UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURTIES AND EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): January 29, 2003
IMPAC MORTGAGE HOLDINGS, INC.
(Exact Name of Registrant as Specified in its Charter)
Maryland 1-14100 33-0675505
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
1401 Dove Street Newport Beach, CA 92660
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (949) 475-3600
Item 5. Other Events
On January 29, 2003, the Registrant issued a press release announcing its
2002 fourth quarter and year to date results. The title and paragraphs 1 and 2,
and the section entitled "Financial Highlights for 2002", which is deemed
paragraph 4, paragraphs 7 (except for the second to last sentence), 8 (except
for the last sentence), 9, 10 (except for the last sentence), 11 (except for the
last sentence), and 14 and the accompanying financial statements, which appear
as part of Exhibit 99.1, are filed and incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits.
Exhibit 99.1 Press Release dated January 29, 2003
Item 9. Regulation FD
Paragraphs 3, 5, 6, the second to last sentence of paragraph 7, the last
sentence of paragraph 8, the last sentence of paragraph 10, the last sentence of
paragraph 11 and paragraphs 12 and 13 of the press release appearing in Exhibit
99.1 are not filed but are furnished pursuant to Regulation FD.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned, hereunto duly authorized.
IMPAC MORTGAGE HOLDINGS, INC.
Date: January 30, 2003
By: /s/ Richard J. Johnson
----------------------------------------
Name: Richard J. Johnson
Title: Executive Vice President
and Chief Financial Officer
Exhibit Index
Exhibit 99.1 Press Release dated January 29, 2003
Exhibit 99.1
IMPAC MORTGAGE HOLDINGS, INC.
(AMEX: IMH)
NEWS RELEASE
____________________For Immediate Release____________________
Impac Mortgage Holdings, Inc. Reports a 55% Increase in Earnings Per Share to
$1.84 for 2002 as compared to $1.19 for 2001
NEWPORT BEACH, CA. - January 29, 2003 - Impac Mortgage Holdings, Inc. (AMEX:
IMH) ("IMH" or the "Company"), a real estate investment trust ("REIT"), reports
net earnings of $74.9 million, or $1.84 per diluted share, for 2002 as compared
to net earnings of $33.2 million, or $1.19 per diluted share, for 2001. Net
earnings for the fourth quarter were $22.1 million, or $0.50 per diluted share,
as compared to net earnings of $15.0 million, or $0.48 per diluted share, for
the fourth quarter of 2001 and $19.4 million, or $0.47 per diluted share, for
the third quarter of 2002. For comparative purposes please refer to the
accompanying financial statements for the calculation of core operating earnings
and a reconciliation of core operating earnings to net earnings. Core operating
earnings exclude certain non-core revenue and expense items that are included in
net earnings.
Estimated taxable income was $85.6 million, or $2.10 per diluted share, for 2002
as compared to taxable income of $38.3 million, or $1.37 per diluted share, for
2001. Estimated taxable income for the fourth quarter was $25.9 million, or
$0.58 per diluted share, as compared to estimated taxable income of $18.7
million, or $0.61 per diluted share, for the fourth quarter of 2001 and $25.5
million, or $0.61 per diluted share, for the third quarter of 2002. Please refer
to the accompanying financial statements for the calculation of estimated
taxable income and a reconciliation of estimated taxable income to net earnings.
Joseph R. Tomkinson, Chairman and Chief Executive Officer of Impac Mortgage
Holdings, Inc., commented, "2002 was an exciting year for the company. We
exceeded our initial goals of $1.60 per share in net earnings and total assets
by year-end in excess of $5.0 billion as well as a return to paying consistent
and reliable quarterly dividends to our shareholders. Underlying operating
results was the success and growth of our core operating businesses, which all
made positive earnings contributions during 2002. As a result of the growth of
our core operating businesses, year-over-year earnings per share increased 55%
and total assets at year-end increased 128% over the prior year."
Financial Highlights for 2002
o Earnings per share ("EPS") increased 55% to $1.84 as compared to
$1.19 for 2001
o Estimated taxable income per share increased 53% to $2.10 as
compared to taxable income of $1.37 for 2001
o Total cash dividends declared increased to $1.76 per share as
compared to $0.69 per share for 2001
o Total assets increased 128% to $6.6 billion as of December 31, 2002
from $2.9 billion for the prior year
o Book value per share increased to $6.70 as of December 31, 2002 as
compared to $6.35 for the prior year
o Return on average assets and equity was 1.70% and 28.70%,
respectively, as compared to 1.48% and 17.40%, respectively, for
2001
o Total market capitalization was $521.2 million as of December 31,
2002 as compared to $272.0 million for the prior year
o Dividend yield as of December 31, 2002 was 16.70%, based on an
annualized fourth quarter dividend of $0.48 per share and a closing
stock price of $11.50
o Total return to shareholders was 56%, based on common stock price
appreciation of $3.00 per share and common stock dividends declared
of $1.76 per share
o Net earnings from the long-term investment operations and warehouse
lending operations was 77% of consolidated net earnings as compared
to 67% for 2001
o Impac Funding Corporation ("IFC"), the Company's mortgage
operations, acquired and originated $6.0 billion of primarily
non-conforming Alt-A mortgages ("Alt-A mortgages") as compared to
$3.2 billion for 2001
o Retained for long-term investment $3.9 billion in principal balance
of primarily Alt-A adjustable and fixed rate mortgages which were
acquired and originated by the mortgage operations
o Allowance for loan losses increased to $26.6 million, or 42 basis
points of loans receivable, as of December 31, 2002 as compared to
$11.7 million, or 43 basis points of loans receivable, for the prior
year
o Average finance receivables to non-affiliates increased 66% to
$341.5 million as compared to $205.5 million for 2001
Outlook for 2003
Mr. Tomkinson said, "Although the Mortgage Bankers Association ("MBA") estimates
that nationwide mortgage originations may decline 28% from 2002 levels,
primarily due to a decline in refinancing activity, we look to modestly increase
our loan acquisition and origination levels over 2002 results. Our belief is
that Alt-A mortgage originations as a percentage of the total mortgage
origination market will continue to grow as mortgage borrowers seek alternatives
to the traditional mortgage products offered by government sponsored agencies.
We believe that we can increase our share of the Alt-A mortgage market as we
have built a solid origination platform that focuses on product, price and
service, along with people that work effectively together to profitably manage
the acquisition, sale, finance and investment of our mortgage loans. We also
believe that we will be less affected by a decline in refinance activity as we
rely on purchase money transactions as evidenced by MBA estimates that 58% of
nationwide residential mortgage originations during 2002 were from refinancing
activity as compared to 45% of the Company's acquisitions and originations that
were from refinances during the same period."
Mr. Tomkinson went on to say, "We expect a gradual rise in interest rates
towards the latter part of 2003 from the historic lows experienced during 2002
which should lead to a gradual reduction in mortgage refinance activity along
with slightly higher borrowing costs and decreased mortgage prepayment rates in
our mortgage loan investment portfolio. We also expect a gradual change in the
composition of our acquisitions and originations from adjustable rate to fixed
rate mortgages, which started during the latter half of 2002 and which we expect
will to continue throughout 2003. Fixed rate mortgages held for investment are
financed through the issuance of CMOs, which provide fixed rate financing over
the life of the mortgages with no interest rate risk or interest rate hedge
related expenses. We plan to continue this strategy during 2003 as we believe we
will create long-term shareholder value by retaining mortgage assets that have
favorable credit profiles, prepayment penalty features and conservative
loan-to-value ratios which should generate positive cash flows over a longer
time horizon. Our 2003 business plan is also based on an interest rate hedging
strategy that should help maintain relatively stable net interest margins,
maintain adequate allowance for loan losses and acquire and originate both
adjustable and fixed rate mortgages for long-term investment."
New Business Opportunities
Impac Multifamily Capital Corporation
In addition to acquiring mortgages from our mortgage operations during 2002, the
long-term investment operations also originated multi-family mortgages through
Impac Multifamily Capital Corporation ("IMCC"), a wholly-owned subsidiary of IMH
that was formed during the third quarter of 2002. IMCC is located at our
headquarters in Newport Beach, California, which allows us to maintain
centralized operations and support. IMCC was formed to primarily originate small
balance multi-family mortgages with high credit quality, conservative
loan-to-value ratios and adjustable rate mortgages with balances ranging from
$250,000 to $1.5 million. Multi-family mortgages provide greater asset
diversification on our balance sheet as multi-family mortgages typically have
higher interest rate spreads and longer lives than residential mortgages. IMCC
originated $25.8 million of multi-family mortgages during the fourth quarter of
2002 with an average loan size of $737,000. We expect IMCC to originate in
excess of $300.0 million multi-family mortgages during 2003, which will be
retained for long-term investment and financed with CMO borrowings. Multi-family
mortgages originated during the fourth quarter of 2002 were primarily secured by
properties located in California and all multi-family mortgages had interest
rate floors with prepayment penalty periods ranging from three to five years
with the borrower's weighted average credit score of 731 and a weighted average
loan-to-value ratio of 67%.
Novelle Financial Services, Inc.
Novelle Financial Services, Inc. ("Novelle") is a wholly-owned subsidiary of IFC
that originates sub-prime residential mortgages through a network of wholesale
brokers and subsequently sells its loans to third party investors for cash
gains. Novelle began operations during September of 2001 in San Diego,
California, where it is currently headquartered, with an initial capital
contribution from IFC of $1.5 million. Subsequently in August of 2002, IFC
contributed an additional $3.5 million to Novelle to provide the necessary
capital for Novelle to continue its growth. Novelle exceeded origination and
profitability goals for 2002 as it originated $404.9 million of sub-prime
mortgages and contributed net earnings of $1.7 million to the mortgage
operations, which reflected a return on average equity of 69%. We expect
Novelle's sub-prime mortgage originations to grow to approximately $700.0
million in 2003.
Other Operating Business Segments
Long-Term Investment Operations
We exceeded our growth targets for 2002 as the long-term investment operations
acquired $3.9 billion in principal balance of primarily Alt-A adjustable and
fixed rate mortgages from the mortgage operations and retained $25.8 million of
multi-family mortgages originated by IMCC, which increased CMO collateral and
loans held for investment to $5.2 billion at December 31, 2002 from $2.2 billion
for the prior year. Mortgages acquired for long-term investment were primarily
financed through the issuance of CMOs and sale of common stock. We issued CMOs
totaling $3.9 billion of which $3.3 billion were adjustable rate CMOs and $597.0
million were fixed rate CMOs. We also raised $116.0 million from the issuance of
13.3 million new shares of common stock. By issuing new shares periodically
throughout the year we were able to utilize new capital more efficiently and
profitably, which was important in last year's market as yields on high
investment grade alternatives for cash were extremely low. Issuing new shares of
common stock was accretive to pro forma book value per common share, which
increased to $7.80 at December 31, 2002 as compared to $7.23 for the prior year.
Pro forma book value excludes $50.2 million of unrealized mark-to-market losses
on derivative instruments that is reflected on the financial statements as a
reduction to stockholder's equity.
Warehouse Lending Operations
The warehouse lending operations were a significant contributor to overall
earnings during 2002 which we expect to continue throughout 2003. Advances on
warehouse lines were $1.1 billion as of December 31, 2002 as compared to $466.6
million for the prior year. Average outstanding advances to non-affiliates
increased 66% to $341.5 million in 2002 as compared to $205.5 million during
2001 as new clients were added and mortgage activity with existing clients
reflected the overall increase in mortgage demand during 2002. With our
expectation that nationwide mortgage demand will gradually decline in 2003, we
project growth in average outstanding advances to non-affiliates will remain
relatively flat during 2003.
Mortgage Operations
William S. Ashmore, President and Chief Operating Officer, commented, "Net
earnings rose 56% to $17.2 million in 2002 as compared to $11.0 million during
2001 as total mortgage acquisitions and originations increased 88% to $6.0
billion from $3.2 billion, respectively. The mortgage operations sold $3.9
billion in principal balance of mortgages to the long-term investment
operations, which included $600.0 million of fixed rate mortgages that were
retained and financed through the issuance of fixed rate CMOs. By selling fixed
rate loans to the long-term investment operations, the Company as a whole is
less reliant on revenue generated from gain on sale of loans and is more reliant
on revenue generated from its balance sheet. We believe that this strategy will
provide more earnings over time than would be received on earnings generated
strictly from loan sales."
New Reporting Schedule
In an effort to comply with new reporting guidelines set forth by the
Sarbanes-Oxley Act of 2002 and the Securities and Exchange Commission ("SEC"),
we anticipate accelerating the reporting timeframes that Form 10-Qs and 10-Ks
are available to the public and in the process eliminating our quarterly
earnings releases (with the exception of the fourth quarter earnings release).
Therefore, beginning with the first quarter of 2003, we expect to file our
quarterly Form 10-Q approximately 35 days after quarter-end. This will bring us
into compliance with Form 10-Q filing deadlines as mandated by the SEC two years
before required. Upon filing our quarterly Form 10-Q, we intend to publish a
brief press release that summarizes our quarterly results. We plan to continue
quarterly conference calls to discuss results of operations and publish a
monthly fact sheet, which can be viewed on our website at
www.impaccompanies.com, which provides selected unaudited financial information
and results on a monthly basis. We plan to file our Form 10-K according to the
accelerated schedule as mandated by the SEC that requires a 75-day filing period
beginning with the 2003 annual Form 10-K and a 60-day filing period beginning
with the 2004 annual Form 10-K. For year-end and fourth quarter results of
operations we expect to publish an earnings release approximately 30 days after
year-end.
For additional information, questions or comments call or write to the 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, January 30, 2003 at 9:30 a.m. Pacific Time
(12:30 p.m. Eastern Time). Mr. William S. Ashmore, President and Chief Operating
Officer, will discuss 2002 and the fourth quarter of 2002 results of operations
and provide a general update 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 in the conference call, you may listen by
dialing (800) 350-9149, conference ID number 7941006, or access the web cast via
our web site at http://www.impaccompanies.com/IMH/IMH_main.asp. To participate
in the conference call, dial in fifteen minutes prior to the scheduled start
time. The conference call will be archived on the Company's web site at
www.impaccompanies.com and can be accessed by linking to Impac Mortgage
Holdings, Inc./Audio Archives. You can subscribe to receive instant notification
of conference calls, new releases and the monthly unaudited fact sheet, which
will be available on January 31, 2003, by using our e-mail alert feature located
at the web site 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, reporting
schedules 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, interest rate
fluctuations on our assets that differ from those on our liabilities, increase
in prepayment rates on our mortgage assets, changes in assumptions regarding
estimated loan losses or interest rates, the availability of financing and, if
available, the terms of any financing, changes in estimations of acquisition and
origination and resale pricing of mortgage loans, changes in markets which the
Company serves, including the market for Alt-A mortgages and fixed rate loans,
the inability to originate multi-family or sub-prime mortgages, changes in
general market and economic conditions, unanticipated delays in generating
reports and other factors described in this press release and under "Risk
Factors" in our Quarterly Report on Form 10-Q for the quarter ended September
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:
As of December 31,
--------------------------
2002 2001
----------- -----------
Cash and cash equivalents $ 113,345 $ 51,887
Investment securities available-for-sale 26,065 32,989
Loans receivable:
CMO collateral 5,149,680 2,229,168
Finance receivables 1,140,248 466,649
Mortgage loans held-for-investment 57,536 20,078
Allowance for loan losses (26,602) (11,692)
----------- -----------
Net Loans Receivable 6,320,862 2,704,203
Investment in Impac Funding Corporation 20,787 19,126
Due from affiliates 14,500 14,500
REO properties 11,116 8,137
Accounts receivable 1,293 3,946
Other assets 43,805 19,946
----------- -----------
Total Assets $ 6,551,773 $ 2,854,734
=========== ===========
CMO borrowings $ 5,041,751 $ 2,151,400
Reverse repurchase agreements 1,168,029 469,491
Borrowings secured by investment securities 7,134 12,997
Other liabilities 31,371 17,481
Stockholders' equity 303,488 203,365
----------- -----------
Total Liabilities and Stockholders' Equity $ 6,551,773 $ 2,854,734
=========== ===========
Statements of Operations:
For the Three For the
Months Ended, Year Ended,
December 31, December 31,
--------------------- ---------------------
2002 2001 2002 2001
--------- --------- --------- ---------
Interest income $ 72,419 $ 40,582 $ 226,416 $ 156,615
Interest expense 47,120 26,809 144,807 112,012
--------- --------- --------- ---------
Net interest income 25,299 13,773 81,609 44,603
Provision for loan losses 6,546 6,254 19,848 16,813
--------- --------- --------- ---------
Net interest income after provision for loan losses 18,753 7,519 61,761 27,790
--------- --------- --------- ---------
Equity in net earnings of Impac Funding Corporation 4,257 3,055 17,073 10,912
Other non-interest income 1,290 3,048 4,509 6,467
--------- --------- --------- ---------
Total non-interest income 5,547 6,103 21,582 17,379
--------- --------- --------- ---------
Professional services 1,000 1,019 3,649 2,747
General and administrative and other expense 615 413 1,716 1,753
Personnel expense 542 345 1,868 1,211
Loss (gain) on disposition of real estate owned 34 (347) 154 (1,931)
Write-down on investment securities available-for-sale -- 269 1,039 2,217
Mark-to-market loss - SFAS 133 -- 107 -- 3,821
--------- --------- --------- ---------
Total non-interest expense 2,191 1,806 8,426 9,818
--------- --------- --------- ---------
Earnings before taxes, extraordinary item and
cumulative effect of change in accounting principle 22,109 11,816 74,917 35,351
Alternative minimum tax -- (550) -- (550)
Extraordinary item -- -- -- (1,006)
Cumulative effect of change in accounting principle -- 3,696 -- (617)
--------- --------- --------- ---------
Net earnings 22,109 14,962 74,917 33,178
Less: Cash dividends on 10.5% cumulative convertible
preferred stock -- -- -- (1,575)
--------- --------- --------- ---------
Net earnings available to common stockholders $ 22,109 $ 14,962 $ 74,917 $ 31,603
========= ========= ========= =========
Earnings per share before taxes, extraordinary item and
cumulative effect of change in accounting principle:
Basic $ 0.50 $ 0.37 $ 1.87 $ 1.41
Diluted 0.50 0.37 1.84 1.25
Net earnings per share:
Basic $ 0.50 $ 0.49 $ 1.87 $ 1.34
Diluted 0.50 0.48 1.84 1.19
Dividends declared per common share $ 0.48 $ 0.44 $ 1.76 $ 0.69
Weighted average shares outstanding:
Basic 43,808 30,512 40,099 23,510
Diluted 44,516 30,862 40,773 27,952
Common shares outstanding 45,321 32,002 45,321 32,002
IMPAC MORTGAGE HOLDINGS, INC.
(in thousands, except per share amounts)
(unaudited)
Reconciliation of Core Operating Earnings to Net Earnings
For the Three For the
Months Ended, Year Ended,
December 31, December 31,
------------------- -------------------
2002 2001 2002 2001
-------- -------- -------- --------
Net earnings $ 22,109 $ 14,962 $ 74,917 $ 33,178
Adjustments to net earnings:
Mark-to-market loss - SFAS 133 -- 107 -- 3,821
Alternative minimum tax -- 550 -- 550
Write-down on investment securities available-for-sale -- 269 1,039 2,217
Extraordinary item -- -- -- 1,006
Cumulative effect of change in accounting principle -- (3,696) -- 617
Tax-effected recovery of previously charged-off
assets at IFC -- (668) -- (668)
Recovery of previously charged-off assets -- (2,145) -- (2,145)
-------- -------- -------- --------
Core operating earnings $ 22,109 $ 9,379 $ 75,956 $ 38,576
======== ======== ======== ========
Core operating earnings per diluted share $ 0.50 $ 0.30 $ 1.86 $ 1.38
======== ======== ======== ========
Diluted weighted average shares outstanding 44,516 30,862 40,773 27,952
======== ======== ======== ========
Reconciliation of Estimated Taxable Income to Net Earnings (1)
For the Three For the
Months Ended, Year Ended,
December 31, December 31,
------------------- -------------------
2002 (2) 2001 (3) 2002 (2) 2001 (4)
-------- -------- -------- --------
Net earnings $ 22,109 $ 14,962 $ 74,917 $ 33,178
Adjustments to net earnings:
Loan loss provision 6,546 6,254 19,848 16,813
Dividends from IFC 2,970 2,475 12,870 8,894
Tax deduction for actual loan losses (1,508) (2,504) (4,938) (10,211)
Equity in net earnings of IFC (4,257) (3,055) (17,073) (10,912)
Alternative minimum tax -- 550 -- 550
Net miscellaneous tax adjustments -- -- -- 13
-------- -------- -------- --------
Estimated taxable income $ 25,860 $ 18,682 $ 85,624 $ 38,325
======== ======== ======== ========
Estimated taxable income per diluted share $ 0.58 $ 0.61 $ 2.10 $ 1.37
======== ======== ======== ========
Diluted weighted average shares outstanding 44,516 30,862 40,773 27,952
======== ======== ======== ========
(1) Estimated taxable income include estimates of book to tax adjustments and
can differ from actual taxable income 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) Excludes the deduction for dividends paid and the availability of a
deduction attributable to a net operating loss carryforward in addition to
a quarterly tax deduction of approximately $2.7 million for amortization
of the termination of the Company's management agreement.
(4) Actual taxable income per the Company's 2001 tax return. Excludes the
deduction for dividends paid and the availability of a deduction
attributable to a net operating loss carryforward in addition to a tax
deduction of approximately $10.8 million for amortization of the
termination of the Company's management agreement.
Other Financial Data
For the Three For the
Months Ended, Year Ended,
December 31, December 31,
------------------------ ------------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
Diluted book value per share $ 6.70 $ 6.35 $ 6.70 $ 6.35
Pro forma diluted book value per share (1) 7.80 7.23 7.80 7.23
Return on average assets 1.49% 2.24% 1.70% 1.48%
Return on average equity 31.37% 28.84% 28.70% 17.40%
Pro forma return on average assets (2) 1.49% 1.40% 1.73% 1.57%
Pro forma return on average equity (2) 31.37% 18.08% 29.10% 18.47%
Assets to equity ratio 21.59:1 14.04:1 21.59:1 14.04:1
Debt to equity ratio 20.48:1 12.95:1 20.48:1 12.95:1
Allowance for loan losses to total loans receivable 0.42% 0.43% 0.42% 0.43%
Prepay penalties as a % of mortgages securing CMOs 72% 49% 72% 49%
CPR on mortgages securing CMOs 25% 28% 25% 34%
Total non-performing assets (3) $ 130,614 $ 69,273 $ 130,614 $ 69,273
Total non-performing assets to total assets 1.99% 2.43% 1.99% 2.43%
Total mortgages owned 60+ days delinquent (4) $ 161,260 $ 82,700 $ 161,260 $ 82,700
60+ day delinquency rate of mortgages owned 3.22% 3.84% 3.22% 3.84%
Master servicing portfolio $8,694,474 $5,568,740 $8,694,474 $5,568,740
60+ day delinquency rate of mortgages in the master
servicing portfolio (4) 4.73% 5.38% 4.73% 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 For the
Three Months Ended, Three Months Ended,
December 31, 2002 December 31, 2001
---------------------- ---------------------
Avg Bal Yield Avg Bal Yield
---------- -------- ---------- --------
Investment securities available-for-sale $ 26,336 5.36% $ 34,253 6.07%
CMO collateral 4,591,776 4.96% 1,911,579 6.44%
Mortgage loans held-for-investment 213,402 5.17% 85,055 5.05%
Finance receivables 952,111 4.95% 535,401 5.54%
---------- ----------
Total Mortgage Assets $5,783,625 4.97% $2,566,288 6.20%
========== ==========
CMO borrowings 4,516,563 3.43% 1,844,523 4.51%
Reverse repurchase agreements 1,133,396 2.77% 588,272 3.62%
Borrowings secured by investment securities 7,893 20.07% 14,172 17.16%
---------- ----------
Total Borrowings on Mortgage Assets $5,657,852 3.32% $2,446,967 4.37%
========== ==========
Net Interest Spread on Mortgage Assets 1.64% 1.83%
Net Interest Margin on Mortgage Assets 1.72% 2.04%
For the For the
Year Ended, Year Ended,
December 31, 2002 December 31, 2001
---------------------- ----------------------
Avg Bal Yield Avg Bal Yield
---------- -------- ---------- --------
Investment securities available-for-sale $ 28,931 5.31% $ 34,199 10.28%
CMO collateral 3,387,720 5.24% 1,519,702 7.13%
Mortgage loans held-for-investment 114,519 4.91% 137,130 5.97%
Finance receivables 746,532 5.01% 474,192 7.15%
---------- ----------
Total Mortgage Assets $4,277,702 5.19% $2,165,223 7.11%
========== ==========
CMO borrowings 3,302,988 3.57% 1,444,033 5.39%
Reverse repurchase agreements 814,248 2.90% 580,605 5.31%
Borrowings secured by investment securities 10,037 18.45% 17,199 14.92%
---------- ----------
Total Borrowings on Mortgage Assets $4,127,273 3.47% $2,041,837 5.45%
========== ==========
Net Interest Spread on Mortgage Assets 1.72% 1.66%
Net Interest Margin on Mortgage Assets 1.84% 1.98%
Acquisition Summary (1)
For the Three Months Ended, For the Year Ended,
December 31, December 31,
--------------------------------------------------------------------------
2002 2001 2002 2001
--------------------------------------------------------------------------
Volume % Volume % Volume % Volume %
------ - ------ - ------ - ------ -
Acquisitions by Type:
Fixed rate first trust deeds $ 399,006 33 $ -- 0 $ 599,566 15 $ 17,028 1
Fixed rate second trust deeds -- 0 4,000 1 311 0 259 0
Adjustable rate:
Six month LIBOR ARMs 624,102 257,138 2,351,300 374,114
Six month LIBOR hybrids (2) 188,261 317,411 940,080 1,094,942
---------- ---------- ---------- ----------
Total adjustable rate 812,363 67 574,549 99 3,291,380 85 1,469,056 99
---------- ---------- ---------- ----------
Total loan production $1,211,369 $ 578,549 $3,891,257 $1,486,343
========== ========== ========== ==========
Acquisitions by Credit Quality:
Alt-A loans $1,208,026 100 $ 574,038 99 $3,875,903 100 $1,475,269 99
B/C loans 3,343 0 4,511 1 15,354 0 11,074 1
---------- ---------- ---------- ----------
Total loan acquisitions $1,211,369 $ 578,549 $3,891,257 $1,486,343
========== ========== ========== ==========
Acquisitions by Purpose:
Purchase $ 683,886 56 $ 383,234 66 $2,336,451 60 $ 997,350 67
Refinance 527,483 44 195,315 34 1,554,806 40 488,993 33
---------- ---------- ---------- ----------
Total loan acquisitions $1,211,369 $ 578,549 $3,891,257 $1,486,343
========== ========== ========== ==========
Acquisitions by Prepayment Penalty:
With prepayment penalty $1,024,133 85 $ 342,810 59 $3,074,741 79 $ 876,798 59
Without prepayment penalty 187,236 15 235,739 41 816,516 21 609,545 41
---------- ---------- ---------- ----------
Total loan acquisitions $1,211,369 $ 578,549 $3,891,257 $1,486,343
========== ========== ========== ==========
(1) Excludes premiums paid for acquiring mortgage loans and $25.8 million of
multi-family mortgages originated by IMCC.
(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:
As of December 31,
---------------------
2002 2001
-------- --------
Cash $ 22,773 $ 28,612
Securities available-for-sale 129 3,394
Mortgage loans held-for-sale 495,877 174,172
Mortgage servicing rights 8,274 8,468
Premises and equipment, net 4,948 5,333
Other assets 43,585 19,823
-------- --------
Total Assets $575,586 $239,802
======== ========
Warehouse facilities $491,383 $174,136
Due to affiliates 14,500 14,500
Deferred revenue 5,088 4,479
Other liabilities 43,618 27,367
Shareholders' equity 20,997 19,320
-------- --------
Total Liabilities and Shareholders' Equity $575,586 $239,802
======== ========
Statements of Operations:
For the For the
Three Months Ended, Year Ended,
December 31, December 31,
-------------------- --------------------
2002 2001 2002 2001
-------- -------- -------- --------
Interest income $ 7,749 $ 5,861 $ 30,393 $ 24,175
Interest expense 5,243 4,263 22,125 20,865
-------- -------- -------- --------
Net interest income 2,506 1,598 8,268 3,310
Gain on sale of loans 21,677 14,003 71,064 46,949
Loan servicing income (expense) (642) (168) (1,863) 2,140
Other non-interest income 50 4,684 2,140 5,005
-------- -------- -------- --------
Total non-interest income 21,085 18,519 71,341 54,094
-------- -------- -------- --------
Personnel expense 7,328 5,783 25,746 16,559
General and administrative and other expense 4,996 3,852 18,002 12,352
Amortization and impairment of mortgage servicing rights 1,385 1,587 4,914 5,344
Mark-to-market loss (gain) - SFAS 133 1,692 391 (1,700) 346
Provision for repurchases and loan losses 652 2,983 2,806 3,498
-------- -------- -------- --------
Total non-interest expense 16,053 14,596 49,768 38,099
-------- -------- -------- --------
Earnings before income taxes and cumulative
effect of change in accounting principle 7,538 5,521 29,841 19,305
Income taxes 3,238 2,435 12,595 8,300
-------- -------- -------- --------
Earnings before cumulative effect of change in
accounting principle 4,300 3,086 17,246 11,005
Cumulative effect of change in accounting principle -- -- -- 17
-------- -------- -------- --------
Net earnings 4,300 3,086 17,246 11,022
Less: Cash dividends on preferred stock (2,970) (2,475) (12,870) (8,894)
-------- -------- -------- --------
Net earnings available to common stockholders $ 1,330 $ 611 $ 4,376 $ 2,128
======== ======== ======== ========
IMPAC FUNDING CORPORATION
(in thousands)
(unaudited)
Production Summary (1)
For the Three Months Ended, For the Year Ended,
December 31, December 31,
--------------------------------------------------------------------------
2002 2001 2002 2001
--------------------------------------------------------------------------
Volume % Volume % Volume % Volume %
------ - ------ - ------ - ------ -
Production by Type:
Fixed rate first trust deeds $ 840,250 50 $ 401,218 41 $2,159,696 36 $1,570,225 50
Fixed rate second trust deeds 20,426 1 13,195 1 82,145 1 43,074 1
Adjustable rate:
Six month LIBOR ARMs 551,761 251,122 2,426,865 410,002
Six month LIBOR hybrids (2) 281,271 311,541 1,276,792 1,131,327
---------- ---------- ---------- ----------
Total adjustable rate 833,032 49 562,663 58 3,703,657 62 1,541,329 49
---------- ---------- ---------- ----------
Total loan production $1,693,708 $ 977,076 $5,945,498 $3,154,628
========== ========== ========== ==========
Production by Channel:
Correspondent acquisitions $1,278,842 76 $ 715,645 73 $4,451,541 75 $2,383,018 76
Wholesale and retail originations 301,691 18 192,862 20 1,089,008 18 683,060 22
Novelle Financial Services, Inc. 113,175 7 68,569 7 404,949 7 88,550 3
---------- ---------- ---------- ----------
Total loan production $1,693,708 $ 977,076 $5,945,498 $3,154,628
========== ========== ========== ==========
Production by Credit Quality:
Alt-A loans $1,575,306 93 $ 902,900 92 $5,515,573 93 $3,046,532 97
B/C loans 118,402 7 74,176 8 429,925 7 108,096 3
---------- ---------- ---------- ----------
Total loan production $1,693,708 $ 977,076 $5,945,498 $3,154,628
========== ========== ========== ==========
Production by Purpose:
Purchase $ 815,440 48 $ 565,496 58 $3,288,566 55 $1,938,715 61
Refinance 878,268 52 411,580 42 2,656,932 45 1,215,913 39
---------- ---------- ---------- ----------
Total loan production $1,693,708 $ 977,076 $5,945,498 $3,154,628
========== ========== ========== ==========
Production by Prepayment Penalty:
With prepayment penalty $1,385,227 82 $ 650,504 67 $4,677,078 79 $2,058,746 65
Without prepayment penalty 308,481 18 326,572 33 1,268,420 21 1,095,882 35
---------- ---------- ---------- ----------
Total loan production $1,693,708 $ 977,076 $5,945,498 $3,154,628
========== ========== ========== ==========
(1) Excludes premiums paid for acquiring and originating mortgage loans.
(2) Mortgage loans are fixed rate for initial two to five year periods and
subsequently adjust to indicated index plus a margin.