Exhibit 99.1
| FIELDSTONE INVESTMENT CORPORATION |
FOR IMMEDIATE RELEASE:
CONTACT:
INVESTOR RELATIONS
TEL: 410-772-5160
TOLL-FREE: 866-438-1088
INVESTORS@FIELDSTONEINVESTMENT.COM
FIELDSTONE INVESTMENT CORPORATION
ANNOUNCES THIRD QUARTER 2005 OPERATING RESULTS AND
RECORD NON-CONFORMING FUNDINGS AND
REAFFIRMS 2005 DIVIDEND GUIDANCE
COLUMBIA, MARYLAND, November 14, 2005 – Fieldstone Investment Corporation (NASDAQ: FICC) today announced its results of operations for the third quarter of 2005.
Financial Highlights
• Fieldstone’s net income for the third quarter of 2005 was $23.4 million or $0.48 per share (diluted) compared to $23.1 million or $0.47 per share (diluted) for the second quarter of 2005. Net income increased $0.3 million during the third quarter of 2005 from the prior quarter due primarily to greater non-cash mark to market valuations of interest rate swap and cap agreements, offset by lower net interest margins on the portfolio of mortgage loans held for investment, faster amortization of deferred origination and bond issuance costs and decreased gain on sale revenue from mortgage loan sales.
• Fieldstone had core net income in the third quarter of 2005 of $15.6 million or $0.32 core per share (diluted), a $19.6 million decrease from the $35.2 million or $0.72 core per share (diluted) for the second quarter of 2005. This decrease was due primarily to lower net interest margins on the portfolio of mortgage loans held for investment, faster amortization of deferred origination and bond issuance costs and decreased gain on sale revenue from mortgage loan sales. Core net income excludes the non-cash mark to market gains or losses recognized on interest rate swap and cap agreements.
• The investment portfolio was $5.3 billion at September 30, 2005, a $443.9 million increase to the portfolio during the quarter, achieved by adding $1.0 billion of loans to the portfolio, net of repayments of $566.6 million.
• Fieldstone funded a record $1.8 billion of non-conforming residential mortgage loans in the third quarter, an increase of 11.5% compared to the second quarter, and funded $2.3 billion of loans including conforming loans.
• Fieldstone sold $896.6 million of its non-conforming loans in the third quarter at an average gross premium of 2.7%, net of hedge gains, compared to its sales of $1.2 billion of non-conforming loans in the second quarter at an average gross premium of 3.3%, net of hedge losses; the second quarter sales included $639.5 million of non-conforming first lien ARM loans that Fieldstone initially held for investment.
• Non-conforming cost to produce remained flat in the third quarter at 2.35%, versus 2.36% in the second quarter.
• Fieldstone declared a cash dividend on October 5, 2005 of $0.51 per share for the third quarter of 2005 payable to stockholders of record on October 19, 2005, representing the seventh consecutive dividend increase since November of 2003.
• Fieldstone reaffirmed its dividend guidance for 2005: dividends for the year 2005 are expected to total between $1.98 and $2.04 per share, including the $1.48 paid year to date.
“Fieldstone achieved a record level of non-conforming loan fundings and continued to build its investment portfolio in the third quarter,” stated Michael J. Sonnenfeld, Fieldstone’s President and Chief Executive Officer. “Our results in the third quarter validated again the strength of our REIT / TRS business model. During the quarter, we built our REIT portfolio, achieved our targeted returns on new loans held for investment and continued our strategy of match funding the portfolio. In addition, we continued to build our TRS origination franchise, achieved a positive margin on loans sold and demonstrated our ability to originate quality loans at a competitive cost. During the third quarter our oldest ARM loans passed their first reset dates, and our prepayments and delinquencies increased: our actual delinquencies and losses remain at levels lower than we have anticipated. Despite the uncertainties of the current market, we are confident that we can continue to build our business and maintain our portfolio and origination disciplines, with a goal of maintaining stable dividends.”
DIVIDEND GUIDANCE
Fieldstone today reaffirmed management’s previous guidance that dividends for common stockholders during the year 2005 are expected to total between $1.98 and $2.04 per share. To date, Fieldstone has declared and paid dividends of $1.48 per share relating to the nine months ended September 30, 2005. This dividend guidance is based on management’s current estimates and assumptions for the year 2005, including the following:
• Total annual non-conforming mortgage loan fundings of between $5.8 billion and $6.2 billion. Year to date fundings were $4.6 billion through the nine months ended September 30, 2005.
• Investment portfolio balance of between $5.4 billion and $5.6 billion of non-conforming loans by year end 2005, which reflects a portfolio debt to equity leverage ratio of approximately 10 to 1. The portfolio balance was $5.3 billion at September 30, 2005.
• Stable interest margin on new loans added to the investment portfolio in the fourth quarter of 2005 at levels achieved in the third quarter of 2005, as interest rates increase based on the forward LIBOR curve.
• Retention of 2005 after-tax income from sale of loans in the taxable REIT subsidiary (TRS).
• Weighted average diluted common shares outstanding in 2005 of 48.5 million.
FINANCIAL RESULTS
This press release discloses Fieldstone’s financial results under accounting principles generally accepted in the United States of America (GAAP). Also presented are certain non-GAAP financial measures that management believes provide useful information to investors regarding Fieldstone’s financial performance. The non-GAAP financial measures presented include core net income, core earnings per share (diluted), core return on average assets, core return on average equity, core net interest income and margin and cost to produce. Additional information about each of these non-GAAP financial measures, including a definition and the reason management believes its presentation provides useful information and a reconciliation of each of these non-GAAP financial measures to the most directly comparable measure under GAAP is provided in Schedule 2 of this press release.
Net Income and Earnings per Share
Fieldstone’s net income for the third quarter of 2005 was $23.4 million, or $0.48 per share (diluted) compared to $23.1 million or $0.47 per share (diluted) for the second quarter of 2005. Net income increased $0.3 million during the third quarter of 2005 from the second quarter due primarily to the $7.6 million non-cash mark to market valuation gain on interest rate swap and cap agreements in the third quarter of 2005 compared to the $12.1 million non-cash mark to market valuation loss in the second quarter of 2005. This increase was offset by an $11.5 million decrease in net interest income prior to the provision for loan losses and a $7.1 million decrease in pre-tax gain on sale revenue from mortgage loan sales. Net interest income on the investment portfolio was lower in the third quarter as new loans with narrower margins replaced older loans with wider margins that prepaid. In addition, amortization of deferred origination and bond issuance costs increased due to faster prepayments after the oldest ARM loans in the portfolio passed their first reset date, and the provision for loan losses – loans held for investment increased, reflecting higher portfolio delinquencies. Gain on sale revenue decreased from a lower volume of mortgage loans sold, due to a higher percentage of new originations designated as held for investment and lower sale premium. Please see the discussions below of net interest income and gain on sale revenue.
Net income for the third quarter of 2005 increased $19.5 million from $4.0 million, or $0.08 per share (diluted) in the third quarter of 2004, due primarily to the non-cash mark to market valuation gain and net cash settlements received on interest rate swap and cap agreements in the third quarter of 2005, versus a non-cash mark to market valuation loss and net cash settlements paid in the third quarter of 2004. This increase was partially offset by lower net interest income after provision for loan losses in 2005, due to increased borrowing costs, faster amortization of deferred origination and bond issuance costs and increased provision for loan losses on loans held for investment.
Core Net Income and Core Earnings per Share
Core net income for the third quarter of 2005 was $15.6 million, or $0.32 core per share (diluted), a $19.6 million decrease from the $35.2 million, or $0.72 core per share (diluted) in the second quarter of 2005. Core net income decreased in the third quarter of 2005 due to the same factors which decreased the quarter’s net income. Please see the discussions below of net interest income and gain on sale revenue. Core net income excludes the non-cash mark to market gains or losses on interest rate swap and cap agreements.
Core net income for the third quarter of 2005 decreased $0.5 million from $16.1 million, or $0.33 core per share (diluted), for the third quarter of 2004 due primarily to the lower net interest income after provision for loan losses in 2005 as current year amortization of deferred origination and bond issuance costs rose due to faster prepayment speeds, and provision for loan losses increased due to higher loan delinquencies. This decrease was partially offset by the net cash settlements on interest rate swap and cap agreements received in the third quarter of 2005 during a period of rising interest rates, versus net cash settlements paid in the third quarter of 2004.
Mortgage Loan Fundings
Fieldstone funded a record of $1.8 billion of non-conforming mortgage loans during the quarter, an 11.5% increase from the prior quarter. The non-conforming fundings increased due primarily to the effects of hiring additional account executives and loan officers and the opening of new origination branches. Conforming mortgage loan fundings were $434.0 million for the third quarter of 2005, an increase of 13.8% compared to the second quarter of 2005. Total mortgage loan fundings increased in the third quarter of 2005 to $2.3 billion from $2.0 billion in the second quarter of 2005.
Total mortgage loan fundings for the third quarter of 2005 increased 13.4% from the $2.0 billion funded in the third quarter of 2004. Non-conforming fundings increased 7.9% from the third quarter of 2004 and conforming fundings increased 44.1% from the third quarter of 2004.
Net Interest Income and Margin
Net interest margin on loans held for investment after provision for loan losses for the three months ended September 30, 2005, June 30, 2005 and September 30, 2004 was as follows:
| | 3Q 2005 | | 2Q 2005 | | 3Q 2004 | |
Coupon interest income | | 6.7 | % | 6.7 | % | 6.6 | % |
Amortization of deferred origination costs | | (0.7 | )% | (0.5 | )% | (0.5 | )% |
Prepayment fees | | 0.7 | % | 0.7 | % | 0.4 | % |
Yield on loans held for investment | | 6.7 | % | 6.9 | % | 6.5 | % |
| | | | | | | |
Cost of financing loans held for investment | | 4.3 | % | 3.7 | % | 2.3 | % |
| | | | | | | |
Net yield on loans held for investment * | | 2.4 | % | 3.4 | % | 4.3 | % |
| | | | | | | |
Provision for loan losses | | (0.9 | )% | (0.6 | )% | (0.6 | )% |
| | | | | | | |
Yield on loans held for investment, after provision | | 1.5 | % | 2.8 | % | 3.7 | % |
* Net yield on loans held for investment does not equal the arithmetic difference between the yield on loans held for investment less the cost of financing loans held for investment due to the difference between the principal balance of the loans held for investment and the principal balance of the debt financing those loans.
Net interest income loans held for investment after provision for loan losses was $19.5 million for the third quarter of 2005, a 1.5% net interest margin after provision, compared to $31.9 million for the second quarter of 2005, a 2.8% net interest margin after provision, and $33.9 million for the third quarter of 2004, a 3.7% net interest margin after provision. The decline in Fieldstone’s net interest margin after provision in the third quarter of 2005 reflects a compression of margins on the investment portfolio as Fieldstone’s cost to finance its mortgage loans increased during the quarter, while its interest income remained the same due to competitive pressures. In addition, Fieldstone increased its amortization of deferred origination and bond issuance costs in the third quarter due to an increase in the prepayments of Fieldstone’s oldest loans, resulting in an increased amortization expense. Finally, Fieldstone increased its provision for loan losses on loans held for investment in the third quarter by 0.3% due to an increase in delinquencies of the loans held for investment, consistent with the seasoning of the investment portfolio. Net interest income and margin do not include the effect of Fieldstone’s economic hedge of its cost of financing.
Net interest income loans held for sale was $4.7 million for the third quarter of 2005, a 3.1% net interest margin, compared to $8.0 million for the second quarter of 2005, a 3.9% net interest margin, and $4.9 million for the third quarter of 2004, a 5.6% net interest margin after provision.
Core Net Interest Income and Margin
Core net interest margin on loans held for investment after provision for loan losses for the three months ended September 30, 2005, June 30, 2005 and September 30, 2004 was as follows:
| | 3Q 2005 | | 2Q 2005 | | 3Q 2004 | |
Yield – net interest income on loans held for investment, after provision | | 1.5 | % | 2.8 | % | 3.7 | % |
| | | | | | | |
Net cash settlements received (paid) on portfolio derivatives used as an economic hedge of cost of financing | | 0.6 | % | 0.2 | % | (0.3 | )% |
| | | | | | | |
Core yield on loans held for investment, after provision | | 2.1 | % | 3.0 | % | 3.4 | % |
Core net interest income loans held for investment after provision for loan losses was $27.3 million for the third quarter of 2005, compared to $34.6 million for the second quarter of 2005, and $31.0 million for the third quarter of 2004. Core net interest margin loans held for investment after provision for loan losses was 2.1% for the third quarter of 2005, compared to 3.0% for the second quarter of 2005, and 3.4% for the third quarter of 2004. The decrease in core net interest income loans held for investment after provision for loan losses from both the second quarter of 2005 and the third quarter of 2004 was due primarily to the lower net interest income on new loans added to the portfolio replacing older, higher margin loans, faster amortization of deferred origination and bond issuance costs and an increased provision for loan losses for loans held for investment as anticipated with a more seasoned portfolio. Fieldstone’s economic hedge program has been effective to stabilize the interest expense on older loans held for investment as interest rates have risen, but the average core yield on the portfolio has fallen due to lower yields on new loans due to market competition, faster amortization due to prepayments and higher delinquencies as the portfolio ages.
Gains on Sales of Mortgage Loans, Net
For the third quarter of 2005, revenues from gains on sales of mortgage loans, net were $20.2 million, a decrease of $7.1 million from $27.3 million for the second quarter of 2005. Gain on sale revenue decreased due primarily to the 23% lower volume of non-conforming loan sales at a slightly lower net gain on sale margin of 2.1% for the third quarter of 2005, as compared to a non-conforming net gain on sale margin of 2.2% for the second quarter of 2005. The lower non-conforming sales volume in the third quarter of 2005 was due to the reduced percent of non-conforming fundings designated as held for sale versus held for investment.
Origination Expenses and Cost to Produce
Fieldstone’s cost to produce as a percentage of total non-conforming mortgage loan fundings was stable at 2.35% in the third quarter of 2005, compared to 2.36% in the second quarter of 2005. Cost to produce is total expenses plus deferred origination costs and premiums paid, net of fees collected, less internal and external servicing costs.
Mortgage Loans Held for Investment, Net
| | Three Months Ended | |
($000) | | September 30,
2005 | | June 30,
2005 | | September 30,
2004 | |
Beginning principal balance | | $ | 4,828,569 | | 5,091,330 | | 3,136,935 | |
Loans funded for investment | | 1,019,811 | | 729,341 | | 1,210,648 | |
Less: Loan repayments | | (566,552 | ) | (453,356 | ) | (234,587 | ) |
Transfers to mortgage loans held for sale | | — | | (530,830 | ) | — | |
Transfers to real estate owned | | (9,349 | ) | (7,916 | ) | (2,069 | ) |
Ending principal balance | | 5,272,479 | | 4,828,569 | | 4,110,927 | |
Plus: Net deferred loan origination (fees)/costs | | 39,410 | | 37,945 | | 35,026 | |
Ending balance mortgage loans held for investment | | 5,311,889 | | 4,866,514 | | 4,145,953 | |
Allowance for loan losses – loans held for investment | | (39,329 | ) | (30,690 | ) | (16,700 | ) |
Ending balance mortgage loans held for investment, net | | $ | 5,272,560 | | 4,835,824 | | 4,129,253 | |
| | | | | | | |
Allowance for loan losses as a percentage of the principal balance of loans held for investment | | 0.75 | % | 0.64 | % | 0.41 | % |
The investment portfolio was $5.3 billion at September 30, 2005, a $0.4 billion increase to the portfolio during the quarter. During the third quarter of 2005, loan repayments increased to $566.6 million from $453.4 million during the previous quarter due to the continued seasoning of the portfolio.
Delinquency, life to date loss status and weighted average coupon as of September 30, 2005 of Fieldstone’s loans held for investment by securitization pool was as follows:
| | As of September 30, 2005 | |
| | Current
Principal
Balance | | % of
Principal
Balance
Seriously
Delinquent(1) | | Current
Balance as
Factor of
Original
Principal | | % of
Aggregate
Realized
Losses(2) | | Weighted
Avg.
Coupon | | Avg. Age
of Loans
from
Funding
(months) | |
Loans held for investment-securitized: | | | | | | | | | | | | | |
FMIC Series 2003-1 | | $ | 148,645 | | 9.0 | % | 30 | % | 0.25 | % | 8.73 | % | 26 | |
FMIT Series 2004-1 | | 329,736 | | 5.7 | % | 48 | % | 0.19 | % | 6.89 | % | 22 | |
FMIT Series 2004-2 | | 447,224 | | 5.9 | % | 51 | % | 0.23 | % | 6.76 | % | 19 | |
FMIT Series 2004-3 | | 636,463 | | 4.4 | % | 64 | % | 0.13 | % | 6.45 | % | 17 | |
FMIT Series 2004-4 | | 619,546 | | 5.7 | % | 70 | % | 0.12 | % | 6.98 | % | 14 | |
FMIT Series 2004-5 | | 708,794 | | 4.1 | % | 79 | % | 0.03 | % | 6.80 | % | 12 | |
FMIT Series 2005-1 | | 634,301 | | 3.6 | % | 85 | % | 0.04 | % | 6.92 | % | 10 | |
FMIT Series 2005-2 | | 953,426 | | 0.5 | % | 99 | % | 0.00 | % | 7.16 | % | 4 | |
Total | | 4,478,135 | | 4.0 | % | 68 | % | 0.11 | % | | | 13 | |
Loans held for investment-to be securitized | | 794,344 | | 0.0 | % | 100 | % | 0.00 | % | | | 2 | |
Total loans held for investment | | $ | 5,272,479 | | 3.4 | % | 72 | % | 0.10 | % | | | 11 | |
| | | | | | | | | | | | | | | |
(1) | Seriously delinquent is defined as a mortgage loan that is 60 plus days past due or in the process of foreclosure. |
| |
(2) | Realized losses include charge-offs to the allowance for loan losses—loans held for investment related to loan principal balances and do not include previously accrued but uncollected interest, which is reversed against current period interest income. |
The total portfolio delinquency status of mortgage loans held for investment at September 30, 2005, June 30, 2005, and September 30, 2004 was as follows:
| | September 30, 2005 | | June 30, 2005 | | September 30, 2004 | |
($000) | | Principal
Balance | | % of
Total | | Principal
Balance | | % of
Total | | Principal
Balance | | % of
Total | |
Current | | $ | 4,835,343 | | 91.7 | % | $ | 4,467,490 | | 92.5 | % | $ | 3,896,179 | | 94.8 | % |
30 days past due | | 258,807 | | 4.9 | % | 226,477 | | 4.7 | % | 166,942 | | 4.0 | % |
60 days past due | | 64,461 | | 1.2 | % | 55,685 | | 1.1 | % | 18,488 | | 0.5 | % |
90+ days past due | | 37,707 | | 0.7 | % | 32,642 | | 0.7 | % | 14,348 | | 0.3 | % |
In process of foreclosure | | 76,161 | | 1.5 | % | 46,275 | | 1.0 | % | 14,970 | | 0.4 | % |
Total | | $ | 5,272,479 | | 100.0 | % | $ | 4,828,569 | | 100.0 | % | $ | 4,110,927 | | 100.0 | % |
| | | | | | | | | | | | | |
Seriously delinquent % | | | | 3.4 | % | | | 2.8 | % | | | 1.2 | % |
| | | | | | | | | | | | | | | | | |
Mortgage Loans Held for Sale, Net
| | Three Months Ended | |
($000) | | September 30,
2005 | | June 30,
2005 | | September 30,
2004 | |
Beginning principal balance | | $ | 545,159 | | 272,368 | | 348,005 | |
Loans funded, held for sale | | 1,234,984 | | 1,285,666 | | 778,191 | |
Transfers from mortgage loans held for investment | | — | | 639,469 | | — | |
Less: Loans sold | | (1,247,546 | ) | (1,536,713 | ) | (868,868 | ) |
Transfers to mortgage loans held for investment | | — | | (108,639 | ) | — | |
Loans paid off /other | | (6,581 | ) | (6,992 | ) | (156 | ) |
Ending principal balance | | 526,016 | | 545,159 | | 257,172 | |
Plus: Net deferred loan origination fees/(costs) | | 3,704 | | 4,145 | | 2,216 | |
Less: Valuation allowances | | (850 | ) | (858 | ) | (2,621 | ) |
Ending balance mortgage loans held for sale, net | | $ | 528,870 | | 548,446 | | 256,767 | |
Mortgage loans held for sale, net, totaled $528.9 million at September 30, 2005, which consist of all conforming loans funded, together with a portion of the non-conforming fixed rate, second lien and ARM loans originated by Fieldstone.
Income Taxes
Fieldstone recognized income tax expense of $3.0 million during the third quarter of 2005 related to the $8.0 million pre-tax net income of Fieldstone Mortgage Company (FMC), Fieldstone’s taxable REIT subsidiary (TRS).
Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004
Net Income and Earnings per Share
Fieldstone’s net income for the nine months ended September 30, 2005 was $88.6 million, or $1.82 per share (diluted), an increase of $58.3 million from the $30.3 million, or $0.62 per share (diluted) for the nine months ended September 30, 2004. Net income was higher in the nine months ended September 30, 2005 than in the same period of the prior year primarily due to the increased non-cash mark to market valuation gain and net cash settlements received on interest rate swaps and cap agreements, increased net interest income on a growing investment portfolio and the increase in gains on sales of mortgage loans, net.
Core Net Income and Core Earnings per Share
Core net income for the nine months ended September 30, 2005 was $72.2 million, or $1.48 core per share (diluted), an increase of $45.7 million from the $26.5 million, or $0.54 core per share (diluted) for the nine months ended September 30, 2004. Core net income in the nine months ended September 30, 2005 was higher than in the same period of the prior year primarily due to the increased net cash settlements received on interest rate swaps and cap agreements, increased net interest income on a growing investment portfolio and the increase in gains on sales of mortgage loans, net.
Mortgage Loan Fundings
Total mortgage loan fundings for the nine months ended September 30, 2005 was $5.7 billion compared to $5.6 billion for the nine months ended September 30, 2004. Conforming mortgage loan fundings increased $191.0 million offset by a $90.4 million decrease in non-conforming mortgage loan fundings.
Income Taxes
For the nine months ended September 30, 2005, Fieldstone recognized income tax expense of $4.8 million related to the $13.3 million pre-tax net income of FMC, compared to $4.5 million of tax provision related to $12.2 million of pre-tax net income during the same period in 2004.
Conference Call
Fieldstone will hold a conference call on Tuesday, November 15, 2005 at 10:00 a.m. Eastern Time to discuss its third quarter 2005 financial results. The conference call may be accessed by dialing 800-811-7286 (domestic) or 913-981-4902 (international). Please dial in at least 10 minutes prior to the start of the call.
The conference call also will be webcast live on the Internet at www.FieldstoneInvestment.com. Interested participants should go to the Company’s website at least 15 minutes prior to the start of the call, select the “Press Room” tab, choose “Live Webcast of 3Q Earnings Call” and follow the related instructions.
A replay of the conference call will be available on Fieldstone’s website at www.FieldstoneInvestment.com shortly after the conclusion of the call on November 15, 2005 and will be archived on Fieldstone’s website for a minimum of 30 days following the conference call.
About Fieldstone
Fieldstone Investment Corporation, a real estate investment trust for federal income tax purposes, owns and manages a portfolio of non-conforming mortgage loans originated primarily by its mortgage origination subsidiary, Fieldstone Mortgage Company. Founded in 1995, Fieldstone Mortgage Company is a nationwide residential mortgage banking company that originates non-conforming and conforming residential mortgage loans through over 4,700 independent mortgage brokers serviced by regional wholesale operations centers and a network of retail branch offices located throughout the country. Fieldstone is headquartered in Columbia, Maryland.
Information Regarding Forward Looking Statements
Certain matters discussed in this press release may constitute “forward-looking statements” within the meaning of the federal securities laws and, if so, are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results and the timing of certain events may differ materially from those indicated by such forward-looking statements due to a variety of risks and uncertainties, many of which are beyond Fieldstone’s ability to control or predict, including but not limited to (i) Fieldstone’s ability to successfully implement or change aspects of its portfolio strategy; (ii) interest rate volatility and the level of interest rates generally; (iii) the sustainability of loan origination volumes and current levels of origination costs; (iv) continued availability of credit facilities for the origination of mortgage loans; (v) the ability to sell or securitize mortgage loans; (vi) deterioration in the credit quality of Fieldstone’s loan portfolio; (vii) the nature and amount of competition; (viii) the impact of changes to the fair value of our interest rate swaps on our net income, which will vary based upon changes in interest rates and could cause net income to vary significantly from quarter to quarter; and (ix) other risks and uncertainties outlined in Fieldstone Investment Corporation’s annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 25, 2005, and other filings with the SEC. These statements are made as of the date of this press release, and Fieldstone undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
FIELDSTONE INVESTMENT CORPORATION AND SUBSIDIARIES
Consolidated Statements of Condition
(Unaudited; in thousands, except share data)
| | September 30,
2005 | | June 30,
2005 | | September 30,
2004 | |
Assets | | | | | | | |
| | | | | | | |
Cash | | $ | 34,549 | | 38,435 | | 32,252 | |
Restricted cash | | 11,431 | | 5,946 | | 16,584 | |
Mortgage loans held for sale, net | | 528,870 | | 548,446 | | 256,767 | |
Mortgage loans held for investment | | 5,311,889 | | 4,866,514 | | 4,145,953 | |
Allowance for loan losses – loans held for investment | | (39,329 | ) | (30,690 | ) | (16,700 | ) |
Mortgage loans held for investment, net | | 5,272,560 | | 4,835,824 | | 4,129,253 | |
| | | | | | | |
Accounts receivable | | 9,587 | | 7,204 | | 7,139 | |
Accrued interest receivable | | 25,633 | | 23,417 | | 23,550 | |
Trustee receivable | | 118,317 | | 95,561 | | 58,241 | |
Prepaid expenses and other assets | | 23,922 | | 21,833 | | 13,447 | |
Derivative assets, net | | 40,079 | | 28,237 | | 3,448 | |
Deferred tax asset, net | | 16,159 | | 16,809 | | 18,821 | |
Furniture and equipment, net | | 9,314 | | 9,205 | | 9,709 | |
Total assets | | $ | 6,090,421 | | 5,630,917 | | 4,569,211 | |
| | | | | | | |
Liabilities and Shareholders’ Equity | | | | | | | |
| | | | | | | |
Warehouse financing – loans held for sale | | $ | 429,551 | | 361,747 | | 98,796 | |
Warehouse financing – loans held for investment | | 693,565 | | 670,004 | | 1,241,026 | |
Securitization financing | | 4,336,677 | | 3,968,008 | | 2,644,777 | |
Reserve for losses – loans sold | | 37,784 | | 38,411 | | 32,405 | |
Accounts payable and accrued expenses | | 24,426 | | 23,551 | | 22,802 | |
Total liabilities | | 5,522,003 | | 5,061,721 | | 4,039,806 | |
| | | | | | | |
Commitments and contingencies | | — | | — | | — | |
| | | | | | | |
Shareholders’ equity: | | | | | | | |
| | | | | | | |
Common stock $0.01 par value; 90,000,000 shares authorized; shares issued and outstanding of 48,820,876 as of September 30, 2005, 48,835,876 as of June 30, 2005, and 48,852,460 as of September 30, 2004 | | 488 | | 488 | | 488 | |
Paid-in capital | | 496,983 | | 497,244 | | 497,817 | |
Accumulated earnings | | 75,919 | | 76,913 | | 37,538 | |
Unearned compensation | | (4,972 | ) | (5,449 | ) | (6,438 | ) |
Total shareholders’ equity | | 568,418 | | 569,196 | | 529,405 | |
Total liabilities and shareholders’ equity | | $ | 6,090,421 | | 5,630,917 | | 4,569,211 | |
FIELDSTONE INVESTMENT CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited; in thousands, except share and per share data)
| | Three Months Ended | | Nine Months Ended | |
| | September 30, | | June 30, | | September 30, | | September 30, | | September 30, | |
| | 2005 | | 2005 | | 2004 | | 2005 | | 2004 | |
| | | | | | | | | | | |
Revenues: | | | | | | | | | | | |
Interest income: | | | | | | | | | | | |
Loans held for investment | | $ | 84,940 | | 80,574 | | 60,141 | | 248,350 | | 130,139 | |
Loans held for sale | | 9,860 | | 14,226 | | 6,445 | | 29,458 | | 19,036 | |
Total interest income | | 94,800 | | 94,800 | | 66,586 | | 277,808 | | 149,175 | |
Interest expense: | | | | | | | | | | | |
Loans held for investment | | 54,361 | | 41,773 | | 20,274 | | 134,742 | | 38,705 | |
Loans held for sale | | 5,166 | | 6,276 | | 1,543 | | 12,855 | | 4,271 | |
Total interest expense | | 59,527 | | 48,049 | | 21,817 | | 147,597 | | 42,976 | |
Net interest income | | 35,273 | | 46,751 | | 44,769 | | 130,211 | | 106,199 | |
Provision for loan losses – loans held for investment | | 11,045 | | 6,863 | | 5,921 | | 22,402 | | 14,878 | |
Net interest income after provision for loan losses | | 24,228 | | 39,888 | | 38,848 | | 107,809 | | 91,321 | |
Gains on sales of mortgage loans, net | | 20,147 | | 27,254 | | 14,238 | | 57,070 | | 41,356 | |
Other income (expense) - portfolio derivatives | | 15,630 | | (9,432 | ) | (15,032 | ) | 26,540 | | (4,488 | ) |
Fees and other income | | 661 | | 144 | | 1,067 | | 1,198 | | 2,898 | |
Total revenues | | 60,666 | | 57,854 | | 39,121 | | 192,617 | | 131,087 | |
| | | | | | | | | | | |
Expenses: | | | | | | | | | | | |
Salaries and employee benefits | | 20,555 | | 19,707 | | 20,690 | | 60,004 | | 62,417 | |
Occupancy | | 1,941 | | 1,975 | | 1,733 | | 5,711 | | 4,800 | |
Depreciation and amortization | | 961 | | 828 | | 633 | | 2,584 | | 1,761 | |
Servicing fees | | 2,208 | | 1,743 | | 1,912 | | 6,555 | | 3,838 | |
General and administration | | 8,578 | | 7,792 | | 8,666 | | 24,368 | | 23,430 | |
Total expenses | | 34,243 | | 32,045 | | 33,634 | | 99,222 | | 96,246 | |
| | | | | | | | | | | |
Income before income taxes | | 26,423 | | 25,809 | | 5,487 | | 93,395 | | 34,841 | |
Provision for income tax expense | | (2,999 | ) | (2,734 | ) | (1,536 | ) | (4,792 | ) | (4,538 | ) |
Net income | | $ | 23,424 | | 23,075 | | 3,951 | | 88,603 | | 30,303 | |
| | | | | | | | | | | |
Earnings per share of common stock: | | | | | | | | | | | |
Basic | | $ | 0.48 | | 0.47 | | 0.08 | | 1.82 | | 0.62 | |
Diluted | | $ | 0.48 | | 0.47 | | 0.08 | | 1.82 | | 0.62 | |
| | | | | | | | | | | |
Basic weighted average common shares outstanding | | 48,462,126 | | 48,462,126 | | 48,327,338 | | 48,462,080 | | 48,326,356 | |
Diluted weighted average common shares outstanding | | 48,479,152 | | 48,462,126 | | 48,481,516 | | 48,478,654 | | 48,527,501 | |
FIELDSTONE INVESTMENT CORPORATION AND SUBSIDIARIES
Schedule 1 - Supplemental Data
(Unaudited; dollars in thousands)
| | Three Months Ended | | Nine Months Ended | |
| | September 30, | | June 30, | | September 30, | | September 30, | | September 30, | |
| | 2005 | | 2005 | | 2004 | | 2005 | | 2004 | |
Mortgage Loan Fundings | | | | | | | | | | | |
Non-Conforming | | $ | 1,820,791 | | 1,633,613 | | 1,687,570 | | 4,558,085 | | 4,648,533 | |
Conforming | | 434,004 | | 381,394 | | 301,269 | | 1,167,569 | | 976,564 | |
Total | | $ | 2,254,795 | | 2,015,007 | | 1,988,839 | | 5,725,654 | | 5,625,097 | |
| | | | | | | | | | | |
Non-Conforming Mortgage Loan Funding Statistics | | | | | | | | | | | |
Weighted average interest rate | | 7.3 | % | 7.3 | % | 7.3 | % | 7.4 | % | 7.1 | % |
Weighted average credit score | | 655 | | 653 | | 652 | | 654 | | 652 | |
Weighted average loan to value | | 83.9 | % | 84.1 | % | 84.3 | % | 83.9 | % | 84.6 | % |
Full documentation (1) | | 53.9 | % | 57.4 | % | 58.4 | % | 55.6 | % | 60.9 | % |
Percentage held for investment | | 56.0 | % | 46.2 | % | 71.7 | % | 42.8 | % | 67.8 | % |
| | | | | | | | | | | |
Mortgage Loan Sales Statistics | | | | | | | | | | | |
Non-Conforming loan sales | | $ | 896,584 | | 1,158,674 | | 583,078 | | 2,543,532 | | 1,744,202 | |
Conforming loan sales | | 350,962 | | 378,039 | | 285,790 | | 1,043,459 | | 971,983 | |
Total | | $ | 1,247,546 | | 1,536,713 | | 868,868 | | 3,586,991 | | 2,716,185 | |
| | | | | | | | | | | |
Gain on sale margin - Non-Conforming sales | | | | | | | | | | | |
Gross premiums - loan sales, net of hedging gain/(loss) | | 2.7 | % | 3.3 | % | 2.5 | % | 3.0 | % | 2.9 | % |
Premiums paid net of fees collected | | 0.1 | % | (0.1 | )% | 0.2 | % | 0.0 | % | 0.2 | % |
Allowance for losses - loans sold (2) | | 0.0 | % | (0.3 | )% | 0.0 | % | (0.2 | )% | (0.4 | )% |
Direct origination costs | | (0.7 | )% | (0.7 | )% | (0.6 | )% | (0.7 | )% | (0.8 | )% |
Total | | 2.1 | % | 2.2 | % | 2.1 | % | 2.1 | % | 1.9 | % |
| | | | | | | | | | | |
Gain on sale margin - Conforming sales | | | | | | | | | | | |
Gross premiums - loan sales, net of hedging gain/(loss) | | 1.6 | % | 2.1 | % | 1.9 | % | 1.9 | % | 1.9 | % |
Premiums paid net of fees collected | | (0.7 | )% | (1.1 | )% | (0.4 | )% | (0.9 | )% | (0.5 | )% |
Allowance for losses - loans sold (2) | | (0.1 | )% | (0.1 | )% | (0.1 | )% | (0.1 | )% | (0.1 | )% |
Direct origination costs | | (0.5 | )% | (0.5 | )% | (0.6 | )% | (0.5 | )% | (0.5 | )% |
Total | | 0.3 | % | 0.5 | % | 0.8 | % | 0.4 | % | 0.8 | % |
| | | | | | | | | | | |
Statements of Condition Data | | | | | | | | | | | |
Average equity as a percentage of average assets | | 9.6 | % | 9.9 | % | 12.5 | % | 9.8 | % | 16.5 | % |
| | | | | | | | | | | |
Debt to capital | | 9.6 | | 8.8 | | 7.5 | | | | | |
Book value per share | | $ | 11.64 | | 11.66 | | 10.84 | | | | | |
| | | | | | | | | | | |
Mortgage loans held for sale, net | | | | | | | | | | | |
Non-Conforming | | $ | 462,650 | | 407,499 | | 154,824 | | | | | |
Conforming | | 66,220 | | 140,947 | | 101,943 | | | | | |
Total | | $ | 528,870 | | 548,446 | | 256,767 | | | | | |
| | | | | | | | | | | |
Seriously delinquent - mortgage loans held for sale (4) | | 0.5 | % | 0.4 | % | 1.7 | % | | | | |
Seriously delinquent - mortgage loans held for investment (4) | | 3.4 | % | 2.8 | % | 1.2 | % | | | | |
Weighted average credit score - mortgage loans held for investment | | 650 | | 650 | | 649 | | | | | |
(1) Full documentation of non-conforming mortgage loan fundings also includes bank statements program.
(2) Provision for loan losses - loans sold is calculated as provision for loan losses - loans sold divided by total mortgage loan sales. The provision is recorded as a reductions of gains on sales of mortgage loans. The third quarter of 2005 includes a $4.7 million reversal due to lower losses on 2002 and 2003 loan sales.
(3) Gain on sale margin is calculated as gains on sales of mortgage loans, net divided by total mortgage loan sales.
(4) Seriously delinquent is defined as a mortgage loan that is 60 plus days past due or in the process of foreclosure.
FIELDSTONE INVESTMENT CORPORATION AND SUBSIDIARIES
Schedule 2––Non-GAAP Financial Measures and Regulation G Reconciliations
Core net income, core earnings per share (diluted), core net interest income and margin, core return on average assets and core return on average equity and cost to produce are non-GAAP financial measures of Fieldstone’s earnings within the meaning of Regulation G promulgated by the Securities and Exchange Commission.
Core net income is net income less the non-cash mark to market gains (losses) on interest rate swap and cap agreements and the amortization of interest rate swap buydown payments.
Core earnings per share (diluted) is core net income available to common shareholders divided by the weighted average diluted number of shares outstanding during the period.
Core return on average assets is core net income divided by average total assets.
Core return on average equity is core net income divided by core average total equity, which is the equity balance at the end of the reporting period less the cumulative non-cash mark to market gains or losses on interest rate swap and cap agreements and the cumulative amortization of interest rate swap buydown payments.
Core net interest income after provision for loan losses is net interest income after provision for loan losses adjusted to include (a) the net cash settlements on the existing interest rate swaps and caps economically hedging the variable rate debt financing Fieldstone’s investment portfolio, (b) the net cash settlements incurred or paid to terminate these derivatives prior to maturity related to derivatives related to loans held for investment and (c) the amortization of interest rate swap buydown payments. Core net interest income after provision for loan losses does not include the net cash settlements incurred or paid to terminate swaps or caps related to loans ultimately sold, which are a component of “Gains on sales of mortgage loans, net” on the consolidated statements of operations.
Cost to produce is total expenses plus deferred origination costs and premiums paid, net of fees collected, less internal and external servicing costs.
Management believes the core financial measures are useful because they include the current period effects of Fieldstone’s economic hedging program but exclude the non-cash mark to market derivative value changes and the amortization of swap buydown payments. Fieldstone uses interest rate swap and cap agreements to create economic hedges of the variable rate debt it issues to finance its investment portfolio. Changes in the fair value of these agreements, which reflect the potential future cash settlements over the remaining lives of the agreements according to the market’s changing projections of interest rates, are recognized in the line item “Other income (expense) – portfolio derivatives” on the consolidated statements of operations. This single line item includes both the actual cash settlements related to the agreements that occurred during the period and recognition of the non-cash changes in the fair value of the agreements over the period. The actual cash settlements include regular monthly payments or receipts under the terms of the swap agreements and amounts paid or received to terminate the agreements prior to maturity.
The amounts of cash settlements and non-cash changes in derivative value that were included in the line item “Other income (expense) – portfolio derivatives” were:
| | Three Months Ended | | Nine Months Ended | |
($000) | | September 30,
2005 | | June 30,
2005 | | September 30,
2004 | | September 30,
2005 | | September 30,
2004 | |
Non-cash changes in fair value | | $ | 7,630 | | (12,087 | ) | (12,119 | ) | 16,171 | | 3,777 | |
Cash settlements received (paid) | | 8,000 | | 2,655 | | (2,913 | ) | 10,369 | | (8,265 | ) |
Other income (expense) – portfolio derivatives | | $ | 15,630 | | (9,432 | ) | (15,032 | ) | 26,540 | | (4,488 | ) |
Management believes that the presentation of cost to produce provides useful information to investors regarding financial performance because this measure includes additional costs to originate mortgage loans, both recognized when incurred and deferred costs, which are not all included in GAAP total expenses.
As required by Regulation G, a reconciliation of each of these non-GAAP financial measures to the most directly comparable measure under GAAP is provided in the remainder of this Schedule 2.
Regulation G Reconciliation—Core Net Income and Core Earnings Per Share - Diluted
| | Three Months Ended | | Nine Months Ended | |
(Dollars in 000’s, except share and per share data) | | September 30,
2005 | | June 30,
2005 | | September 30,
2004 | | September 30,
2005 | | September 30,
2004 | |
| | | | | | | | | | | |
Core Net Income Reconciliation: | | | | | | | | | | | |
Net income | | $ | 23,424 | | 23,075 | | 3,951 | | 88,603 | | 30,303 | |
Less: Mark to market (gain) loss on portfolio derivatives included in “Other income (expense) - portfolio derivatives” | | | | | | | | | | | |
Mark to market interest rate swaps | | (7,858 | ) | 11,788 | | 11,023 | | (16,628 | ) | (5,296 | ) |
Mark to market interest rate cap | | 228 | | 299 | | 1,096 | | 457 | | 1,519 | |
Total mark to market on portfolio derivatives | | (7,630 | ) | 12,087 | | 12,119 | | (16,171 | ) | (3,777 | ) |
| | | | | | | | | | | |
Less: Amortization of interest rate swap buydown payments | | (224 | ) | — | | — | | (224 | ) | — | |
Core net income | | $ | 15,570 | | 35,162 | | 16,070 | | 72,208 | | 26,526 | |
| | | | | | | | | | | |
Core Earnings per Share-Diluted Reconciliation: | | | | | | | | | | | |
Net income | | $ | 23,424 | | 23,075 | | 3,951 | | 88,603 | | 30,303 | |
Less: Mark to market (gain) loss on portfolio derivatives | | (7,630 | ) | 12,087 | | 12,119 | | (16,171 | ) | (3,777 | ) |
Amortization of interest rate swap buydown payments | | (224 | ) | — | | — | | (224 | ) | — | |
Unvested restricted stock dividends | | (187 | ) | (176 | ) | (125 | ) | (363 | ) | (162 | ) |
Core net income available to common shareholders | | $ | 15,383 | | 34,986 | | 15,945 | | 71,845 | | 26,364 | |
| | | | | | | | | | | |
Earnings per share - diluted | | $ | 0.48 | | 0.47 | | 0.08 | | 1.82 | | 0.62 | |
Core earnings per share - diluted | | $ | 0.32 | | 0.72 | | 0.33 | | 1.48 | | 0.54 | |
| | | | | | | | | | | |
Diluted weighted average common shares outstanding | | 48,479,152 | | 48,462,126 | | 48,481,516 | | 48,478,654 | | 48,527,501 | |
| | | | | | | | | | | |
Core Return on Assets and Core Return on Equity: | | | | | | | | | | | |
Average total equity | | $ | 561,200 | | 557,817 | | 524,292 | | 554,953 | | 521,786 | |
Average total assets | | 5,861,717 | | 5,650,417 | | 4,187,111 | | 5,648,471 | | 3,158,439 | |
Core average total equity | | 533,066 | | 529,819 | | 521,050 | | 527,294 | | 520,739 | |
Core average total assets | | 5,861,717 | | 5,650,417 | | 4,187,111 | | 5,648,471 | | 3,158,439 | |
| | | | | | | | | | | |
Return on average equity (annualized) | | 16.7 | % | 16.5 | % | 3.0 | % | 21.3 | % | 7.7 | % |
Return on average assets (annualized) | | 1.6 | % | 1.6 | % | 0.4 | % | 2.1 | % | 1.3 | % |
| | | | | | | | | | | |
Core return on average equity (annualized) | | 11.7 | % | 26.5 | % | 12.3 | % | 18.3 | % | 6.8 | % |
Core return on average assets (annualized) | | 1.1 | % | 2.5 | % | 1.5 | % | 1.7 | % | 1.1 | % |
| | | | | | | | | | | |
Average Balance Data | | | | | | | | | | | |
Mortgage loans held for sale | | $ | 592,456 | | 811,753 | | 340,087 | | 570,552 | | 348,677 | |
Mortgage loans held for investment | | 4,986,748 | | 4,590,662 | | 3,602,695 | | 4,820,949 | | 2,608,641 | |
Warehouse financing - mortgage loans held for sale | | 445,504 | | 601,742 | | 222,459 | | 396,750 | | 224,010 | |
Warehouse financing - mortgage loans held for investment | | 552,965 | | 223,368 | | 697,437 | | 431,853 | | 606,881 | |
Securitization financing | | 4,339,839 | | 4,242,147 | | 2,762,324 | | 4,257,215 | | 1,786,848 | |
Regulation G Reconciliation - Core Net Interest Income & Core Yield Analysis
| | Three Months Ended | | Nine Months Ended | |
(Dollars in 000’s) | | September 30,
2005 | | June 30,
2005 | | September 30,
2004 | | September 30,
2005 | | September 30,
2004 | |
Core net interest income after provision for loan losses | | | | | | | | | | | |
Net interest income after provision for loan losses | | $ | 24,228 | | 39,888 | | 38,848 | | 107,809 | | 91,321 | |
Plus: Net cash settlements received (paid) on portfolio derivatives included in “Other income (expense) - portfolio derivatives | | 8,000 | | 2,655 | | (2,913 | ) | 10,369 | | (8,265 | ) |
Less: Amortization of interest rate swap buydown payments | | (224 | ) | — | | — | | (224 | ) | — | |
Core net interest income after provision for loan losses | | $ | 32,004 | | 42,543 | | 35,935 | | 117,954 | | 83,056 | |
| | | | | | | | | | | |
Interest income loans held for investment | | $ | 84,940 | | 80,574 | | 60,141 | | 248,350 | | 130,139 | |
| | | | | | | | | | | |
Interest expense loans held for investment | | 54,361 | | 41,773 | | 20,274 | | 134,742 | | 38,705 | |
Plus: Net cash settlements (received) paid on portfolio derivatives | | (8,000 | ) | (2,655 | ) | 2,913 | | (10,369 | ) | 8,265 | |
Plus: Amortization of interest rate swap buydown payments | | 224 | | — | | — | | 224 | | — | |
Core interest expense - loans held for investment | | 46,585 | | 39,118 | | 23,187 | | 124,597 | | 46,970 | |
| | | | | | | | | | | |
Core net interest income loans held for investment | | 38,355 | | 41,456 | | 36,954 | | 123,753 | | 83,169 | |
Provision for loan losses loans held for investment | | 11,045 | | 6,863 | | 5,921 | | 22,402 | | 14,878 | |
Core net interest income loans held for investment after provision for loan losses | | 27,310 | | 34,593 | | 31,033 | | 101,351 | | 68,291 | |
| | | | | | | | | | | |
Net interest income loans held for sale | | 4,694 | | 7,950 | | 4,902 | | 16,603 | | 14,765 | |
Core net interest income after provision for loan losses | | $ | 32,004 | | 42,543 | | 35,935 | | 117,954 | | 83,056 | |
| | | | | | | | | | | |
Core Yield Analysis | | | | | | | | | | | |
Core yield analysis - loans held for investment | | | | | | | | | | | |
| | | | | | | | | | | |
Coupon interest income on loans held for investment | | 6.7 | % | 6.7 | % | 6.6 | % | 6.6 | % | 6.7 | % |
Amortization of deferred origination costs | | (0.7 | )% | (0.5 | )% | (0.5 | )% | (0.5 | )% | (0.4 | )% |
Prepayment fees | | 0.7 | % | 0.7 | % | 0.4 | % | 0.7 | % | 0.3 | % |
Yield on loans held for investment | | 6.7 | % | 6.9 | % | 6.5 | % | 6.8 | % | 6.6 | % |
| | | | | | | | | | | |
Cost of financing for loans held for investment | | 4.3 | % | 3.7 | % | 2.3 | % | 3.8 | % | 2.1 | % |
Net cash settlements (received) paid on portfolio derivatives | | (0.6 | )% | (0.2 | )% | 0.3 | % | (0.3 | )% | 0.5 | % |
Amortization of interest rate swap buydown payments | | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % |
Core cost of financing for loans held for investment | | 3.7 | % | 3.5 | % | 2.6 | % | 3.5 | % | 2.6 | % |
| | | | | | | | | | | |
Net yield on loans held for investment | | 2.4 | % | 3.4 | % | 4.3 | % | 3.1 | % | 4.6 | % |
Net cash settlements received (paid) on portfolio derivatives | | 0.6 | % | 0.2 | % | (0.3 | )% | 0.3 | % | (0.4 | )% |
Amortization of interest rate swap buydown payments | | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % |
Core net yield on loans held for investment | | 3.0 | % | 3.6 | % | 4.0 | % | 3.4 | % | 4.2 | % |
Provision for loan losses - loans held for investment | | (0.9 | )% | (0.6 | )% | (0.6 | )% | (0.6 | )% | (0.8 | )% |
Core yield on loans held for investment after provision for loan losses | | 2.1 | % | 3.0 | % | 3.4 | % | 2.8 | % | 3.4 | % |
| | | | | | | | | | | |
Yield analysis - loans held for sale | | | | | | | | | | | |
Yield on loans held for sale | | 6.5 | % | 6.9 | % | 7.4 | % | 6.8 | % | 7.2 | % |
Cost of financing for loans held for sale | | 4.5 | % | 4.1 | % | 2.7 | % | 4.3 | % | 2.5 | % |
Net yield on loans held for sale | | 3.1 | % | 3.9 | % | 5.6 | % | 3.8 | % | 5.6 | % |
| | | | | | | | | | | |
Core yield analysis - loans held for investment and loans held for sale | | | | | | | | | | | |
| | | | | | | | | | | |
Yield - net interest income on loans held for sale and loans held for investment after provision for loan losses | | 1.7 | % | 2.9 | % | 3.9 | % | 2.6 | % | 4.1 | % |
Net cash settlements received (paid) on portfolio derivatives | | 0.6 | % | 0.2 | % | (0.3% | ) | 0.3 | % | (0.4% | ) |
Amortization of interest rate swap buydown payments | | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % |
Core yield - net interest income on loans held for sale and loans held for investment after provision for loan losses | | 2.3 | % | 3.1 | % | 3.6 | % | 2.9 | % | 3.7 | % |
Regulation G Reconciliation - Cost to Produce
| | Three Months Ended | | Nine Months Ended | |
(Dollars in 000’s) | | September 30,
2005 | | June 30,
2005 | | September 30,
2004 | | September 30,
2005 | | September 30,
2004 | |
Total expenses | | $ | 34,243 | | 32,045 | | 33,634 | | 99,222 | | 96,246 | |
Deferred origination costs | | 14,397 | | 12,703 | | 14,435 | | 36,078 | | 39,806 | |
Servicing costs - internal and external | | (2,743 | ) | (2,504 | ) | (2,689 | ) | (8,566 | ) | (6,085 | ) |
Total general and administrative costs | | 45,897 | | 42,244 | | 45,380 | | 126,734 | | 129,967 | |
Premiums paid, net of fees collected | | 4,751 | | 5,568 | | 3,270 | | 14,884 | | 9,791 | |
Cost to produce | | $ | 50,648 | | 47,812 | | 48,650 | | 141,618 | | 139,758 | |
| | | | | | | | | | | |
Mortgage Loan Fundings: | | | | | | | | | | | |
Non-Conforming | | $ | 1,820,791 | | 1,633,613 | | 1,687,570 | | 4,558,085 | | 4,648,533 | |
Conforming | | 434,004 | | 381,394 | | 301,269 | | 1,167,569 | | 976,564 | |
Total | | $ | 2,254,795 | | 2,015,007 | | 1,988,839 | | 5,725,654 | | 5,625,097 | |
| | | | | | | | | | | |
Cost to produce as % of total mortgage loan fundings: | | | | | | | | | | | |
Non-Conforming | | 2.35 | % | 2.36 | % | 2.45 | % | 2.53 | % | 2.52 | % |
Conforming | | 1.83 | % | 2.44 | % | 2.41 | % | 2.25 | % | 2.30 | % |
Total | | 2.25 | % | 2.37 | % | 2.45 | % | 2.47 | % | 2.48 | % |
| | | | | | | | | | | |
Cost to produce as % of total mortgage loan fundings: | | | | | | | | | | | |
Total expenses | | 1.52 | % | 1.59 | % | 1.69 | % | 1.73 | % | 1.71 | % |
Deferred origination costs | | 0.64 | % | 0.63 | % | 0.73 | % | 0.63 | % | 0.71 | % |
Servicing costs - internal and external | | (0.12 | )% | (0.12 | )% | (0.14 | )% | (0.15 | )% | (0.11 | )% |
Total general and administrative costs | | 2.04 | % | 2.10 | % | 2.28 | % | 2.21 | % | 2.31 | % |
Premiums paid, net of fees collected | | 0.21 | % | 0.28 | % | 0.16 | % | 0.26 | % | 0.17 | % |
Cost to produce as % of total mortgage loan fundings | | 2.25 | % | 2.37 | % | 2.45 | % | 2.47 | % | 2.48 | % |
