Exhibit 99.1
| FIELDSTONE INVESTMENT CORPORATION |
FOR IMMEDIATE RELEASE: |
| 11000 BROKEN LAND PARKWAY |
|
| COLUMBIA, MARYLAND 21044 |
|
| WWW.FIELDSTONEINVESTMENT.COM |
CONTACT:
INVESTOR RELATIONS
TEL: 410-772-5160
TOLL-FREE: 866-438-1088
INVESTORS@FIELDSTONEINVESTMENT.COM
FIELDSTONE INVESTMENT CORPORATION
ANNOUNCES RECORD FULL YEAR 2005 NET INCOME
COLUMBIA, MARYLAND, April 14, 2006 – Fieldstone Investment Corporation (NASDAQ: FICC) today announced its results of operations for the year ended December 31, 2005.
Financial Highlights
• Net income for the full year 2005 was a record $99.4 million or $2.04 per share (diluted) compared to $63.6 million or $1.30 per share (diluted) for the full year 2004. Net income includes the non-cash mark to market gains or losses recognized on interest rate swap and cap agreements.
• Core net income for the full year 2005 was a record $89.6 million or $1.84 core net income per share (diluted), a $46.5 million increase from the $43.1 million or $0.88 core per share (diluted) for the full year 2004. Core net income does not include the non-cash mark to market gains or losses recognized on interest rate swap and cap agreements.
• The investment portfolio was $5.53 billion at December 31, 2005, a $257.7 million increase to the portfolio during the fourth quarter of 2005, achieved by adding $849.8 million of loans to the portfolio, net of repayments of $592.1 million. As of year-end 2005, the principal balance of the portfolio increased by $795.2 million compared to December 31, 2004.
• Fieldstone funded $5.9 billion of non-conforming residential mortgage loans in 2005, a decrease of 3.9% compared to the full year 2004.
• Fieldstone sold $370.3 million of its non-conforming loans in the fourth quarter of 2005 at an average gross premium of 1.9%, net of derivative gains (losses), compared to its sales of $896.6 million of non-conforming loans in the third quarter at an average gross premium of 2.7%, net of derivative gains (losses). For the full year 2005, Fieldstone sold $2.9 billion of its non-conforming loans at an average gross premium of 2.8%, net of derivative gains (losses), compared to its sales of $2.2 billion of non-conforming loans in the full year 2004 at an average gross premium of 3.0%, net of derivative gains (losses).
• Fieldstone declared a regular quarterly dividend on December 16, 2005 of $0.52 per share for the fourth quarter of 2005 and a special dividend of $0.03 per share for a total of $0.55 per share payable to stockholders of record on December 30, 2005. Dividends declared for the year ended December 31, 2005 totaled $2.03 per share.
“We are pleased to announce Fieldstone’s record earnings for 2005,” stated Michael J. Sonnenfeld, Fieldstone’s President and Chief Executive Officer. “Fieldstone achieved a 108% increase in its core net income as it continued to execute its strategy of building a stable REIT portfolio of non-conforming loans originated by Fieldstone Mortgage, our taxable REIT subsidiary. Our portfolio ended the year at a record level, $5.5 billion, and we are very pleased with the strong performance by the loans in our portfolio. We expect that our portfolio will reach $6.0 billion in 2006 and that we will achieve our targeted leveraged returns on new loans we add to the portfolio. We will continue to expand our origination business in 2006, adding sales personnel to existing offices, deploying technology to reduce our operating costs and opening offices in new regions.”
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DIVIDEND GUIDANCE
Fieldstone today reaffirmed management’s previous guidance that dividends for common stockholders during the year 2006 are expected to total between $1.84 and $2.04 per share. The dividend guidance is based on management’s current estimates and forecasts for the year 2006, including the following:
• Total annual non-conforming mortgage loan fundings of between $5.0 billion and $6.2 billion.
• Investment portfolio balance of $6.0 billion of non-conforming loans by year end 2006, which reflects a portfolio debt to equity leverage ratio of approximately 13 to 1.
• Average net interest spread on new loans added to the investment portfolio over the 2 year swap rate of between 3.00% and 3.25%.
• Weighted average diluted common shares outstanding of 48.5 million, including only the effect of shares repurchased in 2005.
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.
Financial information in this release for 2004 and the first three quarters of 2005 has been restated to correct the timing of the Company’s recognition of income tax expense, as previously announced on April 3, 2006.
FULL YEAR 2005 OPERATING RESULTS
Net Income and Earnings per Share
Fieldstone’s net income for the full year 2005 was $99.4 million, or $2.04 per share (diluted), an increase of $35.8 million from $63.6 million, or $1.30 per share (diluted) for the full year 2004, primarily due to an increase in the revenue related to Fieldstone’s investment portfolio of non-conforming mortgages. The net cash settlements on the interest rate swaps and caps used to economically hedge the portfolio’s securitization financing costs, which are reported as a component of other income (expense) portfolio derivatives, plus the net interest income before loss provision on loans held for investment, increased $44.6 million, or 35.5%, to $170.3 million in 2005 from $125.7 million in 2004. In addition, gains on sales of mortgage loans increased $14.0 million in 2005, to $66.2 million, compared to 2004. These revenue increases were partially offset by an $11.5 million decrease, to $9.0 million, in the non-cash mark to market valuation gain on Fieldstone’s swaps and caps, also a component of other income (expense) portfolio derivatives, and an $8.5 million increase in the provision for loan loss – loans held for investment, reflecting the continued seasoning of the mortgage portfolio.
Core Net Income and Core Earnings per Share
Core net income for the full year 2005 was $89.6 million, or $1.84 core earnings per share (diluted), an increase of $46.5 million from the $43.1 million, or $0.88 core earnings per share (diluted) for the full year 2004. Core net income in 2005 was higher than the prior year primarily due to the combination of the higher core net interest income received on the portfolio, plus the increase in gains on sales of mortgage loans, net.
Mortgage Loan Fundings
Total non-conforming mortgage loan fundings for the full year 2005 were $5.9 billion compared to $6.2 billion for the full year 2004. This decrease in non-conforming fundings was due primarily to a rising interest rate environment and mortgage originator competition. Conforming mortgage loan fundings were $1.5 billion in 2005, compared to $1.3 billion in 2004.
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Net Interest Income and Margin
Net interest margin on loans held for investment after provision for loan losses for the years ended December 31, 2005 and 2004 was as follows:
|
| Year Ended December 31, |
| ||
|
| 2005 |
| 2004 |
|
Coupon interest income |
| 6.69 | % | 6.63 | % |
Amortization of deferred origination costs |
| (0.51 | )% | (0.41 | )% |
Prepayment fees |
| 0.65 | % | 0.39 | % |
Yield on loans held for investment |
| 6.83 | % | 6.61 | % |
Cost of financing for loans held for investment * |
| 4.04 | % | 2.37 | % |
Net yield on loans held for investment ** |
| 2.89 | % | 4.40 | % |
Provision for loan losses |
| (0.60 | )% | (0.69 | )% |
Yield on loans held for investment, after provision for loan losses |
| 2.29 | % | 3.71 | % |
* Cost of financing for loans held for investment does not include the effect of the interest rate swap agreements.
** 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 on loans held for investment before provision for loan losses was $145.8 million in 2005, compared to $137.4 million in 2004. The increase reflects a 61.8% increase in the average balance of Fieldstone’s investment portfolio, partially offset by a decrease in the average 2005 net interest income margin. Net interest margin declined in 2005 as older, higher margin loans prepaid and new loans were added to the portfolio at lower margins. The margins available on new loans narrowed, as market competition for new loans did not permit coupons on new originations to increase at the same rate as the increase in financing costs, which were indexed to rising market interest rates.
Core Net Interest Income and Margin
Core net interest margin on loans held for investment after provision for loan losses for the years ended December 31, 2005 and 2004 was as follows:
|
| Year Ended December 31, |
| ||
|
| 2005 |
| 2004 |
|
Yield on loans held for investment* |
| 6.83 | % | 6.61 | % |
Core cost of financing for loans held for investment |
| 3.56 | % | 2.77 | % |
Core yield on loans held for investment |
| 3.37 | % | 4.02 | % |
|
|
|
|
|
|
Provision for loan losses – loans held for investment |
| (0.60 | )% | (0.69 | )% |
Core yield on loans held for investment, after provision for loan losses |
| 2.77 | % | 3.33 | % |
*includes coupon interest income and prepayment fees, net of amortization of deferred costs.
Core net interest income on loans held for investment after provision for loan losses was $139.5 million in 2005, compared to $104.1 million in 2004, primarily due to the increase in the average balance of Fieldstone’s investment portfolio, partially offset by a decline in the 2005 core net interest income margin. The decline in core net interest margin reflects the narrower spreads available on new originations in 2005, compared to the loans prepaying in 2005, which were originated in prior years during periods of wider net interest margin spreads.
Gains on Sales of Mortgage Loans, Net
In 2005, gains on sales of mortgage loans, net increased 27% to $66.2 million in 2005 from $52.1 million in 2004, due primarily to a 24% increase in loan sale volume. The gross gain on sale margin on non-conforming loans sold, net of derivative gains (losses) in 2005 declined slightly to 2.8% from 3.0% in 2004, as narrower interest margin spreads resulted in lower sale margins.
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Origination Expenses and Cost to Produce
Fieldstone’s cost to produce as a percentage of total non-conforming mortgage loan fundings was relatively flat at 2.57% in 2005, compared to 2.55% in 2004. Cost to produce is total expenses plus deferred origination costs and premiums paid, net of fees collected, less internal and external servicing costs. The slight increase was a result of the Company’s fixed expenses for personnel and facilities spread over a lower number of fundings during the year.
FOURTH QUARTER 2005 OPERATING RESULTS
Net Income and Earnings per Share
Fieldstone’s net income for the fourth quarter of 2005 was $10.8 million, or $0.22 per share (diluted) compared to $23.0 million or $0.47 per share (diluted) for the third quarter of 2005. Net income decreased $12.2 million during the fourth quarter of 2005 from the third quarter due primarily to a non-cash mark to market valuation loss on interest rate swap agreements and reduced gain on sale of mortgage loans. The fourth quarter of 2005 had a $7.2 million non-cash mark to market valuation loss on interest rate swap agreements compared to a $7.6 million non-cash mark to market valuation gain in the third quarter of 2005. Fieldstone had an $11.1 million increase in the revenue earned on its portfolio of loans held for investment, which included the net interest income after loss provision combined with the net cash settlements on the interest swaps used to economically hedge the portfolio’s securitization financing costs, which are reported as a component of other income (expense) portfolio derivatives. Gain on sale of mortgage loans decreased $11.1 million in the fourth quarter due to a lower volume of mortgage loans sold.
Net income for the fourth quarter of 2005 compared to the fourth quarter of 2004, decreased $24.1 million from $34.9 million, or $0.71 per share (diluted). The decrease was primarily due to a $23.9 million reduction in the non-cash mark to market valuation change on the interest rate swaps economically hedging the portfolio financing costs in the fourth quarter of 2005, compared to the non-cash valuation change in the fourth quarter of 2004.
Fieldstone purchased 296,000 shares of its common stock at an average price of $11.28 per share during the fourth quarter of 2005 pursuant to its previously announced share repurchase program.
Core Net Income and Core Earnings per Share
Core net income for the fourth quarter of 2005 was $17.4 million, or $0.36 core per share (diluted), a $2.2 million increase from the $15.2 million, or $0.31 core per share (diluted) in the third quarter of 2005. Core net income increased in the fourth quarter of 2005 due to increased net interest income, partially offset by lower gain on sale income. 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 fourth quarter of 2005 decreased $0.7 million from $18.1 million, or $0.37 core per share (diluted), for the fourth quarter of 2004.
Mortgage Loan Fundings
Fieldstone funded $1.4 billion of non-conforming mortgage loans during the fourth quarter of 2005, a 24.0% decrease from the prior quarter. This decrease in non-conforming fundings was due primarily to a rising interest rate environment and mortgage originator competition. Conforming mortgage loan fundings were $319.8 million for the fourth quarter of 2005, a decrease of 26.3% compared to the third quarter of 2005. As previously announced, Fieldstone discontinued its conforming wholesale and conforming retail operations in the first quarter of 2006.
Non-conforming mortgage loan fundings by quarter for the years ended December 31, 2004 and 2005 and for the quarter ended March 31, 2006 were as follows:
($000,000) |
| 1Q |
| 2Q |
| 3Q |
| 4Q |
| YTD |
| |
2004 |
| $ | 1,285 |
| 1,675 |
| 1,688 |
| 1,537 |
| 6,185 |
|
2005 |
| $ | 1,104 |
| 1,633 |
| 1,821 |
| 1,383 |
| 5,941 |
|
2006 |
| $ | 980 |
| — |
| — |
| — |
| 980 |
|
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Net Interest Income and Margin
Net interest margin on loans held for investment after provision for loan losses for the three months ended December 31, 2005, September 30, 2005 and December 31, 2004 was as follows:
|
| 4Q 2005 |
| 3Q 2005 |
| 4Q 2004 |
|
Coupon interest income |
| 6.77 | % | 6.64 | % | 6.58 | % |
Amortization of deferred origination costs |
| (0.43 | )% | (0.69 | )% | (0.46 | )% |
Prepayment fees |
| 0.60 | % | 0.72 | % | 0.58 | % |
Yield on loans held for investment |
| 6.94 | % | 6.67 | % | 6.70 | % |
Cost of financing for loans held for investment * |
| 4.71 | % | 4.35 | % | 2.77 | % |
Net yield on loans held for investment ** |
| 2.33 | % | 2.40 | % | 4.04 | % |
Provision for loan losses |
| (0.55 | )% | (0.87 | )% | (0.59 | )% |
Yield on loans held for investment, after provision for loan losses |
| 1.78 | % | 1.53 | % | 3.45 | % |
* Cost of financing for loans held for investment does not include the effect of the interest rate swap agreements.
** 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 on loans held for investment after provision for loan losses was $24.6 million for the fourth quarter of 2005, a 1.78% net interest margin after provision, compared to $19.5 million for the third quarter of 2005, a 1.53% net interest margin after provision, and $39.3 million for the fourth quarter of 2004, a 3.45% net interest margin after provision. The increase in Fieldstone’s net interest margin after provision in the fourth quarter of 2005 was due primarily to Fieldstone decreasing its provision for loan losses on loans held for investment based on management’s periodic review of its forecast of loan losses. Net interest income and margin do not include the effect of Fieldstone’s economic hedge of its cost of financing.
Net interest income on loans held for sale was $3.9 million for the fourth quarter of 2005, a 3.07% net interest margin, compared to $4.7 million for the third quarter of 2005, a 3.10% net interest margin, and $5.1 million for the fourth quarter of 2004, a 5.75% net interest margin after provision. Net interest income declined in the fourth quarter of 2005 versus the third quarter of 2005 as a result of a lower average balance of loans held for sale, and declined versus the fourth quarter of 2004 as a result of the narrower margin in 2005.
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 December 31, 2005, September 30, 2005 and December 31, 2004 was as follows:
|
| 4Q 2005 |
| 3Q 2005 |
| 4Q 2004 |
|
Yield on loans held for investment* |
| 6.94 | % | 6.67 | % | 6.70 | % |
Core cost of financing for loans held for investment |
| 3.71 | % | 3.73 | % | 3.09 | % |
Core yield on loans held for investment |
| 3.31 | % | 3.01 | % | 3.74 | % |
|
|
|
|
|
|
|
|
Provision for loan losses – loans held for investment |
| (0.55 | )% | (0.87 | )% | (0.59 | )% |
Core yield on loans held for investment, after provision for loan losses |
| 2.76 | % | 2.14 | % | 3.15 | % |
*includes coupon interest income and prepayment fees, net of amortization of deferred costs.
Core net interest income on loans held for investment after provision for loan losses was $38.1 million for the fourth quarter of 2005, compared to $27.3 million for the third quarter of 2005, and $35.9 million for the fourth quarter of 2004. The increase in core net interest income loans held for investment after provision for loan losses from both the third quarter of 2005 and the fourth quarter of 2004 was due primarily to a larger average loan portfolio and a decrease in the provision for loan losses.
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Core net interest margin on loans held for investment after provision for loan losses was 2.76% for the fourth quarter of 2005, compared to 2.14% for the third quarter of 2005, and 3.15% for the fourth quarter of 2004. The core net interest margin after provision in the fourth quarter of 2005 increased compared to the third quarter of 2005 due to a decreased provision for loan losses. The core net interest margin after provision in the fourth quarter of 2005 decreased compared to the fourth quarter of 2004 due to higher financing costs in the fourth quarter of 2005 compared to the fourth quarter of 2004.
Gains on Sales of Mortgage Loans, Net
For the fourth quarter of 2005, revenues from gains on sales of mortgage loans, net were $9.1 million, a decrease of $11.1 million from $20.2 million for the third quarter of 2005. Gain on sale revenue decreased due primarily to the 58.7% lower volume of non-conforming loan sales at a lower net gain on sale margin of 1.8% for the fourth quarter of 2005, as compared to a non-conforming net gain on sale margin of 2.1% for the third quarter of 2005. The lower non-conforming sales volume in the fourth quarter of 2005 was due to the reduced portion of non-conforming fundings designated as held for sale versus held for investment during the quarter and the entry into sales agreements that had closing dates after the end of the quarter.
Origination Expenses and Cost to Produce
Fieldstone’s cost to produce as a percentage of total non-conforming mortgage loan fundings increased to 2.72% in the fourth quarter of 2005, compared to 2.35% in the third quarter of 2005. This increase reflects the Company’s fixed production expenses spread over a lower funding volume during the quarter.
Mortgage Loans Held for Investment, Net
|
| Three Months Ended |
| |||||
($000) |
| December 31, |
| September 30, |
| December 31, |
| |
Beginning principal balance |
| $ | 5,272,479 |
| 4,828,569 |
| 4,110,927 |
|
Loans funded for investment |
| 861,961 |
| 1,019,811 |
| 962,501 |
| |
Less: Loan repayments |
| (592,069 | ) | (566,552 | ) | (334,221 | ) | |
Transfers to real estate owned |
| (12,155 | ) | (9,349 | ) | (4,144 | ) | |
Ending principal balance |
| 5,530,216 |
| 5,272,479 |
| 4,735,063 |
| |
|
|
|
|
|
|
|
| |
Plus: Net deferred loan origination (fees)/costs |
| 40,199 |
| 39,410 |
| 39,693 |
| |
Ending balance mortgage loans held for investment |
| 5,570,415 |
| 5,311,889 |
| 4,774,756 |
| |
Allowance for loan losses – loans held for investment |
| (44,122 | ) | (39,329 | ) | (22,648 | ) | |
Ending balance mortgage loans held for investment, net |
| $ | 5,526,293 |
| 5,272,560 |
| 4,752,108 |
|
Allowance for loan losses as a percentage of the principal balance of loans held for investment |
| 0.80 | % | 0.75 | % | 0.48 | % | |
The investment portfolio was $5.5 billion at December 31, 2005, a $253.7 million increase to the portfolio during the quarter. During the fourth quarter of 2005, loan repayments increased to $592.1 million from $566.6 million during the previous quarter due to the continued seasoning of the portfolio.
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Delinquency, life to date loss status and weighted average coupon as of December 31, 2005 of Fieldstone’s loans held for investment by securitization pool were as follows:
|
| As of December 31, 2005 |
| |||||||||||
($000) |
| Current |
| Current |
| % of |
| % of Aggregate |
| Weighted |
| Avg. Age |
| |
Loans held for investment-securitized: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
FMIC Series 2003-1 |
| $ | 83,201 |
| 17 | % | 17.1 | % | 0.31 | % | 8.79 | % | 29 |
|
FMIT Series 2004-1 |
| 221,352 |
| 33 | % | 9.1 | % | 0.22 | % | 8.48 | % | 25 |
| |
FMIT Series 2004-2 |
| 398,754 |
| 45 | % | 7.0 | % | 0.30 | % | 6.83 | % | 22 |
| |
FMIT Series 2004-3 |
| 556,056 |
| 56 | % | 6.9 | % | 0.18 | % | 6.46 | % | 20 |
| |
FMIT Series 2004-4 |
| 535,681 |
| 61 | % | 7.5 | % | 0.20 | % | 6.97 | % | 17 |
| |
FMIT Series 2004-5 |
| 610,985 |
| 68 | % | 6.7 | % | 0.07 | % | 6.80 | % | 15 |
| |
FMIT Series 2005-1 |
| 562,331 |
| 75 | % | 4.9 | % | 0.11 | % | 6.92 | % | 13 |
| |
FMIT Series 2005-2 |
| 918,831 |
| 95 | % | 3.0 | % | 0.00 | % | 7.14 | % | 7 |
| |
FMIT Series 2005-3 |
| 1,156,571 |
| 99 | % | 0.7 | % | 0.00 | % | 7.34 | % | 3 |
| |
Total |
| 5,043,762 |
| 65 | % | 4.9 | % | 0.14 | % |
|
| 13 |
| |
Loans held for investment-to be securitized |
| 486,454 |
| 100 | % | 0.1 | % | 0.00 | % |
|
| 1 |
| |
Total loans held for investment |
| $ | 5,530,216 |
| 67 | % | 4.4 | % | 0.13 | % | 7.13 | % | 12 |
|
(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 December 31, 2005, September 30, 2005, and December 31, 2004 was as follows:
|
| December 31, 2005 |
| September 30, 2005 |
| December 31, 2004 |
| |||||||||
($000) |
| Principal |
| % of |
| Principal |
| % of |
| Principal |
| % of |
| |||
Current |
| $ | 4,925,656 |
| 89.1 | % | $ | 4,835,343 |
| 91.7 | % | $ | 4,424,418 |
| 93.4 | % |
30 days past due |
| 359,074 |
| 6.5 | % | 258,807 |
| 4.9 | % | 230,787 |
| 4.9 | % | |||
60 days past due |
| 93,663 |
| 1.7 | % | 64,461 |
| 1.2 | % | 38,713 |
| 0.8 | % | |||
90+ days past due |
| 65,810 |
| 1.2 | % | 37,707 |
| 0.7 | % | 15,487 |
| 0.3 | % | |||
In process of foreclosure |
| 86,013 |
| 1.5 | % | 76,161 |
| 1.5 | % | 25,658 |
| 0.6 | % | |||
Total |
| $ | 5,530,216 |
| 100.0 | % | $ | 5,272,479 |
| 100.0 | % | $ | 4,735,063 |
| 100.0 | % |
Seriously delinquent % |
|
|
| 4.4 | % |
|
| 3.4 | % |
|
| 1.7 | % | |||
The increase in the portfolio’s seriously delinquent loans through the fourth quarter of 2005 is a result of the aging of the loans in the portfolio. This level of delinquency is lower than the level of delinquency that management initially modeled.
Mortgage Loans Held for Sale, Net
|
| Three Months Ended |
| |||||
($000) |
| December 31, |
| September 30, 2005 |
| December 31, |
| |
Beginning principal balance |
| $ | 526,016 |
| 545,159 |
| 257,172 |
|
Loans funded, held for sale |
| 841,117 |
| 1,234,984 |
| 887,649 |
| |
Less: Loans sold |
| (768,571 | ) | (1,247,546 | ) | (783,593 | ) | |
Loans paid off /other |
| (6,722 | ) | (6,581 | ) | (4,820 | ) | |
Ending principal balance |
| 591,840 |
| 526,016 |
| 356,408 |
| |
Plus: Net deferred loan origination fees (costs) |
| 3,534 |
| 3,704 |
| 2,536 |
| |
Less: Valuation allowances |
| (1,105 | ) | (850 | ) | (1,894 | ) | |
Ending balance mortgage loans held for sale, net |
| $ | 594,269 |
| 528,870 |
| 357,050 |
|
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Mortgage loans held for sale, net, totaled $594.3 million at December 31, 2005, which consisted 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 benefit of $1.3 million during the fourth quarter of 2005 primarily related to the $3.7 million pre-tax net loss of Fieldstone Mortgage Company (FMC), Fieldstone’s taxable REIT subsidiary (TRS).
Conference Call
Fieldstone will hold a conference call on Monday, April 17, 2006 at 10:00 a.m. Eastern Time to discuss its fourth quarter and full year 2005 operating results. The conference call may be accessed by dialing 800-289-0494 (domestic) or 913-981-5520 (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 Fieldstone website at least 15 minutes prior to the start of the call, select the “Press Room” tab, choose “Live Webcast of Year End 2005 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 April 17, 2006 and will be archived on Fieldstone’s website for a minimum of 30 days following the conference call.
About Fieldstone
Fieldstone Investment Corporation owns and manages a portfolio of non-conforming mortgage loans originated primarily by its mortgage origination subsidiary, Fieldstone Mortgage Company, and has elected to be a real estate investment trust for federal income tax purposes. Founded in 1995, Fieldstone Mortgage Company is a nationwide residential mortgage banking company that originates non-conforming and conforming residential mortgage loans through over 4,300 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, including, but not limited to (i) statements regarding the expected continued building of Fieldstone’s investment portfolio in 2006; (ii) the expected achievement of targeted leveraged returns on new loans; (iii) the expected continued expansion of Fieldstone’s origination business in 2006; and (iv) the reaffirmation of management’s previous guidance on dividends, including management’s current estimates and forecasts for 2006 on which this guidance is based, contained in the section titled “Dividend Guidance” of this press release. These statements 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 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 Fieldstone’s interest rate swaps on its 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 Inv estment Corporation’s periodic reports filed with the Securities and Exchange Commission. 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.
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FIELDSTONE INVESTMENT CORPORATION AND SUBSIDIARIES
Consolidated Statements of Condition
(In thousands, except share data)
|
| December 31, |
| September 30, |
| December 31, |
| |
|
|
|
| (Unaudited) |
|
|
| |
Assets |
|
|
|
|
|
|
| |
Cash |
| $ | 33,536 |
| 34,549 |
| 61,681 |
|
Restricted cash |
| 7,888 |
| 11,431 |
| 4,022 |
| |
Mortgage loans held for sale, net |
| 594,269 |
| 528,870 |
| 357,050 |
| |
Mortgage loans held for investment |
| 5,570,415 |
| 5,311,889 |
| 4,774,756 |
| |
Allowance for loan losses – loans held for investment |
| (44,122 | ) | (39,329 | ) | (22,648 | ) | |
Mortgage loans held for investment, net |
| 5,526,293 |
| 5,272,560 |
| 4,752,108 |
| |
Accounts receivable |
| 7,201 |
| 9,587 |
| 9,326 |
| |
Accrued interest receivable |
| 29,940 |
| 25,633 |
| 22,420 |
| |
Trustee receivable |
| 130,237 |
| 118,317 |
| 91,082 |
| |
Prepaid expenses and other assets |
| 31,197 |
| 23,922 |
| 20,172 |
| |
Derivative assets |
| 35,223 |
| 40,577 |
| 21,315 |
| |
Deferred tax asset |
| 17,679 |
| 17,904 |
| 17,623 |
| |
Furniture and equipment, net |
| 10,151 |
| 9,314 |
| 9,815 |
| |
Total assets |
| $ | 6,423,614 |
| 6,092,664 |
| 5,366,614 |
|
|
|
|
|
|
|
|
| |
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
Warehouse financing – loans held for sale |
| $ | 434,061 |
| 429,551 |
| 188,496 |
|
Warehouse financing – loans held for investment |
| 378,707 |
| 693,565 |
| 521,506 |
| |
Securitization financing |
| 4,998,620 |
| 4,336,677 |
| 4,050,786 |
| |
Reserve for losses – loans sold |
| 35,082 |
| 37,784 |
| 33,302 |
| |
Dividends payable |
| 26,689 |
| — |
| 21,501 |
| |
Accounts payable, accrued expenses and other liabilities |
| 23,812 |
| 24,924 |
| 22,942 |
| |
Total liabilities |
| 5,896,971 |
| 5,522,501 |
| 4,838,533 |
| |
|
|
|
|
|
|
|
| |
Commitments and contingencies |
| — |
| — |
| — |
| |
|
|
|
|
|
|
|
| |
Shareholders’ equity: |
|
|
|
|
|
|
| |
Common stock $0.01 par value; 90,000,000 shares authorized; shares issued and outstanding of 48,513,985 as of December 31, 2005, 48,820,876 as of September 30, 2005, and 48,855,876 as of December 31, 2004 |
| 485 |
| 488 |
| 489 |
| |
Paid-in capital |
| 493,603 |
| 496,983 |
| 497,147 |
| |
Accumulated earnings |
| 37,093 |
| 77,664 |
| 36,430 |
| |
Unearned compensation |
| (4,538 | ) | (4,972 | ) | (5,985 | ) | |
Total shareholders’ equity |
| 526,643 |
| 570,163 |
| 528,081 |
| |
Total liabilities and shareholders’ equity |
| $ | 6,423,614 |
| 6,092,664 |
| 5,366,614 |
|
-More-
FIELDSTONE INVESTMENT CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except share and per share data)
|
| Three Months Ended |
| Year Ended |
| |||||||
|
| December 31, |
| September 30, |
| December 31, |
| December 31, |
| December 31, |
| |
|
| (Unaudited) |
| (Unaudited) |
| (Unaudited) |
|
|
|
|
| |
Revenues: |
|
|
|
|
|
|
|
|
|
|
| |
Interest income: |
|
|
|
|
|
|
|
|
|
|
| |
Loans held for investment |
| $ | 96,171 |
| 84,940 |
| 76,321 |
| 344,521 |
| 206,460 |
|
Loans held for sale |
| 8,796 |
| 9,860 |
| 6,280 |
| 38,254 |
| 25,316 |
| |
Total interest income |
| 104,967 |
| 94,800 |
| 82,601 |
| 382,775 |
| 231,776 |
| |
Interest expense: |
|
|
|
|
|
|
|
|
|
|
| |
Loans held for investment |
| 63,946 |
| 54,361 |
| 30,334 |
| 198,688 |
| 69,039 |
| |
Loans held for sale |
| 4,937 |
| 5,166 |
| 1,227 |
| 17,792 |
| 5,498 |
| |
Total interest expense |
| 68,883 |
| 59,527 |
| 31,561 |
| 216,480 |
| 74,537 |
| |
Net interest income |
| 36,084 |
| 35,273 |
| 51,040 |
| 166,295 |
| 157,239 |
| |
Provision for loan losses – loans held for investment |
| 7,663 |
| 11,045 |
| 6,678 |
| 30,065 |
| 21,556 |
| |
Net interest income after provision for loan losses |
| 28,421 |
| 24,228 |
| 44,362 |
| 136,230 |
| 135,683 |
| |
Gains on sales of mortgage loans, net |
| 9,088 |
| 20,147 |
| 10,791 |
| 66,158 |
| 52,147 |
| |
Other income (expense) - portfolio derivatives |
| 6,929 |
| 15,630 |
| 13,277 |
| 33,469 |
| 8,789 |
| |
Fees and other income |
| 216 |
| 661 |
| 816 |
| 1,414 |
| 3,714 |
| |
Total revenues |
| 44,654 |
| 60,666 |
| 69,246 |
| 237,271 |
| 200,333 |
| |
|
|
|
|
|
|
|
|
|
|
|
| |
Expenses: |
|
|
|
|
|
|
|
|
|
|
| |
Salaries and employee benefits |
| 21,011 |
| 20,555 |
| 19,498 |
| 81,015 |
| 81,915 |
| |
Occupancy |
| 1,960 |
| 1,941 |
| 2,283 |
| 7,671 |
| 7,083 |
| |
Depreciation and amortization |
| 960 |
| 961 |
| 999 |
| 3,544 |
| 2,760 |
| |
Servicing fees |
| 2,163 |
| 2,208 |
| 2,661 |
| 8,718 |
| 6,499 |
| |
General and administration |
| 9,056 |
| 8,578 |
| 9,116 |
| 33,424 |
| 32,546 |
| |
Total expenses |
| 35,150 |
| 34,243 |
| 34,557 |
| 134,372 |
| 130,803 |
| |
|
|
|
|
|
|
|
|
|
|
|
| |
Income before income taxes |
| 9,504 |
| 26,423 |
| 34,689 |
| 102,899 |
| 69,530 |
| |
Income tax (expense) benefit |
| 1,281 |
| (3,398 | ) | 165 |
| (3,509 | ) | (5,934 | ) | |
Net income |
| $ | 10,785 |
| 23,025 |
| 34,854 |
| 99,390 |
| 63,596 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Earnings per share of common stock: |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
Basic |
| $ | 0.22 |
| 0.47 |
| 0.71 |
| 2.04 |
| 1.30 |
|
Diluted |
| $ | 0.22 |
| 0.47 |
| 0.71 |
| 2.04 |
| 1.30 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Basic weighted average common shares outstanding |
| 48,411,119 |
| 48,462,126 |
| 48,333,975 |
| 48,449,872 |
| 48,328,271 |
| |
Diluted weighted average common shares outstanding |
| 48,429,693 |
| 48,479,152 |
| 48,374,730 |
| 48,464,445 |
| 48,370,502 |
| |
-More-
FIELDSTONE INVESTMENT CORPORATION AND SUBSIDIARIES
Schedule 1 - Supplemental Data
(Unaudited; dollars in thousands; as restated through September 30, 2005)
|
| Three Months Ended |
| Year Ended |
| |||||||
|
| December 31, |
| September 30, |
| December 31, |
| December 31, |
| December 31, |
| |
Mortgage Loan Fundings |
|
|
|
|
|
|
|
|
|
|
| |
Non-Conforming |
| $ | 1,383,319 |
| 1,820,791 |
| 1,536,512 |
| 5,941,404 |
| 6,185,045 |
|
Conforming |
| 319,759 |
| 434,004 |
| 313,638 |
| 1,487,328 |
| 1,290,202 |
| |
Total |
| $ | 1,703,078 |
| 2,254,795 |
| 1,850,150 |
| 7,428,732 |
| 7,475,247 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Non-Conforming Mortgage Loan Funding Statistics |
|
|
|
|
|
|
|
|
|
|
| |
Weighted average interest rate |
| 7.9 | % | 7.3 | % | 7.2 | % | 7.5 | % | 7.2 | % | |
Weighted average credit score |
| 651 |
| 655 |
| 652 |
| 653 |
| 652 |
| |
Weighted average loan to value |
| 84.2 | % | 83.9 | % | 84.1 | % | 84.0 | % | 84.5 | % | |
Full documentation (1) |
| 51.9 | % | 53.9 | % | 55.2 | % | 54.8 | % | 59.4 | % | |
Percentage held for investment |
| 62.3 | % | 56.0 | % | 62.6 | % | 47.3 | % | 66.5 | % | |
|
|
|
|
|
|
|
|
|
|
|
| |
Mortgage Loan Sales Statistics |
|
|
|
|
|
|
|
|
|
|
| |
Non-Conforming loan sales |
| $ | 370,335 |
| 896,584 |
| 476,407 |
| 2,913,867 |
| 2,220,609 |
|
Conforming loan sales |
| 398,236 |
| 350,962 |
| 307,186 |
| 1,441,695 |
| 1,279,169 |
| |
Total |
| $ | 768,571 |
| 1,247,546 |
| 783,593 |
| 4,355,562 |
| 3,499,778 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Gain on Sale Margin - Non-Conforming Sales (2) |
|
|
|
|
|
|
|
|
|
|
| |
Gross premiums - loan sales, net of derivative gain (loss) |
| 1.9 | % | 2.7 | % | 3.0 | % | 2.8 | % | 3.0 | % | |
Premiums paid net of fees collected |
| 0.3 | % | 0.1 | % | 0.0 | % | 0.0 | % | 0.1 | % | |
Provision for loan losses - loans sold (3) |
| 0.3 | % | 0.0 | % | (0.3 | )% | (0.1 | )% | (0.4 | )% | |
Direct origination costs |
| (0.7 | )% | (0.7 | )% | (0.7 | )% | (0.7 | )% | (0.8 | )% | |
Total |
| 1.8 | % | 2.1 | % | 2.0 | % | 2.0 | % | 1.9 | % | |
|
|
|
|
|
|
|
|
|
|
|
| |
Gain on Sale Margin - Conforming Sales (2) |
|
|
|
|
|
|
|
|
|
|
| |
Gross premiums - loan sales, net of derivative gain (loss) |
| 1.6 | % | 1.6 | % | 1.9 | % | 1.9 | % | 1.9 | % | |
Premiums paid net of fees collected |
| (0.4 | )% | (0.7 | )% | (0.7 | )% | (0.8 | )% | (0.6 | )% | |
Provision for loan losses - loans sold (4) |
| (0.1 | )% | (0.1 | )% | (0.1 | )% | (0.1 | )% | (0.1 | )% | |
Direct origination costs |
| (0.4 | )% | (0.5 | )% | (0.6 | )% | (0.5 | )% | (0.5 | )% | |
Total |
| 0.7 | % | 0.3 | % | 0.5 | % | 0.5 | % | 0.7 | % | |
|
|
|
|
|
|
|
|
|
|
|
| |
Statements of Condition Data |
|
|
|
|
|
|
|
|
|
|
| |
Average equity as a percentage of average assets |
| 8.7 | % | 9.6 | % | 10.4 | % | 9.5 | % | 14.4 | % | |
Debt to capital |
| 11.2 |
| 9.7 |
| 9.2 |
|
|
|
|
| |
Book value per share |
| $ | 10.86 |
| 11.68 |
| 10.81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Mortgage loans held for sale, net |
|
|
|
|
|
|
|
|
|
|
| |
Non-Conforming |
| $ | 452,792 |
| 462,650 |
| 254,368 |
|
|
|
|
|
Conforming |
| 141,477 |
| 66,220 |
| 102,682 |
|
|
|
|
| |
Total |
| $ | 594,269 |
| 528,870 |
| 357,050 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Seriously delinquent - mortgage loans held for sale (5) |
| 0.7 | % | 0.5 | % | 1.0 | % |
|
|
|
| |
Seriously delinquent - mortgage loans held for investment (5) |
| 4.4 | % | 3.4 | % | 1.7 | % |
|
|
|
| |
Weighted average credit score - mortgage loans held for investment |
| 650 |
| 650 |
| 650 |
|
|
|
|
| |
(1) Full documentation of non-conforming mortgage loan fundings also includes the bank statements program.
(2) Gain on sale margin is calculated as gains on sales of mortgage loans, net divided by mortgage loan sales.
(3) Provision for loan losses - loans sold is calculated as provision for loan losses - loans sold divided by mortgage loan sales. The provision is recorded as a reduction of gains on sales of mortgage loans. The third quarter of 2005 includes a $4.3 million reversal due to lower losses on 2002 and 2003 loan sales. The fourth quarter of 2005 relates to sales of 41% of second liens, for which higher reserves are taken, compared to 29% of second liens in the same period in 2004.
(4) The fourth quarter of 2005 includes a $3.3 million reversal due to loss mitigations on prior year sales.
(5) Seriously delinquent is defined as a mortgage loan that is 60 plus days past due or in the process of foreclosure.
-More-
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, 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 |
| Year Ended |
| |||||||
($000) |
| December 31, |
| September 30, |
| December 31, |
| December 31, |
| December 31, |
| |
Non-cash changes in fair value |
| $ | (7,172 | ) | 7,630 |
| 16,736 |
| 8,999 |
| 20,512 |
|
Cash settlements received (paid) |
| 14,101 |
| 8,000 |
| (3,459 | ) | 24,470 |
| (11,723 | ) | |
Other income (expense) – portfolio derivatives |
| $ | 6,929 |
| 15,630 |
| 13,277 |
| 33,469 |
| 8,789 |
|
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.
-More-
Regulation G Reconciliation - Core Net Income and Core Earnings Per Share - Diluted
|
| Three Months Ended |
| Year Ended |
| |||||||
(Dollars in 000's, except share and per share data) |
| December 31, |
| September 30, |
| December 31, |
| December 31, |
| December 31, |
| |
|
|
|
|
|
|
|
|
|
|
|
| |
Core Net Income Reconciliation: |
|
|
|
|
|
|
|
|
|
|
| |
Net income |
| $ | 10,785 |
| 23,025 |
| 34,854 |
| 99,390 |
| 63,596 |
|
Less: Mark to market (gain) loss on portfolio derivatives included in "Other income (expense) - portfolio derivatives" |
|
|
|
|
|
|
|
|
|
|
| |
Mark to market interest rate swaps |
| 7,172 |
| (7,858 | ) | (16,639 | ) | (9,456 | ) | (21,934 | ) | |
Mark to market interest rate cap |
| — |
| 228 |
| (97 | ) | 457 |
| 1,422 |
| |
Total mark to market on portfolio derivatives |
| 7,172 |
| (7,630 | ) | (16,736 | ) | (8,999 | ) | (20,512 | ) | |
|
|
|
|
|
|
|
|
|
|
|
| |
Less: Amortization of interest rate swap buydown payments |
| (531 | ) | (224 | ) | — |
| (755 | ) | — |
| |
Core net income |
| $ | 17,426 |
| 15,171 |
| 18,118 |
| 89,636 |
| 43,084 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Core Earnings per Share-Diluted Reconciliation: |
|
|
|
|
|
|
|
|
|
|
| |
Net income |
| $ | 10,785 |
| 23,025 |
| 34,854 |
| 99,390 |
| 63,596 |
|
Less: Mark to market (gain) loss on portfolio derivatives |
| 7,172 |
| (7,630 | ) | (16,736 | ) | (8,999 | ) | (20,512 | ) | |
Amortization of interest rate swap buydown payments |
| (531 | ) | (224 | ) | — |
| (755 | ) | — |
| |
Unvested restricted stock dividends |
| (157 | ) | (187 | ) | (409 | ) | (591 | ) | (571 | ) | |
Core net income available to common shareholders |
| $ | 17,269 |
| 14,984 |
| 17,709 |
| 89,045 |
| 42,513 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Earnings per share - diluted |
| $ | 0.22 |
| 0.47 |
| 0.71 |
| 2.04 |
| 1.30 |
|
Core earnings per share - diluted |
| $ | 0.36 |
| 0.31 |
| 0.37 |
| 1.84 |
| 0.88 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Diluted weighted average common shares outstanding |
| 48,429,693 |
| 48,479,152 |
| 48,374,730 |
| 48,464,445 |
| 48,370,502 |
| |
|
|
|
|
|
|
|
|
|
|
|
| |
Core Return on Assets and Core Return on Equity: |
|
|
|
|
|
|
|
|
|
|
| |
Average total equity |
| $ | 548,982 |
| 561,849 |
| 528,883 |
| 553,901 |
| 524,286 |
|
Average total assets |
| 6,303,956 |
| 5,862,592 |
| 5,067,914 |
| 5,813,991 |
| 3,639,683 |
| |
Core average total equity |
| 516,960 |
| 533,696 |
| 520,772 |
| 525,146 |
| 521,473 |
| |
Core average total assets |
| 6,303,956 |
| 5,862,592 |
| 5,067,914 |
| 5,813,991 |
| 3,639,683 |
| |
|
|
|
|
|
|
|
|
|
|
|
| |
Return on average equity (annualized) |
| 7.9 | % | 16.4 | % | 26.4 | % | 17.9 | % | 12.1 | % | |
Return on average assets (annualized) |
| 0.7 | % | 1.6 | % | 2.8 | % | 1.7 | % | 1.7 | % | |
|
|
|
|
|
|
|
|
|
|
|
| |
Core return on average equity (annualized) |
| 13.5 | % | 11.4 | % | 13.9 | % | 17.1 | % | 8.3 | % | |
Core return on average assets (annualized) |
| 1.1 | % | 1.0 | % | 1.4 | % | 1.5 | % | 1.2 | % | |
|
|
|
|
|
|
|
|
|
|
|
| |
Average Balance Data |
|
|
|
|
|
|
|
|
|
|
| |
Mortgage loans held for sale |
| $ | 492,037 |
| 592,456 |
| 344,048 |
| 550,762 |
| 347,513 |
|
Mortgage loans held for investment |
| 5,419,162 |
| 4,986,748 |
| 4,454,724 |
| 4,971,731 |
| 3,072,684 |
| |
Warehouse financing - mortgage loans held for sale |
| 386,505 |
| 445,504 |
| 146,250 |
| 394,167 |
| 204,464 |
| |
Warehouse financing - mortgage loans held for investment |
| 630,900 |
| 552,965 |
| 643,881 |
| 482,024 |
| 616,181 |
| |
Securitization financing |
| 4,681,931 |
| 4,339,839 |
| 3,637,264 |
| 4,364,266 |
| 2,251,980 |
| |
-More-
Regulation G Reconciliation - Core Net Interest Income & Core Yield Analysis
|
| Three Months Ended |
| Year Ended |
| |||||||
(Dollars in 000's) |
| December 31, |
| September 30, |
| December 31, |
| December 31, |
| December 31, |
| |
Core net interest income after provision for loan losses |
|
|
|
|
|
|
|
|
|
|
| |
Net interest income after provision for loan losses |
| $ | 28,421 |
| 24,228 |
| 44,362 |
| 136,230 |
| 135,683 |
|
Plus: Net cash settlements received (paid) on portfolio derivatives included in "Other income (expense) - portfolio derivatives |
| 14,101 |
| 8,000 |
| (3,459 | ) | 24,470 |
| (11,723 | ) | |
Less: Amortization of interest rate swap buydown payments |
| (531 | ) | (224 | ) | — |
| (755 | ) | — |
| |
Core net interest income after provision for loan losses |
| $ | 41,991 |
| 32,004 |
| 40,903 |
| 159,945 |
| 123,960 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Interest income loans held for investment |
| $ | 96,171 |
| 84,940 |
| 76,321 |
| 344,521 |
| 206,460 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Interest expense loans held for investment |
| 63,946 |
| 54,361 |
| 30,334 |
| 198,688 |
| 69,039 |
| |
Plus: Net cash settlements (received) paid on portfolio derivatives |
| (14,101 | ) | (8,000 | ) | 3,459 |
| (24,470 | ) | 11,723 |
| |
Plus: Amortization of interest rate swap buydown payments |
| 531 |
| 224 |
| — |
| 755 |
| — |
| |
Core interest expense - loans held for investment |
| 50,376 |
| 46,585 |
| 33,793 |
| 174,973 |
| 80,762 |
| |
|
|
|
|
|
|
|
|
|
|
|
| |
Core net interest income loans held for investment |
| 45,795 |
| 38,355 |
| 42,528 |
| 169,548 |
| 125,698 |
| |
Provision for loan losses loans held for investment |
| 7,663 |
| 11,045 |
| 6,678 |
| 30,065 |
| 21,556 |
| |
Core net interest income loans held for investment after provision for loan losses |
| 38,132 |
| 27,310 |
| 35,850 |
| 139,483 |
| 104,142 |
| |
|
|
|
|
|
|
|
|
|
|
|
| |
Net interest income loans held for sale |
| 3,859 |
| 4,694 |
| 5,053 |
| 20,462 |
| 19,818 |
| |
Core net interest income after provision for loan losses |
| $ | 41,991 |
| 32,004 |
| 40,903 |
| 159,945 |
| 123,960 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Core Yield Analysis |
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| |
Core yield analysis - loans held for investment |
|
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| |
|
|
|
|
|
|
|
|
|
|
|
| |
Coupon interest income on loans held for investment |
| 6.77 | % | 6.64 | % | 6.58 | % | 6.69 | % | 6.63 | % | |
Amortization of deferred origination costs |
| (0.43 | )% | (0.69 | )% | (0.46 | )% | (0.51 | )% | (0.41 | )% | |
Prepayment fees |
| 0.60 | % | 0.72 | % | 0.58 | % | 0.65 | % | 0.39 | % | |
Yield on loans held for investment |
| 6.94 | % | 6.67 | % | 6.70 | % | 6.83 | % | 6.61 | % | |
|
|
|
|
|
|
|
|
|
|
|
| |
Cost of financing for loans held for investment |
| 4.71 | % | 4.35 | % | 2.77 | % | 4.04 | % | 2.37 | % | |
Net cash settlements (received) paid on portfolio derivatives |
| (1.04 | )% | (0.64 | )% | 0.32 | % | (0.50 | )% | 0.40 | % | |
Amortization of interest rate swap buydown payments |
| 0.04 | % | 0.02 | % | 0.00 | % | 0.02 | % | 0.00 | % | |
Core cost of financing for loans held for investment |
| 3.71 | % | 3.73 | % | 3.09 | % | 3.56 | % | 2.77 | % | |
|
|
|
|
|
|
|
|
|
|
|
| |
Net yield on loans held for investment |
| 2.33 | % | 2.40 | % | 4.04 | % | 2.89 | % | 4.40 | % | |
Net cash settlements received (paid) on portfolio derivatives |
| 1.02 | % | 0.63 | % | (0.30 | )% | 0.49 | % | (0.38 | )% | |
Amortization of interest rate swap buydown payments |
| (0.04 | )% | (0.02 | )% | 0.00 | % | (0.01 | )% | 0.00 | % | |
Core net yield on loans held for investment |
| 3.31 | % | 3.01 | % | 3.74 | % | 3.37 | % | 4.02 | % | |
Provision for loan losses - loans held for investment |
| (0.55 | )% | (0.87 | )% | (0.59 | )% | (0.60 | )% | (0.69 | )% | |
Core yield on loans held for investment after provision for loan losses |
| 2.76 | % | 2.14 | % | 3.15 | % | 2.77 | % | 3.33 | % | |
|
|
|
|
|
|
|
|
|
|
|
| |
Yield analysis - loans held for sale |
|
|
|
|
|
|
|
|
|
|
| |
Yield on loans held for sale |
| 7.00 | % | 6.51 | % | 7.14 | % | 6.85 | % | 7.17 | % | |
Cost of financing for loans held for sale |
| 5.00 | % | 4.54 | % | 3.28 | % | 4.45 | % | 2.64 | % | |
Net yield on loans held for sale |
| 3.07 | % | 3.10 | % | 5.75 | % | 3.66 | % | 5.61 | % | |
|
|
|
|
|
|
|
|
|
|
|
| |
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 |
| 1.88 | % | 1.70 | % | 3.62 | % | 2.43 | % | 3.90 | % | |
Net cash settlements received (paid) on portfolio derivatives |
| 0.93 | % | 0.56 | % | (0.28 | )% | 0.44 | % | (0.34 | )% | |
Amortization of interest rate swap buydown payments |
| (0.04 | )% | (0.02 | )% | 0.00 | % | (0.01 | )% | 0.00 | % | |
Core yield - net interest income on loans held for sale and loans held for investment after provision for loan losses |
| 2.77 | % | 2.24 | % | 3.34 | % | 2.86 | % | 3.56 | % | |
-More-
Regulation G Reconciliation - Cost to Produce
|
| Three Months Ended |
| Year Ended |
| |||||||
(Dollars in 000's) |
| December 31, |
| September 30, |
| December 31, |
| December 31, |
| December 31, |
| |
Total expenses |
| $ | 35,150 |
| 34,243 |
| 34,557 |
| 134,372 |
| 130,803 |
|
Deferred origination costs |
| 9,857 |
| 14,397 |
| 12,829 |
| 45,935 |
| 52,634 |
| |
Servicing costs - internal and external |
| (2,796 | ) | (2,743 | ) | (3,398 | ) | (11,362 | ) | (9,484 | ) | |
Total general and administrative costs |
| 42,211 |
| 45,897 |
| 43,988 |
| 168,945 |
| 173,953 |
| |
Premiums paid, net of fees collected |
| 1,252 |
| 4,751 |
| 4,289 |
| 16,136 |
| 14,079 |
| |
Cost to produce |
| $ | 43,463 |
| 50,648 |
| 48,277 |
| 185,081 |
| 188,032 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Mortgage Loan Fundings: |
|
|
|
|
|
|
|
|
|
|
| |
Non-Conforming |
| $ | 1,383,319 |
| 1,820,791 |
| 1,536,512 |
| 5,941,404 |
| 6,185,045 |
|
Conforming |
| 319,759 |
| 434,004 |
| 313,638 |
| 1,487,328 |
| 1,290,202 |
| |
Total |
| $ | 1,703,078 |
| 2,254,795 |
| 1,850,150 |
| 7,428,732 |
| 7,475,247 |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Cost to produce as % of total mortgage loan fundings: |
|
|
|
|
|
|
|
|
|
|
| |
Non-Conforming |
| 2.72 | % | 2.35 | % | 2.64 | % | 2.57 | % | 2.55 | % | |
Conforming |
| 1.82 | % | 1.83 | % | 2.44 | % | 2.16 | % | 2.33 | % | |
Total |
| 2.55 | % | 2.25 | % | 2.61 | % | 2.49 | % | 2.52 | % | |
|
|
|
|
|
|
|
|
|
|
|
| |
Cost to produce as % of total mortgage loan fundings: |
|
|
|
|
|
|
|
|
|
|
| |
Total expenses |
| 2.06 | % | 1.52 | % | 1.87 | % | 1.81 | % | 1.75 | % | |
Deferred origination costs |
| 0.58 | % | 0.64 | % | 0.69 | % | 0.62 | % | 0.71 | % | |
Servicing costs - internal and external |
| (0.16 | )% | (0.12 | )% | (0.18 | )% | (0.16 | )% | (0.13 | )% | |
Total general and administrative costs |
| 2.48 | % | 2.04 | % | 2.38 | % | 2.27 | % | 2.33 | % | |
Premiums paid, net of fees collected |
| 0.07 | % | 0.21 | % | 0.23 | % | 0.22 | % | 0.19 | % | |
Cost to produce as% of total mortgage loan fundings |
| 2.55 | % | 2.25 | % | 2.61 | % | 2.49 | % | 2.52 | % | |