Exhibit 99.1
FOR IMMEDIATE RELEASE
American Home Mortgage Reports Second Quarter 2004 Results
Announces diluted earnings per share of $0.83
Melville, NY (July 29, 2004) - American Home Mortgage Investment Corp. (NYSE:
AHM) today announced results for the second quarter ended June 30, 2004.
SECOND QUARTER FINANCIAL HIGHLIGHTS
o Net earnings for the second quarter of 2004 were $33.5 million, compared
to $26.9 million for the second quarter of 2003, an increase of 24.5%.
o Earnings per diluted share for the second quarter of 2004 was $0.83 per
share, compared to $1.55 per share for the second quarter of 2003, a
decrease of 46.5%.
o The company adopted SEC Staff Accounting Bulletin No. 105 ("SAB 105"),
which resulted in a one-time non-cash reduction in the current quarter's
income. As a result, income per fully diluted share in the second quarter
was reduced $0.27.
o Dividends per share for the second quarter was $0.61 compared to $0.13 for
the second quarter of 2003.
FIRST SIX MONTHS 2004 FINANCIAL HIGHLIGHTS
o Net earnings were $54.7 million for the first six months, an increase of
26.7% from the $43.2 million earned in the first six months of last year.
o Earnings per diluted share were $1.54 per share for the first six months,
a decrease of 38.6% over the first six months of last year.
o Earnings per diluted share for the first six months of 2004 would have
been $0.31 higher if not for the adoption of SAB 105.
OPERATING STATISITICS
- ---------------------
At and for the Quarter Ended June 30, Six Months Ended June 30,
------------------------------------- -------------------------
Mortgage-Backed Securities Holdings Segment*: 2004 2003 2004 2003
------------------ ------------------ ------------- -----------
Average Mortgage-Backed Securities Held $ 4.8 billion --- $ 3.4 billion ---
Average Portfolio Yield 3.4% --- 3.3% ---
Average Cost of Funds and Hedges 2.7% --- 2.5% ---
Net Interest Margin 0.9% --- 1.0% ---
Mortgage-Backed Securities Held - End of Period $ 7.3 billion ---
Average Cost of Mortgage-Backed Securities 100.8% ---
Period End Duration Gap (in years) (0.04) ---
*Excludes loans held pending securitization.
At and for the Quarter Ended June 30, Six Months Ended June 30,
Loan Origination Segment: ------------------------------------- -------------------------------
2004 2003 2004 2003
----------------- ---------------- ------------ ---------------
Loan Originations $ 6.6 billion $ 6.2 billion $ 11.0 billion $ 10.5 billion
Refinance 52% 68% 54% 70%
ARM 49% 13% 43% 14%
Loans Securitized and Held $ 1.5 billion --- $ 2.2 billion ---
Loans Sold to Third Parties $ 4.2 billion $ 5.8 billion $ 7.6 billion $ 9.8 billion
Applications Accepted $ 8.8 billion $ 10.2 billion $ 17.9 billion $ 17.3 billion
Application Pipeline $ 6.5 billion $ 8.5 billion
June 30,
-----------------------------------
Loan Servicing Segment: 2004 2003
----------------- ----------------
Loan Servicing Portfolio - Total with Warehouse $ 11.6 billion $ 8.9 billion
Loan Servicing Portfolio - Loans Sold or Securitized $ 10.2 billion $ 7.2 billion
Weighted Average Note Rate 5.39% 6.46%
Weighted Average Service Fee 0.358% 0.346%
Average Age (in months) 20 34
Michael Strauss, Chairman and Chief Executive Officer commented, "During the
second quarter the company nearly completed the initial build-up of its mortgage
backed securities portfolio including adding $1.5 billion of self-originated
securities and purchasing additional securities. Today the portfolio consists of
$7.3 billion of mortgage-backed securities of which $2.6 billion were
self-originated and $4.7 billion were market purchased. Over the coming quarters
the company intends to replace many of the market bought securities it currently
holds with self-originated securities that are projected to produce higher
yields. Mortgage originations in the second quarter were strong, reaching $6.6
billion due to the company achieving record market share."
SECOND QUARTER OPERATING AND FINANCIAL HIGHLIGHTS
- -------------------------------------------------
During the second quarter, the company's net interest income was $20.1 million
while its average mortgage securities portfolio holdings were $4.8 billion and
the average amount of mortgages held in its inventory was $1.8 billion. Net
interest income is expected to increase in the third quarter as a result of the
company's larger portfolio, and its ongoing substitution of self-originated for
market bought securities. Mortgage production during the quarter grew 6.5%
compared to the second quarter of 2003 despite the fact that nationwide
originations declined 24.2% based on Fannie Mae's estimate. Of the $6.6 billion
of loans originated by the company, $1.3 billion were securitized and held, $4.2
billion were sold for cash, and $1.1 billion were added to loans held pending
sale or securitization. During the quarter, the company's gain on sale of
mortgage loans and mortgage-backed securities was $59.8 million. The company's
adoption of SAB 105 during the quarter resulted in a pre-tax reduction of gain
on sale of loans of $18.7 million.
In the second quarter the company's servicing related revenue was $8.2 million
as servicing benefited from higher servicing fees, slowing amortization of its
servicing asset and recovery of impairment of the servicing asset due to rising
interest rates. As of June 30, the notional amount of loans serviced was $10.2
billion, while the servicing asset had a market value of $145.1 million, was
carried at a book value of $141.8 million, and had a temporary impairment
reserve of $9.2 million. Total income for the second quarter was $33.5 million
compared to $26.9 million during the second quarter of 2003, while earnings per
fully diluted share was $0.83 compared to $1.55 for the second quarter last
year. Earnings per share would have been $0.27 higher in the second quarter of
2004 if not for the adoption of SAB 105.
During the second quarter, the company continued to focus on high credit-quality
assets. On June 30, 2004 35.5% of the company's assets were Fannie Mae or
Freddie Mac obligations, while 61.6% were rated AAA and 1.2% were rated AA and
1.7% were rated A, BBB or unrated, by Standard & Poors. The company also
continued to focus on adjustable and hybrid adjustable rate mortgages. On June
30 the portfolio consisted of 56.2% 5/1 ARMs, 23.0% 3/1 ARMs, and 20.8% ARMs
with an initial reset less than 3 years after origination. On June 30, the
average cost of the portfolio was 100.8%, while its average life was 3.8 years,
and its net duration was negative 0.04 years.
OTHER SECOND QUARTER HIGHLIGHTS
- -------------------------------
o American Home Mortgage Securities LLC securitized approximately $1.4
billion of adjustable rate loans. In addition, the company
securitized $0.7 billion of adjustable rate loans through Fannie Mae
and Freddie Mac's guarantee programs. The company purchased and held
$1.5 billion of these self-originated securities for its portfolio.
o The company began issuing commercial paper to fund its mortgage
inventory. By funding a portion of its inventory with commercial
paper, the company expects its borrowing costs to be reduced. As of
June 30, the company has $1.0 billion of commercial paper
outstanding.
o The company issued $53.8 million of its Class A Preferred Stock
which settled in July 2004.
o On June 4, the company's Board of Directors declared a dividend of
$0.61 per share payable on July 14, to shareholders of record June
30.
OUTLOOK
- -------
During the second half of 2004, the company expects to earn increased net
interest income due to the increased size of its mortgage backed securities
portfolio, and due to the ongoing substitution of self-originated assets for
market bought assets. The company also expects that mortgage originations will
fall throughout the second half with a consequent reduction in loan production
income. Finally, the company projects that higher servicing fees and slowing
amortization will cause its servicing assets to contribute to income through the
remainder of the year.
Based on its projections, the Company reaffirms its 2004 earnings guidance of
$3.25 to $3.40 per share. In addition, the company's continues to support its
dividend policy of $0.61 per share per quarter, subject to ongoing review by its
Board of Directors based on business conditions and the company's financial
condition. The company's dividends policy does not constitute an obligation to
pay dividends which only occurs when its Board of Directors declares a dividend.
ACQUISITION OF CERTAIN ORIGINATION BRANCHES FROM WASHINGTON MUTUAL
- ------------------------------------------------------------------
On July 28 the company announced it signed a definitive agreement with
Washington Mutual, Inc. and its subsidiaries to acquire certain residential
mortgage home loan centers and associated satellite offices in 18 states.
Approximately 500 employees are currently supporting these home loan centers and
associated satellite offices with the vast majority being sales professionals
focused on retail loan originations. The company is currently in the process of
hiring a number of the Washington Mutual employees who work at the acquired home
loan centers.
Under the terms of the acquisition, American Home will assume Washington
Mutual's lease obligations and will purchase certain fixed assets in the
acquired offices. The acquisition will be funded from current cash reserves and
is expected to close on August 2, 2004.
Michael Strauss commented, "Over the last five years American Home has achieved
noteworthy success acquiring significant origination assets at advantageous
terms. The strategic rationale behind this acquisition is to expand our retail
channel in and increase the generation of self originated adjustable rate loans.
In addition, these offices are expected to offer additional efficiencies of
scale for supporting our nationwide branch network."
CONFERENCE CALL TODAY
- ---------------------
American Home will hold an investor conference call to discuss earnings at 10:30
a.m., Eastern Time, today, July 29, 2004. Interested parties may listen to the
call by visiting the American Home corporate website, www.americanhm.com,
Stockholder Information section, to listen to the conference call webcast live.
A replay of the call will be available after 1:00 p.m., Eastern Time, July 29,
2004, through midnight Eastern Time on August 12, 2004. The online broadcast
will be available on the site through August 12, 2004. American Home's second
quarter 2004 conference call can also be accessed online through Yahoo! Finance
at http://finance.yahoo.com/q?s=ahm. Please contact John Lovallo at Ogilvy
Public Relations Worldwide at 212-880-5216 or john.lovallo@ogilvypr.com with any
questions.
ABOUT AMERICAN HOME MORTGAGE INVESTMENT CORP.
American Home Mortgage Investment Corp. (NYSE: AHM) is a mortgage real estate
investment trust focused on earning net interest income from self-originated
mortgage backed securities, and through its taxable subsidiaries, on originating
and servicing mortgage loans for institutional investors. Mortgages are
originated through a network of loan production offices as well as through
mortgage brokers and are serviced at the Company's Columbia, Maryland servicing
center. For additional information, please visit the Company's Web site at
www.americanhm.com.
###
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995: This news release contains statements about future events and
expectations, which are "forward-looking statements." Any statement in this
release that is not a statement of historical fact, including, but not limited
to earnings guidance and forecasts, projections of financial results, and
expected future financial position, dividends and dividend plans or business
strategy, is a forward-looking statement. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors, which may
cause American Home Mortgage Investment Corp.'s actual results to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Specific factors that might cause
such a difference include, but are not limited to: the potential fluctuations in
American Home Mortgage Investment Corp.'s operating results; American Home
Mortgage Investment Corp.'s potential need for additional capital; the direction
of interest rates and their subsequent effect on American Home Mortgage
Investment Corp.'s business and the business of its subsidiaries; federal and
state regulation of mortgage banking; and those risks and uncertainties
discussed in filings made by American Home Mortgage Investment Corp. with the
Securities and Exchange Commission. Such forward-looking statements are
inherently uncertain, and stockholders must recognize that actual results may
differ from expectations. American Home Mortgage Investment Corp. does not
assume any responsibility to issue updates to any forward-looking statements
discussed in this press release.
AMERICAN HOME MORTGAGE INVESTMENT CORP. CONTACT:
John D. Lovallo, SVP
Ogilvy Public Relations Worldwide
212-880-5216
john.lovallo@ogilvypr.com
Financial Tables to Follow on Next Pages
AMERICAN HOME MORTGAGE INVESTMENT CORP.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- ---------------------
2004 2003 2004 2003
--------- --------- ----------- ---------
Net interest income:
Interest income $ 72,404 $ 25,446 $ 106,454 $ 46,424
Interest expense (52,318) (12,572) (73,596) (22,781)
----------- ----------- ----------- -----------
Net interest income 20,086 12,874 32,858 23,643
----------- ----------- ----------- -----------
Non-interest income:
Gain on sales of mortgage
loans and mortgage-
backed securities 59,840 129,282 139,973 217,493
Loan servicing fees 8,730 9,821 19,048 20,949
Amortization (7,764) (17,286) (15,110) (30,055)
Impairment reserve recovery 7,252 (6,472) (5,332) (12,185)
(provision) ----------- ----------- ----------- -----------
Net loan servicing fees (loss) 8,218 (13,937) (1,394) (21,291)
----------- ----------- ----------- -----------
Other non-interest income 1,226 1,241 2,204 4,169
----------- ----------- ----------- -----------
Total non-interest income 69,284 116,586 140,783 200,371
----------- ----------- ----------- -----------
Non-interest expense
Salaries, commissions and 42,851 54,206 82,633 98,853
benefits, net
Occupancy and equipment 8,008 6,679 16,102 12,302
Data processing and 3,338 2,748 6,551 5,827
communications
Office supplies and expenses 3,215 3,847 6,333 6,870
Marketing and promotion 2,196 2,805 4,408 5,604
Travel and entertainment 2,887 2,891 5,464 4,878
Professional fees 1,829 1,672 4,257 3,513
Other 4,082 8,423 9,520 12,088
----------- ----------- ----------- -----------
Total non-interest expenses 68,406 83,271 135,268 149,935
----------- ----------- ----------- -----------
Net income before income taxes 20,964 46,189 38,373 74,079
----------- ----------- ----------- -----------
Income taxes (12,518) 19,312 (16,332) 30,889
----------- ----------- ----------- -----------
Net income $ 33,482 $ 26,877 $ 54,705 $ 43,190
=========== =========== =========== ===========
Per share data:
Basic $ 0.84 $ 1.58 $ 1.56 $ 2.56
=========== ========= ========= =========
Diluted $ 0.83 $ 1.55 $ 1.54 $ 2.51
=========== ========= ========= =========
Weighted average number of
shares - basic 40,000,162 16,980,679 35,015,205 16,866,454
Weighted average number of
shares - diluted 40,445,177 17,347,833 35,476,293 17,182,392
AMERICAN HOME MORTGAGE INVESTMENT CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
June 30, December 31,
2004 2003
-------------- ------------
Assets
Cash and cash equivalents $ 433,918 $ 53,148
Mortgage-backed securities 7,331,162 1,763,628
Mortgage loans held for sale, net 1,435,998 1,226,127
Mortgage servicing rights, net 141,818 117,784
Goodwill 88,799 83,445
Other assets 203,426 160,558
------------ ------------
Total assets $ 9,635,121 $ 3,404,690
============ ============
Liabilities
Warehouse lines of credit $ 672,456 $ 1,121,760
Reverse repurchase agreements 6,413,506 1,344,327
Commercial paper 1,047,036 --
Payable for securities purchased 423,909 259,701
Notes payable 107,237 99,655
Other liabilities 257,411 181,277
------------ ------------
Total liabilities 8,921,555 3,006,720
------------ ------------
Stockholders' equity 713,566 397,970
------------ ------------
Total liabilities and stockholders' equity $ 9,635,121 $ 3,404,690
============ ============
Number of shares outstanding - Basic 40,111,559 25,270,100
American Home Mortgage Investment Corp.
Fair Value of Financial Instruments
At June 30, 2004
---------------------------------------------
Unrecognized
Carrying Value Fair Value Gain
-------------- ---------- ------------
Assets:
Cash and cash equivalents $ 433,918 $ 433,918 $ --
Accounts receivable and servicing advances 100,489 100,489 --
Mortgage-backed securities 7,331,162 7,331,162 --
Mortgage loans
Taxable REIT Subsidiary 860,575 866,862 6,287
Qualified REIT Subsidiary 575,423 581,397 5,974
Mortgage servicing rights 141,818 145,122 3,304
Interest rate lock commitments
Taxable REIT Subsidiary 6,122 18,492 12,370
Qualified REIT Subsidiary -- 7,251 7,251
Other derivative assets 38,486 38,486 --
Liabilities:
Warehouse lines of credit $ 672,456 $ 672,456 $ --
Commercial paper 1,047,036 1,047,036 --
Notes payable 107,237 107,237 --
Drafts payable 86,300 86,300 --
Reverse repurchase agreements 6,413,506 6,404,286 9,220
Payable for securities purchased 423,909 423,909 --
Derivative liabilities 10,098 10,098 --
Total unrecognized gain $ 44,406