NovaStar Financial Announces 2005 and Fourth-Quarter Results
And Earnings Conference Call
Management Offers Guidance of At Least $5.60 in Dividends for 2006
KANSAS CITY, Mo. – February 27, 2006 – NovaStar Financial, Inc. (NYSE:NFI), a residential lender and mortgage Real Estate Investment Trust, today reported quarterly and year-end results.
On February 10, 2006, NovaStar announced that it was postponing its fourth-quarter earnings release and conference call until it obtained legal opinions to support certain tax positions. The Company has obtained these legal opinions, which confirm the previous advice of external advisors on which the Company based these tax positions.
The NovaStar fourth-quarter investor conference call is scheduled for 10:30 a.m. Central time (11:30 a.m. Eastern time) on February 28, 2006. The conference call will be webcast live and archived on the Company’s website at www.novastarmortgage.com. To participate in the call, please contact 800-289-0507 approximately 15 minutes before the scheduled start of the call. A copy of the presentation slides will be available on the website by 9:30 a.m. Central time (10:30 a.m. Eastern time). For investors unable to participate in the live event, a replay will be available until March 7, 2006 at 888-203-1112. The confirmation code for the replay is 2822943.
Full-year 2005 performance highlights:
• | Net income available to common shareholders grew 21 percent to $132.5 million. |
• | Earnings per share available to common shareholders were $4.42 vs. $4.24 a year earlier. |
• | NovaStar originated $9.3 billion in nonconforming loans, up 10 percent from 2004. |
• | Portfolio of loans under management was $14.0 billion, up 15 percent from 2004. |
• | Book value grew 21 percent to $15.08 per share, from $12.49 a year earlier. |
• | Return on average common equity was 31.5 percent, vs. 33.5 percent in 2004. |
Fourth-quarter performance highlights:
• | Net income available to common shareholders grew 16 percent to $26.4 million. |
• | Earnings per share available to common shareholders were $0.84 vs. $0.85 a year earlier. |
• | Fourth-quarter originations were $2.2 billion, down 2 percent from the prior-year period. |
• | Cost of wholesale production declined 35 basis points, year over year, to 2.32 percent. |
Common-stock dividend highlights:
• | Declared $5.60 per share in 2005 dividends, including $1.40 in the fourth quarter. |
• | Dividends for 2006 are expected to total at least $5.60 per share. |
“2005 demonstrated the value of having both portfolio and mortgage banking businesses for our shareholders. Strong portfolio earnings more than compensated for weakness in our mortgage banking business, primarily because of better than expected credit performance driven by rising home prices,” said Scott Hartman, Chief Executive Officer. “Our priorities for 2006 continue to focus on cost disciplines in our mortgage banking operations and managing a portfolio to deliver attractive risk-adjusted returns.”
For full-year 2005, NovaStar reported $132.5 million in net income available to common stockholders, up 21 percent from 2004. Earnings per share available to common stockholders was $4.42, a 4 percent increase on a larger number of shares outstanding compared with $4.24 in 2004. Portfolio net interest income for 2005 was $219.9 million, an increase of 49 percent.
Fourth-quarter net income available to common stockholders was $26.4 million, up 16 percent from the fourth quarter of 2004. Earnings per share available to common stockholders were $0.84 in the fourth quarter, verses $0.85 a year earlier, on 17 percent more diluted shares outstanding. Portfolio net interest income was $57.5 million, an increase of 45 percent.
Greg Metz, Senior Vice President and Chief Financial Officer, noted: “2005 was clearly a challenging year with significant margin compression driven by a highly competitive mortgage banking environment. We proactively focused on cost controls and business efficiencies to mitigate the impact of tighter spreads. These efforts resulted in a 35 basis point reduction in the cost of wholesale production. We will continue to focus on cost containment and production efficiencies in 2006.”
Dividend Guidance
NovaStar’s management believes dividends declared for common stockholders during calendar 2006 will total at least $5.60 per share. consistent with regular quarterly dividends of $1.40 per share the company has declared since October 2004. The amount and timing of future dividends are determined by the Board of Directors based on REIT tax requirements, the company’s financial condition and business trends at the time, so this dividend guidance is subject to change as necessary.
Estimated 2005 taxable income available to stockholders was $285 million, and approximately $76 million in dividends declared to date were applicable to 2005 taxable income (see table).
Dividend Carry-over Analysis |
(In millions) |
| | |
Estimated 2005 REIT taxable income | $285 |
| Less: dividend declarations to date applied to 2005 taxable income | (76) |
Estimated 2005 REIT taxable income remaining to be distributed | $ 209 |
Portfolio Management
Loans under management were $14.0 billion at December 31, 2005, up 15 percent from a year earlier but reflecting a slight decline verses the third quarter. NovaStar securitized $1.7 billion in nonconforming loans in the fourth quarter and sold $421 million in loans to other financial institutions. Fourth-quarter annualized average return on assets in the portfolio was 1.65 percent, compared to 1.35 percent in the fourth quarter of 2004.
“We continue to build NovaStar’s portfolio for the long term, and loans under management grew during 2005. In the fourth quarter, however, seasonally lower mortgage originations, brisk repayment activity and significant whole loan sales caused a slight drop in the overall size of the portfolio. Our priority remains to invest profitably in these assets and manage the risks for NovaStar shareholders,” said Mike Bamburg, Senior Vice President and Chief Investment Officer.
Fourth-quarter earnings in accordance with generally accepted accounting principles in the United States of America (GAAP) included mark to market pretax gains of $3.2 million relating to derivative instruments and impairments of $7.6 million in the valuation of securities. Accounting rules for portfolio-related transactions can introduce volatility in quarterly GAAP earnings as a result of market movements in interest rates, but NovaStar employs hedging to mitigate risk and manage the portfolio in the interest of long-term shareholder value.
Mortgage Banking
NovaStar originated $2.2 billion in nonconforming loans in the fourth quarter, down 2 percent from a year earlier. Wholesale production accounted for about 75 percent of fourth-quarter originations. Average cost of wholesale production was 2.32 percent in the quarter, down from 2.67 percent a year earlier.
Excluding option ARM products, the weighted-average coupon for the fourth quarter was 8.06 percent, somewhat improved compared with the prior year and first three quarters of 2005. Credit quality of originations in the quarter also strengthened slightly from a year earlier, with a weighted-average FICO credit score of 635 and an average loan-to-value ratio of 80.9 percent.
Liquidity and Borrowing Capacity
NovaStar maintained strong liquidity and raised additional capital in the third quarter to fund the growth of its portfolio. As of December 31, 2005, NovaStar had borrowing capacity of $3.5 billion from major lenders. Cash and available liquidity totaled $265 million.
Focus on Key Metrics
In addition to full reporting under GAAP, NovaStar provides information on key performance metrics related to stockholder value:
Summary of Key Performance Metrics
(In thousands, except per share data)
| | Fourth Quarter | | Year Ended December 31 |
| | 2005 | 2004 | Change | | 2005 | 2004 | Change |
Earnings (GAAP) | | | | | | | |
| Net Income available to common | $26,445 | $22,786 | 16% | | $132,471 | $109,124 | 21% |
| EPS available to common (diluted) | $0.84 | $0.85 | -1% | | $4.42 | $4.24 | 4% |
| Return on average equity | 20.10% | 24.40% | | | 28.10% | 31.80% | |
| Return on average common equity | 21.80% | 27.90% | | | 31.50% | 33.50% | |
| | | | | | | | |
REIT Taxable Income & Dividends | | | | | | | |
| Est. REIT taxable income | $60,727 | - | - | | $285,403 | $256,820(A) | 11% |
| Est. REIT taxable income per common share | $1.89 | - | - | | $8.87 | $9.13 | -3% |
| Dividends declared per common share | $1.40 | $2.65 | -47% | | $5.60 | $6.75 | -17% |
| | | | | | | | |
Lending & Originations | | | | | | | |
| Nonconforming loan production | $2,198,339 | $2,235,029 | -2% | | $9,283,138 | $8,424,361 | 10% |
| Cost of wholesale production (B) | 2.32% | 2.67% | | | 2.39% | 2.53% | |
| | | | | | | | |
Portfolio Performance | | | | | | | |
| Portfolio loans under management | $13,987,730 | $12,130,182 | 15% | | $13,987,730 | $12,130,182 | 15% |
| Portfolio net interest income | $57,545 | $39,604 | 45% | | $219,931 | $147,425 | 49% |
| Portfolio return on average assets | 1.65% | 1.35% | | | 1.64% | 1.53% | |
| | | | | | | | |
Common Stock Data | | | | | | | |
| High market price per share | $33.01 | $56.82 | | | $48.15 | $67.49 | |
| Low market price per share | $26.20 | $41.34 | | | $26.20 | $30.97 | |
| Book value per common share (diluted) | $15.08 | $12.49 | 21% | | $15.08 | $12.49 | 21% |
| (B) | As required by Regulation G, a reconciliation of cost of production to the most directly comparable GAAP financial measure is set forth in the table attached as Exhibit 1 to this press release. |
Core Earnings
In addition to GAAP earnings, NovaStar evaluates quarterly performance using core earnings, a management measure that adjusts net income and EPS to exclude quarterly timing differences due to the accounting treatment of hedging and mortgage loans. Core earnings for the quarter were $28.0 million, or $0.89 per diluted share.
Core Earnings (Adjusted from GAAP) (A) | | | |
| Fourth Quarter |
(In millions, except per share data) | 2005 | 2004 | Change |
| | | |
Core earnings (Net income excluding hedging gain/loss) | $28.0 | $17.5 | 60% |
Core earnings per share available to common shareholders, fully diluted | $0.89 | $0.65 | 37% |
| (A) | As required by Regulation G, a reconciliation of core earnings to the most directly comparable GAAP financial measure is set forth in the table attached as Exhibit 2 to this press release. |
About NovaStar
NovaStar Financial, Inc. (NYSE:NFI) is a specialty finance company that originates, purchases, sells, invests in, and services residential nonconforming loans. A Real Estate Investment Trust (REIT) founded in 1996, NovaStar efficiently brings together the capital markets, a nationwide network of mortgage brokers and American families financing their homes. NovaStar is headquartered in Kansas City, Missouri, and has lending operations nationwide.
For more information, including quarterly portfolio data, please visit our website at www.novastarmortgage.com.
Certain matters discussed in this release constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are those that predict or describe future events and that do not relate solely to historical matters. Forward-looking statements are subject to risks and uncertainties and certain factors can cause actual results to differ materially from those anticipated. Some important factors that could cause actual results to differ materially from those anticipated include: our ability to generate sufficient liquidity on favorable terms; the size and frequency of our securitizations; interest rate fluctuations on our assets that differ from our liabilities; increases in prepayment or default rates on our mortgage assets; changes in assumptions regarding estimated loan losses and fair value amounts; changes in origination and resale pricing of mortgage loans; our compliance with applicable local, state and federal laws and regulations or opinions of counsel relating thereto and the impact of new local, state or federal legislation or regulations or opinions of counsel relating thereto or court decisions on our operations; the initiation of margin calls under our credit facilities; the ability of our servicing operations to maintain high performance standards and maintain appropriate ratings from rating agencies; our ability to expand origination volume while maintaining an acceptable level of overhead; our ability to adapt to and implement technological changes; the stability of residual property values; the outcome of litigation or regulatory actions pending against us or other legal contingencies; the impact of losses resulting from natural disasters; the impact of general economic conditions; and the risks that are from time to time included in our filings with the SEC, including our Quarterly Report on Form 10-Q, for the period ending September 30, 2005. Other factors not presently identified may also cause actual results to differ.
This document speaks only as of its date and we expressly disclaim any duty to update the information herein.
CONTACT:
NovaStar Financial, Inc.
Jeffrey A. Gentle, 816-237-7424 (Investor Relations)
Exhibit 1
NovaStar Financial Inc.
Reconciliation of GAAP General and Administrative Expenses to Total Cost of Wholesale Production
(dollars in thousands, except wholesale production as a percentage)
The following table is a reconciliation of overhead costs included in our cost of wholesale production to general and administrative expenses, presented in accordance with accounting principles generally accepted in the United States of America (GAAP) and the resulting cost of production. We believe this presentation provides useful information regarding our financial performance because it more accurately reflects the direct costs of loan production and allows us to monitor the performance of our core operations, which is more difficult to do when looking at GAAP financial statements, and provides useful information regarding our financial performance. Management uses this measure for the same purpose. However, this presentation is not intended to be used as a substitute for financial results prepared in accordance with GAAP.
Cost of Wholesale Production
(dollars in thousands, except total cost of wholesale production as a percentage)
| For the Twelve Months | | For the Three Months |
| Ended December 31, | | Ended December 31, |
| | 2005 | | | 2004 | | | 2005 | | | 2004 |
General and administrative expenses | $ | 215,397 | | $ | 207,730 | | $ | 51,805 | | $ | 59,047 |
Mortgage portfolio management general and administrative expenses | | (14,450) | | | (7,473) | | | (2,521) | | | (2,049) |
Loan servicing general and administrative expenses | | (34,515) | | | (24,698) | | | (9,332) | | | (7,507) |
Branch operations general and administrative expenses | | (37,813) | | | (58,676) | | | (9,802) | | | (16,979) |
Consolidation eliminations | | - | | | 10,180 | | | - | | | 2,165 |
Mortgage lending general and administrative expenses | | 128,619 | | | 127,063 | | | 30,150 | | | 34,677 |
Direct origination costs classified as a reduction in gain-on-sale | | 41,548 | | | 44,641 | | | 8,334 | | | 10,967 |
Other lending expenses | | (32,999) | | | (42,930) | | | (5,817) | | | (10,100) |
Wholesale overhead costs | | 137,168 | | | 128,774 | | | 32,667 | | | 35,544 |
Premium paid to broker, net of fees collected | | 49,612 | | | 53,007 | | | 8,910 | | | 12,962 |
Total cost of wholesale production | $ | 186,780 | | $ | 181,781 | | $ | 41,577 | | $ | 48,506 |
| | | | | | | | | | | |
Wholesale production, principal (A) | $ | 7,823,677 | | $ | 7,185,773 | | $ | 1,790,964 | | $ | 1,819,127 |
Total cost of wholesale production, as a percentage | | 2.39% | | | 2.53% | | | 2.32% | | | 2.67% |
| (A) | Includes loans originated through NovaStar Home Mortgage, Inc. and purchased by our wholesale division in NovaStar Mortgage, Inc. Only the costs borne by our wholesale division are included in the total cost of wholesale production. |
Exhibit 2
NovaStar Financial, Inc.
Reconciliation of GAAP Income to Core Income
(Dollars in thousands, except per share data)
| 2003 | 2004 | 2005 |
| 4Q | 1Q | 2Q | 3Q | 4Q | 1Q | 2Q | 3Q | 4Q |
| | | | | | | | | |
GAAP Net Income Available to Common Shareholders | $ 35,208 | $ 29,650 | $ 33,963 | $ 22,725 | $ 22,786 | $ 33,540 | $ 37,856 | $ 34,630 | $ 26,445 |
| | | | | | | | | |
Mark to Market adjustment of Derivative Instruments - previous qtr. | $ (4,506) | $ 103 | $ (4,331) | $ 7,783 | $ (2,572) | $ 2,675 | $ 3,370 | $ (3,278) | $ 2,171 |
Mark to Market adjustment of Derivative Instruments - current qtr. | (103) | 4,331 | (7,783) | 2,572 | (2,675) | (3,370) | 3,278 | (2,171) | (629) |
Adjustment to Compute Core Income | (4,609) | 4,434 | (12,114) | 10,355 | (5,247) | (695) | 6,648 | (5,449) | 1,542 |
| | | | | | | | | |
Core Income Available to Common Shareholders | $ 30,599 | $ 34,084 | $ 21,849 | $ 33,080 | $ 17,539 | $ 32,845 | $ 44,504 | $ 29,181 | $ 27,987 |
| | | | | | | | | |
Fully Diluted GAAP EPS | $ 1.45 | $ 1.17 | $ 1.34 | $ 0.89 | $ 0.85 | $ 1.19 | $ 1.29 | $ 1.12 | $ 0.84 |
Fully Diluted Core EPS | 1.26 | 1.35 | 0.86 | 1.30 | 0.65 | 1.17 | 1.52 | 0.94 | 0.89 |
| | | | | | | | | |
Fully Diluted Shares | 24,342 | 25,274 | 25,377 | 25,455 | 26,937 | 28,111 | 29,295 | 30,962 | 31,549 |
Core income is not a measure of income in accordance with generally accepted accounting principles (GAAP). It is calculated as GAAP income less net unrealized gains/losses on trading account derivatives, plus unrealized gains/losses on trading account derivatives from the previous reporting period. Management believes that core income is useful to investors because it can provide relevant information regarding the current earnings power of the Company.
At the end of a reporting period, the company holds mortgage loans awaiting securitization. The company also holds derivative instruments, used to hedge interest rate risk in the mortgage loans. GAAP accounting standards require these mortgage loans to be carried on the balance sheet at the lower of cost or market, and any gain taken upon sale (usually in the following quarter). However, changes in value of the derivatives are recognized through the income statement. This creates a timing difference when the asset and hedge gain/loss are recognized in different periods.
The company's core income measure attempts to match the change in value of mortgage loans awaiting securitization with the change in value of derivative instruments used to hedge interest rate risk. Core income, as defined by the company, excludes current period valuation adjustments to derivatives in its trading account and includes valuation adjustments to derivatives in its trading account from the prior reporting period. This adjustment to GAAP income essentially moves the gain/loss in its trading account derivatives into the following period, when the mortgage loans being hedged are sold through securitization.
NovaStar Financial, Inc.
Summary of Gains on Sales of Mortgage Assets
(dollars in thousands) (unaudited)
| | |
| | For the Three Months Ended |
| | | | | | | | | | | | | | |
| | 12/31/2005 | | % | | | 9/30/2005 | | % | | | 12/31/2004 | | % |
Securitizations: | | | | | | | | | | | | | | |
Net whole loan sales price | $ | 1,752,573 | | 101.21% | | $ | 2,175,288 | | 101.64% | | $ | 2,562,436 | | 102.50% |
Cost basis of loans sold | | (1,742,453) | | -100.63% | | | (2,162,506) | | -101.04% | | | (2,531,528) | | -101.26% |
Securitization expenses | | (4,543) | | -0.26% | | | (5,478) | | -0.26% | | | (9,187) | | -0.37% |
| | | | | | | | | | | | | | |
Gains on mortgage loans transferred | | | | | | | | | | | | | | |
in securitizations | $ | 5,577 | | 0.32% | | $ | 7,304 | | 0.34% | | $ | 21,721 | | 0.87% |
| | | | | | | | | | | | | | |
Loan principal sold | $ | 1,731,570 | | | | $ | 2,140,171 | | | | $ | 2,500,000 | | |
Gain as a % of principal sold | | 0.32% | | | | | 0.34% | | | | | 0.87% | | |
| | | | | | | | | | | | | | |
Nonconforming Loan Sales to Third Parties: | | | | | | | | | | | | | | |
Net whole loan sales price | $ | 426,281 | | 101.29% | | $ | 500,562 | | 102.14% | | $ | - | | 0.00% |
Cost basis of loans sold | | (425,340) | | -101.07% | | | (496,310) | | -101.27% | | | - | | 0.00% |
| | | | | | | | | | | | - | | |
Gains on sales of nonconforming | | | | | | | | | | | | | | |
Loans to third parties | $ | 941 | | 0.22% | | $ | 4,252 | | 0.87% | | $ | - | | 0.00% |
| | | | | | | | | | | | | | |
Loan principal sold | $ | 420,836 | | | | $ | 490,067 | | | | $ | - | | |
Gain as a % of principal sold | | 0.22% | | | | | 0.87% | | | | | 0.00% | | |
NovaStar Financial, Inc.
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
(dollars in thousands)
(unaudited)
| For the Three Months Ended | | For the Twelve Months Ended |
| | 12/31/2005 | | | 9/30/2005 | | | 12/31/2004 | | | 12/31/2005 | | | 12/31/2004 |
NovaStar Financial Inc. Income Statement Data | | | | | | | | | | | | | | |
Interest income | $ | 78,503 | | $ | 88,083 | | $ | 60,200 | | $ | 299,772 | | $ | 224,024 |
Interest expense | | 22,170 | | | 25,044 | | | 16,790 | | | 80,843 | | | 52,590 |
Fee income | | 8,264 | | | 12,038 | | | 14,979 | | | 46,286 | | | 50,752 |
Gains on sales of mortgage assets | | 6,389 | | | 10,829 | | | 21,581 | | | 68,173 | | | 144,950 |
Gains (losses) on derivative instruments | | 4,880 | | | 6,522 | | | 8,914 | | | 18,155 | | | (8,905) |
Impairment on mortgage securities available-for-sale | | (7,553) | | | (8,328) | | | (7,210) | | | (17,619) | | | (15,902) |
General and administrative expenses | | 51,805 | | | 52,114 | | | 59,407 | | | 215,397 | | | 207,730 |
Income before tax expense (benefit) | | 21,488 | | | 35,207 | | | 24,129 | | | 132,697 | | | 136,264 |
Income tax expense (benefit) | | (7,224) | | | (2,357) | | | (1,461) | | | (10,900) | | | 9,526 |
Income from continuing operations | | 28,712 | | | 37,564 | | | 25,590 | | | 143,597 | | | 126,738 |
Loss from discontinued operations, net of income tax | | (603) | | | (1,271) | | | (1,140) | | | (4,473) | | | (11,349) |
Preferred dividends | | (1,664) | | | (1,663) | | | (1,664) | | | (6,653) | | | (6,265) |
Net income available to common shareholders | | 26,445 | | | 34,630 | | | 22,786 | | | 132,471 | | | 109,124 |
| | | | | | | | | | | | | | |
Basic earnings per share | | | | | | | | | | | | | | |
Income from continuing operations available to common | | | | | | | | | | | | | | |
shareholders | $ | 0.87 | | $ | 1.17 | | $ | 0.90 | | $ | 4.61 | | $ | 4.76 |
Loss from discontinued operations, net of income tax | $ | (0.02) | | $ | (0.04) | | $ | (0.04) | | $ | (0.15) | | $ | (0.45) |
Net income available to common shareholders | $ | 0.85 | | $ | 1.13 | | $ | 0.86 | | $ | 4.46 | | $ | 4.31 |
Diluted earnings per share | | | | | | | | | | | | | | |
Income from continuing operations available to common | | | | | | | | | | | | | | |
shareholders | $ | 0.86 | | $ | 1.16 | | $ | 0.89 | | $ | 4.57 | | $ | 4.68 |
Loss from discontinued operations, net of income tax | $ | (0.02) | | $ | (0.04) | | $ | (0.04) | | $ | (0.15) | | $ | (0.44) |
Net income available to common shareholders | $ | 0.84 | | $ | 1.12 | | $ | 0.85 | | $ | 4.42 | | $ | 4.24 |
Dividends declared per common share | $ | 1.40 | | $ | 1.40 | | $ | 2.65 | | $ | 5.60 | | $ | 6.75 |
Dividends declared per preferred share | $ | 0.56 | | $ | 0.56 | | $ | 0.56 | | $ | 2.23 | | $ | 2.11 |
Book value per diluted share | $ | 15.08 | | $ | 15.52 | | $ | 12.49 | | $ | 15.08 | | $ | 12.49 |
| As of | | | | | | |
| | 12/31/2005 | | | 9/30/2005 | | | 12/31/2004 | | | | | | |
NovaStar Financial, Inc. Balance Sheet Data | | | | | | | | | | | | | | |
Mortgage loans - held for sale | $ | 1,291,556 | | $ | 1,231,280 | | $ | 747,594 | | | | | | |
Mortgage loans - held in portfolio | | 28,840 | | | 42,480 | | | 59,527 | | | | | | |
Mortgage securities - available for sale | | 505,645 | | | 541,948 | | | 489,175 | | | | | | |
Mortgage securities - trading | | 43,738 | | | - | | | 143,153 | | | | | | |
Total assets | | 2,335,734 | | | 2,230,345 | | | 1,861,311 | | | | | | |
Borrowings | | 1,619,812 | | | 1,531,891 | | | 1,295,422 | | | | | | |
Stockholders' equity | | 564,220 | | | 557,385 | | | 426,344 | | | | | | |
| | | | | | | | | | | | | | |
| For the Three Months Ended | | For the Twelve Months Ended |
| | 12/31/2005 | | | 9/30/2005 | | | 12/31/2004 | | | 12/31/2005 | | | 12/31/2004 |
Other Data: | | | | | | | | | | | | | | |
Servicing portfolio | $ | 14,030,697 | | $ | 14,094,048 | | $ | 12,151,196 | | $ | 14,030,697 | | $ | 12,151,196 |
Loans sold for cash - Non-conforming wholesale | $ | 420,836 | | $ | 490,067 | | $ | - | | $ | 1,138,098 | | $ | - |
Loans securitized | $ | 1,731,570 | | $ | 2,140,171 | | $ | 2,500,000 | | $ | 7,621,030 | | $ | 8,329,804 |
Percent of securitized loans covered by mortgage insurance | | 53% | | | 51% | | | 45% | | | 51% | | | 45% |
Weighted average coupon of mortgage loans - held for sale | | 8.1% | | | 7.6% | | | 7.7% | | | 8.1% | | | 7.7% |
NovaStar Financial, Inc.
LOAN ORIGINATION DATA
(dollars in thousands)
(unaudited)
| | For the Three Months Ended |
| | | | As a % | | | | | As a % | | | | | As a % |
| | 12/31/2005 | | of Total | | | 9/30/2005 | | of Total | | | 12/31/2004 | | of Total |
Non-conforming loan origination volume | | | | | | | | | | | | | | |
Non-conforming | | | | | | | | | | | | | | |
Wholesale | $ | 1,645,769 | | 75% | | $ | 2,036,262 | | 73% | | $ | 1,485,429 | | 66% |
Correspondent/Bulk | | 200,393 | | 9% | | | 266,926 | | 10% | | | 313,838 | | 14% |
Retail | | 352,177 | | 16% | | | 476,128 | | 17% | | | 435,762 | | 20% |
Total non-conforming production volume | $ | 2,198,339 | | 100% | | $ | 2,779,316 | | 100% | | $ | 2,235,029 | | 100% |
| | | | | | | | | | | | | | |
# of funding days in the quarter | | 60 | | | | | 64 | | | | | 61 | | |
Average originations per funding day | $ | 36,639 | | | | $ | 43,427 | | | | $ | 36,640 | | |
| | | | | | | | | | | | | | |
Retail production volume | | | | | | | | | | | | | | |
Non-conforming | | | | | | | | | | | | | | |
Sold to non-affiliates | $ | 139,393 | | 23% | | $ | 131,148 | | 17% | | $ | 432,532 | | 31% |
Held by NMI | | 352,177 | | 59% | | | 476,128 | | 62% | | | 435,762 | | 31% |
Total non-conforming | | 491,570 | | 82% | | | 607,276 | | 79% | | | 868,2944 | | 62% |
| | | | | | | | | | | | | | |
Conforming | | 109,823 | | 18% | | | 166,457 | | 21% | | | 532,320 | | 38% |
| | | | | | | | | | | | | | |
Total retail production volume | $ | 773,733 | | 100% | | $ | 773,733 | | 100% | | $ | 1,400,614 | | 100% |
| | For the Three Months Ended 12/31/05 |
| | Weighted | | Weighted | | | Weighted | | |
| | Average | | Average | | | Average | | Percent |
| | Coupon | | LTV | | | FICO | | of Total |
| | | | | | | | | |
Summary by Credit Grade | | | | | | | | | |
660 and above | | 7.29% | | 82.3% | | | 702 | | 35% |
620 to 659 | | 7.76% | | 81.2% | | | 639 | | 24% |
580 to 619 | | 8.25% | | 80.9% | | | 599 | | 20% |
540 to 579 | | 8.80% | | 79.4% | | | 560 | | 14% |
539 and below | | 9.24% | | 75.9% | | | 527 | | 7% |
| | | | | | | | | |
| | 7.94% | | 80.9% | | | 635 | | 100% |
| | | | | | | | | |
Summary by Program Type | | | | | | | | | |
2-Year Fixed | | 8.29% | | 81.0% | | | 611 | | 53% |
2-Year Fixed IO | | 7.26% | | 80.8% | | | 667 | | 23% |
3-Year Fixed | | 7.52% | | 75.9% | | | 633 | | 1% |
3-Year Fixed IO | | 7.03% | | 79.1% | | | 666 | | 1% |
5-Year Fixed | | 7.15% | | 72.5% | | | 659 | | 0% |
5-Year Fixed IO | | 7.14% | | 78.3% | | | 664 | | 0% |
15-Year Fixed | | 8.99% | | 81.7% | | | 649 | | 1% |
30-Year Fixed | | 7.72% | | 75.7% | | | 640 | | 11% |
30-Year Fixed IO | | 7.10% | | 73.0% | | | 674 | | 1% |
Other Products | | 9.64% | | 92.1% | | | 666 | | 7% |
MTA | | 1.84% | | 75.0% | | | 711 | | 2% |
| | | | | | | | | |
| | 7.94% | | 80.9% | | | 635 | | 100% |
Weighted Average Coupon Excluding MTA | | 8.06% | | | | | | | |
