continue to securitize or sell mortgage loans every 30 to 45 days to limit our exposure to possible margin calls on our warehouse facilities.
"We continue to focus on effectively managing the various operational and economic risks associated with the our business. We believe that we can help to mitigate prepayment risk through the acquisition and origination of mortgage loans with prepayment penalty features. This is evident as the prepayment rate of our CMO portfolio declined to 24% CPR during the third quarter as refinancing activity was at an all-time high. We believe that we mitigate loan losses and a potential increase in foreclosure rates by maintaining an adequate allowance for loan loss, by acquiring mortgage loans with favorable credit profiles and by acquiring mortgage loans with conservative loan-to-value ratios with mortgage insurance enhancements, which reduces our effective loan-to-value ratio. We believe that we mitigate liquidity and margin call risk by frequently securitizing or selling our mortgage loans and we have created greater financing flexibility by adding additional warehouse lines. We further believe that we effectively manage interest rate risk by purchasing interest rate hedging instruments to mitigate future interest rate increases.
"We believe it is extremely important, especially during the current economic environment which has contributed to a decline in the stock market over the last year, to remember that the value of our Company and our affiliates and subsidiaries is not reflected in our historical book value and therefore we believe does not reflect the true market value of our mortgage assets and operating businesses. Our warehouse lending operations continues to grow both in terms of advances outstanding and earnings and the mortgage operations is one of the leading Alt-A mortgage lenders in the country. As the Alt-A market continues to grow and consumers seek alternatives to the traditional mortgage products offered by government sponsored agencies, we expect the mortgage operations to increase its market share within this sector by offering unique mortgage products, superior customer service and implementation of our second generation automated underwriting system, called IDASLg2 which will further enhance our customers and our own underwriting and loan approval capabilities."
As of September 30, 2002, book value per outstanding common share was $6.40 as compared to $6.44 per outstanding common share as of June 30, 2002. Book value decreased during the third quarter primarily due to a $14.9 million increase in other comprehensive loss, which offset the incremental increase in book value from the issuance of new shares. The increase in other comprehensive loss was the result of fair market adjustments on derivative instruments, in accordance with Statement of Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative Instruments and Hedging Activities." The Company is required to mark-to-market its derivative instruments through other comprehensive income but is not allowed to mark-to-market its long-term mortgage loan investment portfolio. Excluding the effect of SFAS 133, pro forma book value per outstanding common share as of September 30, 2002 increased to $7.58 as compared to $7.34 per outstanding common share as of June 30, 2002.
Mortgage Loan Investment Portfolio Increased 26%
Long-Term Investment Operations Acquired $1.1 Billion of Adjustable
and Fixed Rate Non-Conforming Alt-A Mortgages
from the Mortgage Operations During the Third Quarter
The mortgage loan investment portfolio increased 26% to $4.3 billion at
quarter-end as compared to $3.4 billion as of June 30, 2002 as the long-term
investment operations acquired $1.1 billion of primarily adjustable and fixed
rate non-conforming Alt-A mortgages from the mortgage operations. Total
acquisitions during the third quarter had a weighted average credit score of 686
and a weighted average coupon of 6.66%. Of total non-conforming Alt-A
acquisitions during the third quarter, 82% were adjustable rate, 57% were
six-month LIBOR indexed ARMs, 62% were purchase money and 84% had prepayment
penalty features. The Company generally considers prime mortgage loans, or "A"
credit quality loans, to have a credit score of 640 or better. As a comparison,
Fannie Mae and Freddie Mac generally purchase loans with credit scores greater
than 620.
CMOs issued during the third quarter consisted of one fixed rate CMO for $199.0 million with a weighted average fixed borrowing cost of 4.98% and one variable rate CMO for $497.5 million with a weighted average adjustable borrowing cost of one-month London Interbank Offered Rate ("LIBOR") plus 49 basis points. The weighted average mortgage rate of fixed rate mortgages securing the fixed rate CMO was 8.15% while the weighted average mortgage rate of adjustable rate mortgages securing the adjustable rate CMO was 6.46%.
At quarter-end 48% of mortgage loans in the long-term investment portfolio were six-month LIBOR indexed ARMs, 42% were six-month LIBOR indexed hybrids with an average interest rate adjustment period of approximately 14 months and 71% had active prepayment penalties with an average remaining prepayment expiration period of approximately 22 months. Mortgage loans in the long-term investment portfolio have an original weighted average credit score of 680 and a weighted average coupon of 6.84% as of quarter-end.
At quarter-end total non-performing assets were $105.6 million, or 1.96% of total assets, as compared to $69.3 million, or 2.43% of total assets, as of December 31, 2001. Mortgage loans that were 60 or more days delinquent, including foreclosures and delinquent bankruptcies, were 2.92% of the long-term mortgage investment portfolio at quarter-end as compared to 3.84% as of December 31, 2001.
Allowance for loan losses increased 85% to $21.6 million at quarter-end as compared to $11.7 million as of December 31, 2001. Allowance for loan losses expressed as a percentage of loans receivable, which includes CMO collateral, mortgage loans held-for-investment and finance receivables, was 0.41% at quarter-end as compared to 0.43% as of December 31, 2001. During the third quarter provision for loan losses was $5.4 million while actual loan charge-offs, net of recoveries, were $731,000 as compared to $4.2 million and $2.1 million, respectively, during the prior quarter.
The Company makes a monthly provision for estimated loan losses on its long-term investment portfolio as an increase to allowance for loan losses. The provision for estimated loan losses is primarily based on a migration analysis based on historical loss statistics, including cumulative loss percentages and loss severity, of similar loans in the Company's long-term investment portfolio. The loss percentage is used to determine the estimated inherent losses in the investment portfolio. Provision for loan losses is also based on management's judgment of net loss potential, including specific allowances for known impaired loans, changes in the nature and volume of the portfolio, the value of the collateral and current economic conditions that may affect the borrowers' ability to pay.
Average Warehouse Lending Activity with Non-Affiliates Increased 39%Gretchen Verdugo, Executive Vice President of Impac Warehouse Lending Group, Inc., commented, "Our proprietary iWIN ("Impac Warehouse Intelligence Network") technology has allowed us to increase our quarterly average outstanding balance to non-affiliates by 39% during the third quarter to nearly $350.0 million. Our success is the result of our efficient use of technology, experienced and customer service driven warehouse lending professionals and leveraging relationships with the mortgage operations' customers while maintaining an excellent credit risk profile."
Average outstanding finance receivables to non-affiliates increased 39% to $347.7 million during the third quarter as compared to $249.4 million during the prior quarter. At quarter-end the warehouse lending operations had 60 approved warehouse lines available to non-affiliated customers totaling $564.0 million as compared to 57 and $447.0 million as of December 31, 2001, respectively.
During the third quarter the warehouse lending operations contributed net earnings of $5.6 million, or $0.13 per diluted common share as compared to $3.8 million, or $0.10 per diluted common share, during the prior quarter. Net earnings for the third quarter represented a 56% return on average equity as compared to a 33% return on average equity during the prior quarter.
Loan Acquisitions and Originations Increased 21%
Total Loan Acquisitions and Originations Increased
to $1.7 Billion During the Third Quarter
Regarding the results of the mortgage operations, William S. Ashmore, President
and Chief Operating Officer, remarked, "A decline in mortgage rates during the
third quarter contributed to record acquisitions and originations by the
mortgage operations. Acquisitions and originations increased 21% over the prior
quarter and rose 95% year-to-date over the same period last year. We continue to
acquire and originate mortgage loans that fit within our criteria which are
primarily non-conforming Alt-A mortgages with good credit profiles with
insurance enhancements, when required, and prepayment penalty features. We
believe this mortgage profile provides favorable execution upon the sale or
securitization of our mortgage loans. We are also extremely pleased with the
success of our interest-only mortgage products as acquisitions and originations
during the third quarter were approximately $244.0 million as compared to
approximately $36.0 million during the prior quarter when our interest-only
programs were first introduced.
"We continue to rely primarily on purchase money transactions for the bulk of our mortgage business. Because of this and combined with expanding our reach in the non-conforming Alt-A mortgage market, providing our customers with integrated financial services and taking advantage of our increasing financial leverage, we believe that we can at least maintain our current production levels if nationwide mortgage refinance activity declines. Because we realize that current housing demand and mortgage refinance activity may not be sustained over the long-term and may eventually slow down, we believe it is important to acquire and originate mortgages that can be retained by the long-term investment operations which will maximize IMH's earnings and thereby increase long-term shareholder value. Therefore, during the third quarter the mortgage operations sold $200.0 million of fixed rate loans to the long-term investment operations, which were subsequently securitized as a CMO.
"As a result of selling $200.0 million of fixed rate loans to the long-term investment operations, the mortgage operations' earnings decreased from the prior quarter as long-term earnings were exchanged for one time gain on sale of loans. In the future, we expect to sell as much as 50% of our fixed rate mortgage acquisitions and originations to non-affiliated investors and 50% to the long-term investment operations."
Third Quarter Results of OperationsImpac Mortgage Holdings, Inc. Net earnings increased over second quarter of 2002 results primarily as net interest income rose. Net interest income increased to $23.1 million during the third quarter as total average mortgage assets increased to $4.6 billion as compared to net interest income of $17.6 million and total average mortgage assets of $3.8 billion during the prior quarter. Average mortgage assets increased during the third quarter as $1.1 billion of mortgage loans were acquired for long-term investment. Net interest margins on mortgage assets were 1.92% for the third quarter as compared to net interest margins of 1.85% for the prior quarter. Net interest margins rose during the third quarter as CMO borrowings, which are tied to short-term interest rates, declined. Provision for loan losses during the third quarter were $5.4 million as compared to $4.2 million during the prior quarter as loan acquisitions and advances on warehouse lines, or finance receivables, increased. Non-interest income decreased as equity in net earnings of IFC declined to $2.8 million during the third quarter as compared to $5.5 million during the prior quarter. The decrease in net earnings of IFC was primarily due to a decrease of revenue from gain on sale of loans and a before tax increase of $929,000 in provision for loan repurchases. Non-interest expense increased 15% to $2.3 million during the third quarter as compared to $2.0 million during the prior quarter.
Impac Funding Corporation. Net earnings decreased over second quarter of 2002 results primarily as gain on sale of loans declined. Gain on sale of loans declined to $13.7 million on loan sales of $1.46 billion during the third quarter as compared to gain on sale of loans of $19.6 million on loan sales of $1.53 billion during the prior quarter. Gain on loan sales were lower during the third quarter as $200.0 million of fixed rate loans, which in the past have typically been sold to non-affiliated investors as REMICs or whole loan sales, were acquired and retained by the long-term investment operations. Excluding a third quarter mark-to-market gain on derivative instruments of $2.9 million, total non-interest expense increased to $13.5 million during the third quarter as compared to $12.0 million during the prior quarter. The increase in total non-interest expense during the third quarter was primarily due to a $929,000 increase in provision for loan repurchases and an increase in staff costs to meet greater loan acquisition and origination volumes.
For additional information, questions or comments call or write to the Company's investor relations group and ask for Tania Jernigan at (949) 475-3600 or e-mail Ms. Jernigan at tjernigan@impaccompanies.com . The Company has announced a conference call and live web cast on Thursday, October 24, 2002 at 9:30 a.m. Pacific Time (12:30 p.m. Eastern Time). Mr. Joseph R. Tomkinson will discuss the results of the Company's third quarter operations and provide a general update on the Company followed by a question and answer session. The conference call will be limited for discussion to certain buyside and sellside analysts and will be open for listen only to all interested parties.
If you would like to participate, you may listen by dialing (800) 350-9149, conference ID number 6256378, or accessing the web cast via our web site at http://www.impaccompanies.com/IMH/IMH_main.asp . To participate in the call, dial in fifteen minutes prior to the scheduled start time. The conference call will be archived on Impac Mortgage Holdings, Inc.'s web site at www.impaccompanies.com , by linking to Impac Mortgage Holdings, Inc./Audio Archives. You can subscribe to receive instant notification of Impac Mortgage Holdings, Inc. conference calls, news and the monthly unaudited fact sheet, which will be available on Wednesday, October 30, 2002, by using our e-mail alert feature located at the Company's web site at www.impaccompanies.com under Impac Mortgage Holdings, Inc./Investor Relations/Email Alerts.
Note: Safe Harbor "Statement under the Private Securities Litigation Reform Act of 1995." This release contains forward-looking statements including statements relating to the expected performance of the Company's businesses and dividend and earnings expectations. The forward-looking statements are based on current management expectations. Actual results may differ materially as a result of several factors, including, among other things, failure to achieve projected earning levels, the timely and successful implementation of strategic initiatives, the ability to generate sufficient liquidity, including completing securitizations and earning interest on our mortgage loans, different interest rate fluctuations on our assets and liabilities, changes in the difference between short-term and long-term interest rates, increase in prepayment rates on our mortgage assets, changes in assumptions regarding estimated loan losses, the availability of financing and, if available, the terms of any financing, changes in origination and resale pricing of mortgage loans, growth in markets which the Company serves, changes in general market and economic conditions and other facts described in this press release and under "Risk Factors" in our Quarterly Report on Form 10Q and Form 10Q-A for the quarter ended June 30, 2002. Caution must be exercised in relying on these and other forward-looking statements. Due to known and unknown risks and other factors not presently identified, the Company's results may differ materially from its expectations and projections. We will update and revise our estimates based on actual conditions experienced, however, it is not practicable to publish all revisions and as a result, no one should assume that results projected in or contemplated by the forward-looking statements included above may continue to be accurate in the future.
IMPAC MORTGAGE HOLDINGS, INC.
(in thousands, except per share amounts)
(unaudited)
Balance Sheets:
September 30, June 30, December 31,
2002 2002 2001
Cash and cash equivalents $110,060 $41,560 $51,887
Investment securities
available-for-sale 27,494 28,138 32,989
Loans receivable:
CMO collateral 4,006,065 3,438,057 2,229,168
Finance receivables 916,439 569,311 466,649
Mortgage loans
held-for-investment 274,138 10,678 20,078
Allowance for loan
losses (21,564) (16,934) (11,692)
Net Loans
Receivable 5,175,078 4,001,112 2,704,203
Investment in Impac Funding
Corporation 19,226 21,909 19,126
Due from affiliates 14,500 14,500 14,500
REO properties 11,181 9,471 8,137
Accounts receivable 1,984 134,593 3,946
Other assets 36,734 30,631 19,946
Total Assets $5,396,257 $4,281,914 $2,854,734
CMO borrowings $3,918,500 $3,474,019 $2,151,400
Reverse repurchase
agreements 1,167,680 516,065 469,491
Borrowings secured by
investment securities 8,391 9,756 12,997
Other liabilities 27,158 24,764 17,481
Stockholders' equity 274,528 257,310 203,365
Total Liabilities and
Stockholders' Equity $5,396,257 $4,281,914 $2,854,734
Statements of Operations:
For the Three Months For the Nine Months
Ended, Ended,
September 30, September 30,
2002 2001 2002 2001
Interest income $61,699 $38,968 $153,996 $116,032
Interest expense 38,590 27,581 97,687 85,202
Net interest income 23,109 11,387 56,309 30,830
Provision for loan losses 5,361 2,615 13,302 10,559
Net interest income
after provision
for loan losses 17,748 8,772 43,007 20,271
Equity in net earnings
of Impac Funding
Corporation 2,755 3,039 12,816 7,857
Other non-interest income 1,222 1,322 3,219 3,419
Total non-interest
income 3,977 4,361 16,035 11,276
Professional services 708 646 2,649 1,728
Personnel expense 534 290 1,326 866
General and administrative
and other expense 533 415 1,099 1,339
Gain on disposition of
real estate owned 514 (619) 120 (1,584)
Write-down on investment
securities
available-for-sale 2 1,841 1,040 1,949
Mark-to-market loss -
SFAS 133 -- 2,269 -- 3,713
Total non-interest
expense 2,291 4,842 6,234 8,011
Earnings before
extraordinary item and
cumulative effect of
change in accounting
principle 19,434 8,291 52,808 23,536
Extraordinary item -- -- -- (1,006)
Cumulative effect of change
in accounting principle -- -- -- (4,313)
Net earnings 19,434 8,291 52,808 18,217
Less: Cash dividends on
10.5% cumulative
convertible
preferred stock -- -- -- (1,575)
Net earnings
available to common
stockholders $19,434 $8,291 $52,808 $16,642
Earnings per share before
taxes and cumulative
effect of change in
accounting principle:
Basic $0.47 $0.37 $1.36 $0.97
Diluted $0.47 $0.31 $1.34 $0.87
Net earnings per share:
Basic $0.47 $0.37 $1.36 $0.74
Diluted $0.47 $0.31 $1.34 $0.68
Dividends declared per
common share $0.45 $0.25 $1.28 $0.25
Weighted average shares
outstanding:
Basic 41,010 22,687 38,850 22,573
Diluted 41,776 27,184 39,512 26,967
Common shares
outstanding 42,908 26,832 42,908 26,832
IMPAC MORTGAGE HOLDINGS, INC.
(in thousands, except per share amounts)
(unaudited)
Reconciliation of Core Operating Earnings to Net Earnings
For the Three Months For the Nine Months
Ended, Ended,
September 30, September 30,
2002 2001 2002 2001
Net earnings $19,434 $8,291 $52,808 $18,217
Adjustments to net earnings:
Mark-to-market loss - SFAS 133 -- 2,269 -- 3,713
Write-down on investment
securities available-for-sale 2 1,841 1,040 1,949
Extraordinary item -- -- -- 1,006
Cumulative effect of change in
accounting principle -- -- -- 4,313
Amortization of costs
associated with the
acquisition of hedging
instruments not included in
interest expense due to the
implementation of FAS 133 -- (1,096) -- (3,366)
Core operating earnings $19,436 $11,305 $53,848 $25,832
Core operating earnings per
diluted share $0.47 $0.42 $1.36 $0.96
Reconciliation of Estimated Taxable Earnings to Net Earnings (1)
For the Three Months For the Nine Months
Ended, Ended,
September 30, September 30,
2002 (2) 2001 (3) 2002 (2) 2001 (3)
Net earnings $19,434 $8,291 $52,808 $18,217
Adjustments to net earnings:
Loan loss provision 5,361 2,615 13,302 10,559
Dividends from IFC 4,208 2,000 9,901 6,419
Tax deduction for actual
loan losses (731) (2,491) (3,430) (7,707)
Equity in net earnings
of IFC (2,755) (3,039) (12,816) (7,857)
Estimated taxable earnings $25,517 $7,376 $59,765 $19,631
Estimated taxable earnings
per diluted share $0.61 $0.27 $1.51 $0.73
(1) Estimated taxable earnings include estimates of book to tax
adjustments and can differ from actual taxable earnings as calculated
when the Company files its annual tax return.
(2) Excludes the deduction for dividends paid and the availability of a
deduction attributable to a net operating loss carryforward.
(3) In addition to footnote (2), excludes quarterly tax deductions of
approximately $2.7 million for amortization of the termination of its
management agreement.
Other Financial Data
For the For the
Three Three
For the Three Months Months Months
Ended, Ended, Ended,
September 30, June 30, December 31,
2002 2001 2002 2001
Diluted book value per
share $6.40 $6.58 $6.44 $6.35
Diluted book value per
share excluding
SFAS 133 (1) 7.58 7.47 7.34 7.23
Return on average assets 1.64% 1.45% 1.88% 2.24%
Return on average equity 29.27% 17.16% 27.00% 28.84%
Return on average
assets (2) 1.64% 1.98% 1.88% 1.40%
Return on average
equity (2) 29.27% 23.40% 27.00% 18.08%
Assets to equity ratio 19.66:1 13.57:1 16.64:1 14.04:1
Debt to equity ratio 18.53:1 12.52:1 15.54:1 12.95:1
Allowance for loan losses
to total loans receivable 0.41% 0.35% 0.42% 0.43%
Prepay penalties as a % of
mortgages securing CMOs 61% 44% 65% 54%
CPR on mortgages securing
CMOs 24% 36% 26% 28%
Total non-performing
assets (3) $105,610 $60,435 $88,094 $69,273
Total non-performing
assets to total assets 1.96% 2.52% 2.06% 2.43%
Total mortgages owned 60+
days delinquent (4) $120,078 $72,343 $102,607 $82,700
60+ day delinquency rate
of mortgages owned 2.92% 4.15% 3.10% 3.84%
Master servicing
portfolio $7,917,232 $5,118,580 $6,939,897 $5,568,740
60+ day delinquency rate
of mortgages in the
master servicing
portfolio (4) 4.45% 5.41% 4.70% 5.38%
(1) Pro forma book value excludes unrealized mark-to-market loss on
derivative instruments that are reflected on the financial statements
as a reduction to stockholder's equity.
(2) Based on core operating earnings.
(3) Non-performing assets include mortgages owned that are 90+ days
delinquent, including foreclosures and bankruptcies, plus other real
estate owned.
(4) Includes foreclosures and delinquent bankruptcies.
IMPAC MORTGAGE HOLDINGS, INC.
(in thousands, except per share amounts)
(unaudited)
Yield Analysis of Mortgage Assets and Borrowings on Mortgage Assets
For the Three Months For the Three Months
Ended, Ended,
September 30, 2002 September 30, 2001
Avg Bal Yield Avg Bal Yield
Investment securities
available-for-sale $28,442 5.09% $33,491 8.11%
CMO collateral 3,725,003 5.19% 1,515,450 7.18%
Mortgage loans
held-for-investment 131,267 5.07% 195,891 5.16%
Finance receivables 725,613 5.19% 459,304 6.90%
Total Mortgage Assets $4,610,325 5.18% $2,204,136 6.96%
CMO borrowings 3,635,351 3.42% 1,435,864 5.36%
Reverse repurchase agreements 816,923 2.98% 633,248 4.86%
Borrowings secured by investment
securities 9,255 18.63% 16,183 15.32%
Total Borrowings on Mortgage
Assets $4,461,529 3.37% $2,085,295 5.29%
Net Interest Spread on Mortgage
Assets 1.81% 1.67%
Net Interest Margin on Mortgage
Assets 1.92% 1.96%
For the Nine Months For the Nine Months
Ended, Ended,
September 30, 2002 September 30, 2001
Avg Bal Yield Avg Bal Yield
Investment securities
available-for-sale $29,806 6.48% $34,181 11.69%
CMO collateral 2,981,957 5.39% 1,387,641 7.45%
Mortgage loans
held-for-investment 81,195 4.70% 154,678 6.13%
Finance receivables 677,253 5.05% 453,565 7.79%
Total Mortgage Assets $3,770,211 5.32% $2,030,065 7.50%
CMO borrowings 2,894,017 3.64% 1,309,069 5.81%
Reverse repurchase agreements 706,696 2.97% 578,021 5.88%
Borrowings secured by investment
securities 10,760 18.03% 18,219 14.33%
Total Borrowings on Mortgage
Assets $3,611,473 3.55% $1,905,309 5.91%
Net Interest Spread on Mortgage
Assets 1.77% 1.59%
Net Interest Margin on Mortgage
Assets 1.92% 1.95%
Acquisition Summary (1)
For the Three Months For the Nine Months
Ended, Ended,
September 30, September 30,
2002 2001 2002 2001
Volume % Volume % Volume % Volume %
Acquisitions
by Type:
Adjustable
rate $892,092 82 $353,290 98 $2,479,017 93 $894,506 99
Fixed rate 200,004 18 7,608 2 200,871 7 13,287 1
Total loan
acquisitions $1,092,096 $360,898 $2,679,888 $907,793
Acquisitions
by Product:
Six-month
LIBOR indexed
ARMs $619,225 57 $92,925 26 $1,727,198 65 $116,975 13
Six-month
LIBOR indexed
hybrids (2) 272,867 25 260,365 72 751,819 28 777,531 86
Fixed rate
first trust
deeds 200,004 18 -- 200,560 7 --
Fixed rate
second trust
deeds -- 0 7,608 2 311 0 13,287 1
Total loan
acquisitions $1,092,096 $360,898 $2,679,888 $907,793
Acquisitions
by Credit
Quality:
Alt-A loans $1,086,719 100 $358,492 99 $2,667,877 100 $901,229 99
B/C loans 5,377 0 2,406 1 12,011 0 6,564 1
Total loan
acquisitions $1,092,096 $360,898 $2,679,888 $907,793
Acquisitions
by Purpose:
Purchase $681,739 62 $253,224 70 $1,652,564 62 $614,116 68
Refinance 410,357 38 107,674 30 1,027,324 38 293,677 32
Total loan
acquisitions $1,092,096 $360,898 $2,679,888 $907,793
Acquisitions
by prepayment
penalty:
With
prepayment
penalty $913,959 84 $194,697 54 $2,050,608 77 $533,987 59
Without
prepayment
penalty 178,137 16 166,201 46 629,280 23 373,806 41
Total loan
acquisitions $1,092,096 $360,898 $2,679,888 $907,793
(1) Excludes premiums paid for acquiring mortgage loans.
(2) Mortgage loans are fixed rate for initial two to five year periods
and subsequently adjust to indicated index plus a margin.
IMPAC FUNDING CORPORATION
(in thousands)
(unaudited)
Balance Sheets:
September 30, June 30, December 31,
2002 2002 2001
Cash $19,251 $27,671 $28,612
Securities available-for-sale 186 94 3,394
Mortgage loans held-for-sale 456,640 241,057 174,172
Mortgage servicing rights 10,023 7,820 8,468
Premises and equipment, net 5,303 4,927 5,333
Other assets 41,232 30,302 19,823
Total Assets $532,635 $311,871 $239,802
Warehouse facilities $454,083 $238,425 $174,136
Due to affiliates 14,500 14,500 14,500
Deferred revenue 6,147 3,779 4,479
Other liabilities 38,485 33,037 27,367
Shareholders' equity 19,420 22,130 19,320
Total Liabilities and
Shareholders' Equity $532,635 $311,871 $239,802
Statements of Operations:
For the Three Months For the Nine Months
Ended, Ended,
September 30, September 30,
2002 2001 2002 2001
Interest income $8,072 $5,569 $22,644 $18,314
Interest expense 5,991 4,629 16,882 16,601
Net interest income 2,081 940 5,762 1,713
Gain on sale of loans 13,656 12,423 49,387 32,947
Loan servicing income (expense) (473) 507 (1,221) 2,308
Other non-interest income 9 210 2,089 319
Total non-interest income 13,192 13,140 50,255 35,574
Personnel expense 6,575 4,138 18,418 10,776
General and administrative
and other expense 4,549 2,844 13,006 8,500
Provision for repurchases
and loan losses 1,324 501 2,154 515
Amortization and impairment
of mortgage servicing rights 1,037 1,313 3,529 3,757
Mark-to-market gain -
SFAS 133 (2,937) (62) (3,393) (45)
Total non-interest
expense 10,548 8,734 33,714 23,503
Earnings before income
taxes and cumulative
effect of change in
accounting principle 4,725 5,346 22,303 13,784
Income taxes 1,942 2,257 9,357 5,865
Earnings before cumulative
effect of change in
accounting principle 2,783 3,089 12,946 7,919
Cumulative effect of change in
accounting principle -- -- -- 17
Net earnings 2,783 3,089 12,946 7,936
Less: Cash dividends on
preferred stock (4,208) (2,000) (9,901) (6,419)
Net earnings (loss)
available to common
stockholders $(1,425) $1,089 $3,045 $1,517
IMPAC FUNDING CORPORATION
(in thousands)
(unaudited)
Production Summary (1)
For the Three Months Ended, For the Nine Months Ended,
September 30, September 30,
2002 2001 2002 2001
Volume % Volume % Volume % Volume %
Production
by Type:
Fixed rate
first trust
deeds $552,751 33 $335,257 41 $1,319,446 31 $1,169,007 54
Fixed rate
second trust
deeds 24,032 1 10,083 1 61,719 1 29,879 1
Adjustable rate:
Six month
LIBOR ARMs 724,101 133,557 1,875,105 158,880
Six month
LIBOR
hybrids 379,102 336,618 995,520 819,786
Total
adjustable
rate 1,103,203 66 470,175 58 2,870,625 68 978,666 45
Total loan
production $1,679,986 $815,515 $4,251,790 $2,177,552
Production
by Channel:
Correspondent
acquisi-
tions $1,258,485 75 $606,905 74 $3,172,698 75 $1,667,374 77
Wholesale
and retail
originations 295,518 18 188,629 23 787,317 18 490,197 22
Novelle
Financial
Services,
Inc. 125,983 7 19,981 3 291,775 7 19,981 1
Total loan
production $1,679,986 $815,515 $4,251,790 $2,177,552
Production
by Credit
Quality:
Alt-A
loans $1,545,239 92 $791,037 97 $3,940,267 93 $2,143,632 98
B/C loans 134,747 8 24,478 3 311,523 7 33,920 2
Total loan
production $1,679,986 $815,515 $4,251,790 $2,177,552
Production
by Purpose:
Purchase $985,755 59 $531,935 65 $2,473,125 58 $1,373,171 63
Refinance 694,231 41 283,580 35 1,778,665 42 804,381 37
Total loan
production $1,679,986 $815,515 $4,251,790 $2,177,552
Production
by Prepayment
Penalty:
With
prepayment
penalty $1,372,735 82 $515,814 63 $3,291,851 77 $1,407,519 65
Without
prepayment
penalty 307,251 18 299,701 37 959,939 23 770,033 35
Total loan
production $1,679,986 $815,515 $4,251,790 $2,177,552
(1) Excludes premiums paid for acquiring and originating mortgage loan
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SOURCE Impac Mortgage Holdings, Inc.
CONTACT: Tania Jernigan of Impac Mortgage Holdings, Inc.,
+1-949-475-3600, tjernigan@impaccompanies.com
URL: http://www.prnewswire.com
http://www.impaccompanies.co
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