EXHIBIT 99.1
[AMERICAN HOME - LOGO]
FOR IMMEDIATE RELEASE
- ---------------------
American Home Mortgage Reports Third Quarter 2004 Results
Announces fully diluted earnings per share of $1.02
Board of Directors increases dividend policy to $0.66 per share per
quarter or $2.64 per share annualized
Increases 2004 earnings guidance to $3.55 per diluted share
Issues 2005 earnings guidance of $3.80 to $3.90 per diluted share
Common shareholder book value increases $0.63 per share to $18.42
Melville, NY (October 28, 2004) - American Home Mortgage Investment Corp. (NYSE:
AHM) announced today results for the third quarter and nine months ended
September 30, 2004.
FINANCIAL HIGHLIGHTS
- --------------------
Comparison of the Three Months Ended September 30, 2004 and 2003
o Revenue for the third quarter of 2004 was $111.3 million compared to
$121.9 million for the third quarter of 2003, a decrease of 8.7%.
o Net earnings for the third quarter were $42.9 million, compared to $18.7
million for the third quarter of 2003, an increase of 129.7%.
o Earnings per diluted share for the third quarter were $1.02 per share,
compared to $1.06 per share for the third quarter of 2003, a decrease of
3.8%.
o Dividends per common share for the third quarter were $0.61 compared to
$0.13 for the third quarter of 2003.
o Book value per common share was $18.42 as of September 30, 2004 compared
to $13.09 as of September 30, 2003.
Comparison of the Three Months Ended September 30, 2004 and June 30, 2004
o Revenue for the third quarter of 2004 was $111.3 million compared to $89.2
million for the second quarter of 2004, an increase of 24.7%.
o Net earnings for the third quarter were $42.9 million, compared to $33.5
million for the second quarter of 2004, an increase of 28.3%.
o Earnings per diluted share for the third quarter were $1.02 per share,
compared to $0.83 per share for the second quarter of 2004, an increase of
22.9%.
o Dividends per common share were $0.61 for the third quarter and second
quarter of 2004.
o Book value per common share was $18.42 as of September 30, 2004 compared
to $17.79 as of June 30, 2004.
Comparison of the Nine Months Ended September 30, 2004 and 2003
o Revenue for the first nine months of 2004 was $284.6 million compared to
$345.9 million for the first nine months of last year, a decrease of
17.7%.
o Net earnings for the first nine months of 2004 were $97.6 million,
compared to $61.9 million for the first nine months of 2003, an increase
of 57.8%.
o Earnings per diluted share for the first nine months of 2004 were $2.58
per share, compared to $3.57 per share for the first nine months of 2003,
a decrease of 27.7%.
o Dividends per common share for the first nine months of 2004 were $1.77
compared to $0.36 for the first nine months of 2003.
Michael Strauss, Chairman and Chief Executive Officer commented, "In many
respects, the third quarter was a breakout period for our Company. During the
quarter, net interest income grew to $32.9 million compared with $20.1 million
during the second quarter of 2004. In addition, the book value of our
mortgage-backed securities ("MBS") portfolio, excluding capital raises,
increased $59.5 million causing book value per common share to reach a record
$18.42. Loan production was $5.3 billion, down 25.4% compared to the $7.1
billion production level achieved during the third quarter of 2003, but
favorable given Fannie Mae's estimate that national loan production declined 51%
over the same comparison period. During the third quarter, lending to homebuyers
accounted for 64% of production, while refinancing dropped to 36% of production,
its lowest level since 2000. During the quarter we substantially increased the
size of our experienced sales force, adding 372 additional loan officers to our
ranks. These additions are expected to increase loan production during the
fourth quarter."
Mr. Strauss continued, "We are very pleased with the progress our company has
made since its conversion to a REIT last December. Our portfolio yield, driven
by selectively holding self-originated securities, has increased substantially.
In addition, our production franchise has expanded so that during the third
quarter, even as refinancing became a smaller portion of the market, our loan
production activity was a strong contributor to profits. We are especially
pleased that the combined prospects for our portfolio and origination businesses
have caused our Board of Directors to increase our dividend policy, while
enabling us to raise earnings guidance for 2004 and to provide positive earnings
guidance for 2005."
Third Quarter Results
- ---------------------
During the third quarter, the Company's mortgage-backed securities portfolio
averaged $7.2 billion, earned a net interest margin of 1.40%, and earned net
interest income of $24.7 million. This compares favorably to the second quarter
when the MBS portfolio averaged $4.8 billion, earned a net interest margin of
0.90% and earned net interest income of $10.7 million.
At September 30, the composition of the MBS portfolio by type of loan was 69.5%
5/1 ARMs, 16.6% short reset ARMs, and 13.9% 3/1 ARMs. The composition of the MBS
portfolio by credit quality based on Standard & Poor's ratings was 96.5% Agency
and AAA, 1.3% AA and A, and 2.2% BBB or lower or unrated. On September 30, the
MBS portfolio's duration, net of liabilities and hedges, was estimated to be
- -0.002 years, its projected average life was 2.4 years, and its average cost was
100.7% of par. During the quarter, the Company earned additional net interest
income on its loan inventory held pending sale or securitization of $12.6
million on an average inventory balance of $2.1 billion. During the second
quarter 2004, the Company earned $13.6 million of net interest income on its
loan inventory which had an average balance of $2.0 billion.
During the quarter, the Company securitized $2.7 billion of newly originated
loans through collateralized debt and agency pass-through transactions. The
collateralized debt obligations (CDOs) were structured to enhance the yield of
securities retained. Of the securities created, $1.4 billion were retained in
the MBS portfolio while $1.3 billion were sold for a cash gain of $29.4 million.
The $1.4 billion of retained securities had a projected yield of 4.02%, an
estimated duration of 1.73 years, an expected average life of 1.97 years, and
were valued at an average price of 102.4% of par, and created an unrealized gain
of $26.4 million. Changes to prepayment speeds and other factors may prevent the
projected yield, estimated duration or expected average life from being
realized. During the quarter, $1.7 billion of other securities were sold,
largely to make room for the higher-yielding, retained securities. The sold
securities resulted in a loss, net of discontinued hedges of the associated
liabilities of $4.6 million which reduced current period income by $0.11 per
share. The Company expects that it will continue to create higher yielding
securities from its originations using the CDO market, and that it will hold
these securities in substitution for lower yielding, primarily market-purchased
securities.
During the third quarter, loan production was $5.3 billion. Of the $5.3 billion,
64% of loans were to homebuyers while 36% were for refinancing. This compares
favorably to the second quarter of 2004 when 52% of production was for
refinancing, and very favorably to the third quarter of 2003 when 70% of
production was for refinancing. During the quarter, the Company estimates its
national market share reached 0.88% based on Fannie Mae's forecast of national
market size. This represents the Company's highest market share to date. During
the quarter, the Company experienced a material product shift toward ARM loans
as well as a shift toward Alternative A loans. During the quarter, 56% of
originations were ARMs and 16% of originations were Alternative A loans compared
to 49% ARMs and 10% Alternative A loans during this year's second quarter. The
Company favors originations of ARM loans, which are the loans it securitizes.
The Company sells virtually all of its fixed rate loan production, and
consequently typically does not securitize its fixed rate originations. During
the quarter, the Company sold $2.9 billion of non-securitized loans to third
parties for a gain of $28.4 million.
During the quarter, the Company's production franchise grew as a substantial
number of additional mortgage salespersons were hired and mortgage origination
offices were opened. Hiring and office openings resulted both from organic
growth initiatives and the Company's purchase of loan production offices from
Washington Mutual at the end of the second quarter of 2004. As of September 30,
the Company employed approximately 1,738 mortgage salespersons including call
center representatives, but excluding sales assistants, compared to
approximately 1,366 on June 30.
Loans serviced on September 30, 2004, including warehouse loans, reached 87,704
loans with a principal balance of $13.6 billion compared to 78,868 loans with a
principal balance of $11.6 billion on June 30. During the quarter, servicing
revenues were $9.8 million, direct servicing expenses were $2.5 million and
amortization and impairment was $12.6 million. During the quarter, servicing
experienced a loss of $2.9 million net of an associated tax benefit due to
impairment and amortization. The carrying value, net of impairment reserves, of
the servicing portfolio on September 30 was $160.4 million or 1.28% of the
unpaid principal balance or 3.6 times the weighted average servicing fee,
compared to $141.8 million or 1.39% of the unpaid principal balance or 3.9 times
the weighted average servicing fee at June 30. The market value of the servicing
portfolio was $163.0 million on September 30 and $145.1 million on June 30. On
September 30, the impairment reserve was $14.0 million, the weighted average
servicing fee was 0.354 percent, the weighted average life of the portfolio was
1.5 years, and the weighted average coupon was 5.41%.
The Company's total revenues for the quarter were $111.3 million. Of these
revenues, $32.9 million was from net interest income, $55.3 million was from
gains on sales to third parties of loans and securities backed by
self-originated loans, and from net mortgage origination fees. $28.9 million of
revenue was from unrealized gains on newly created mortgage securities that were
retained, $9.8 million was from mortgage servicing fees and ancillary revenues,
and $3.3 million was from other sources. Revenues were
reduced by the $4.6 million loss from sales of MBS portfolio securities and
discontinuation of hedges on the associated liabilities and by $12.6 million for
servicing amortization and impairment. During the quarter, the Company's
expenses were $78.3 million, and the Company's pre-tax profit was $32.9 million.
During the quarter the Company's taxable REIT subsidiary experienced a loss that
resulted in a tax benefit of $10.0 million. The loss was caused in part by
reduced fixed rate lending as compared to ARM lending. It was also caused by
servicing impairment and rapid amortization which together accounted for $3.8
million of the tax benefit. Tax benefits are not expected to continue in the
fourth quarter. Net income for the quarter was $42.9 million, preferred
dividends were $1.6 million and net income available to common stockholders was
$41.3 million, resulting in earnings per fully diluted common share of $1.02.
Book value attributable to common stockholders on September 30 was $740.1
million or $18.42 per common share.
During the quarter, the Company continued to build its leadership team.
Important additions to senior management included Kathleen Heck, David Friedman
and Tim Neer. Ms. Heck will become a member of the Eastern Division's executive
office, and will work with Eastern Division President John Manglardi and Eastern
Division Executive Vice President Tom Fiddler. Ms. Heck is a 15-year veteran of
the mortgage industry and has held senior positions at Washington Mutual, PNC
bank and Sears Mortgage Corporation. David Friedman will lead the Company's
servicing operations and will assume the role of Executive Vice President,
Mortgage Servicing. Mr. Friedman replaces Charlie Isenhour who recently retired.
He brings 25 years of industry experience, and most recently ran the servicing
operations of Provident Bank of Cincinnati, Ohio. Mr. Neer will fill a new role
as Director of Enterprise Risk Management and Policies and Procedures for the
Company. Mr. Neer was recently the Executive Director of Enterprise Program
Management at Homebanc and previously worked at Huntington Mortgage and Fleet
Mortgage.
Dividend Policy Increase and Dividend Tax Classification
- --------------------------------------------------------
The Company's Board of Directors sets dividend policy based on the Company's
projected GAAP earnings and cash-flow. Cash-flow is primarily generated from net
interest income, from the sale to third parties of loans and new,
self-originated securities, from applying leverage to retained self-originated
securities and to increases in the value of mortgage servicing assets, from loan
origination and loan servicing fees, and from other income. Cash-flow is used to
pay operating expenses, fund increases in working capital, make capital
expenditures, post securities and derivatives margins, and pay dividends.
The Company projects that its activities will generate sufficient cash-flow to
raise the dividend, while leaving intact additional cash-flow for expected and
contingent needs. Consequently, the Company's Board of Directors is changing the
Company's dividend policy to increase the quarterly dividend on common shares to
$0.66, or $2.64 annualized. It is expected that the first dividend of $0.66 per
common share will be payable in January, 2005. The Company's dividend policy
does not constitute an obligation to pay dividends, which only occurs when its
Board of Directors declares a dividend. The dividend policy is subject to
ongoing review by the Board of Directors based on the Company's business
prospects and financial condition, and the Board may, when it deems doing so is
advisable, lower or eliminate the dividend without prior notice.
The Company projects that a portion of the dividend it has paid out in 2004 will
be classified as a capital distribution as opposed to ordinary income for tax
purposes. This is a result of the Company's GAAP income and cash-flow exceeding
its taxable income. Taxable income is less than GAAP income and cash-flow
primarily because the sale of self-originated CDOs at prices above par, and the
retention and subsequent leveraging of self-originated CDOs and mortgage
servicing rights, create GAAP income and cash-flow, but do not create concurrent
tax income. Rather, these items create tax income over the life of the CDOs and
servicing assets. Based on results as of September 30, the Company estimates
that a portion of our dividends will be classified as capital distributions. For
many taxpayers, the portion of
dividend received as a capital distribution will reduce their basis in the stock
they hold in the Company as opposed to being ordinary, taxable income.
Stockholders should consult their tax advisors on how the portion of dividend
that will be classified as a capital distribution will affect them.
Earnings Outlook
- ----------------
The Company's earnings during the first nine months of 2004 were $2.58 per fully
diluted common share. In addition, the Company's net interest margins are
projected to reach or exceed third quarter levels, while loan production is
projected to exceed third quarter amounts and tax benefits are projected to
cease. Based on these factors, the Company is raising its full year 2004
earnings guidance to $3.55 per fully diluted common share.
The Company is also providing earnings guidance for the full year 2005 of $3.80
to $3.90 per fully diluted common share. The following projections are the
midpoint of the assumptions used in the EPS guidance:
2005 Earnings Outlook Projections
Midpoint Assumptions
of Forecast Range
---------------------
Volumes in Billions (In Billions)
---------------------
Average MBS Holdings $7.7 billion
Average loans held for sale 2.1 billion
Average servicing unpaid principal balance 18.1 billion
Loan originations 19.5 billion
(In millions)
---------------------
Net interest income adjusted for market value losses due to erosion of MBS
premiums and convexity associated with
MBS held in trading classification $ 140
Gain on sale to third parties of loans and self-originated securities 318
Other income 6
Servicing revenue, net of amortization and impairment 21
---------------------
Total revenue $ 485
Non-interest expense 316
Income tax expense 8
---------------------
Net earnings $ 161
Preferred dividends 5
---------------------
Earnings available to common shareholders $ 156
=====================
Average shares outstanding 40.6
Earnings per share $ 3.85
The Company could fail to achieve its earnings guidance, and may experience
losses due to any of a broad range of reasons, including market forces reducing
net interest income or asset values or both, credit delinquencies reducing
income and / or net asset values, loan production or production margins being
less than anticipated, expenses being higher than expected and other factors.
Other Third Quarter Highlights
- ------------------------------
The Company completed its renaming initiative, and now operates all of its
retail offices under the American Home Mortgage brand.
The Company closed on a new warehouse and servicing credit facility of $600
million with a bank syndicate led by Bank of America. The warehouse facility
replaces a maturing facility that was more expensive, and provided less
favorable terms.
The Company has substantially completed its self-assessment and testing of
internal controls pursuant to Sarbanes-Oxley. Its self-assessment and testing of
controls are now being reviewed by its external auditor.
CONFERENCE CALL TODAY
American Home will hold an investor conference call to discuss earnings at 10:30
a.m., Eastern Time, today, October 28, 2004. Interested parties may listen to
the call by visiting the American Home corporate website, www.americanhm.com,
Investor 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, October 28,
2004, through midnight Eastern Time on November 12, 2004. The online broadcast
will be available on the site through November 12, 2004. American Home's third
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 Website 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, and expressly disclaims 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. AND SUBSIDIARIES
OPERATING STATISTICS
Three Months Ended
--------------------------------------------------------
September 30, June 30, March 31,
2004 2004 2004
----------------- ----------------- -----------------
Mortgage-Backed Securities Holdings Segment:*
--------------------------------------------------------
Average mortgage-backed securities held $7.2 billion $4.8 billion $2.0 billion
Average portfolio yield 3.7% 3.4% 3.1%
Average cost of funds and hedges 2.5% 2.7% 2.1%
Net interest margin 1.4% 0.9% 1.2%
Mortgage-backed securities held - end of period $7.3 billion $7.3 billion $4.0 billion
Average cost of mortgage-backed securities 100.7% 100.8% 101.6%
Period end duration gap (in years) (0.002) (0.04) 0.04
* - Excludes loans held pending securitization
Loan Origination Segment:
--------------------------------------------------------
Loan originations $5.3 billion $6.6 billion $4.4 billion
Refinance 36% 52% 57%
ARM 56% 49% 35%
Loans securitized and held $1.4 billion $1.5 billion $0.9 billion
Loans securitized and sold $1.3 billion $0.6 billion $0.1 billion
Loans sold to third parties $2.9 billion $4.5 billion $3.4 billion
Applications accepted $8.7 billion $8.8 billion $9.1 billion
Application pipeline $6.5 billion $6.5 billion $7.3 billion
September 30, June 30, March 31,
2004 2004 2004
----------------- ----------------- -----------------
Loan Servicing Segment:
--------------------------------------------------------
Loan servicing portfolio - total with warehouse $13.6 billion $11.6 billion $10.3 billion
Loan servicing portfolio - loans sold or securitized $12.5 billion $10.2 billion $9.0 billion
Weighted average note rate 5.41% 5.39% 5.58%
Weighted average service fee 0.354% 0.358% 0.363%
Average age (in months) 18 20 26
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
OPERATING STATISTICS
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------- -------------------------------
2004 2003 2004 2003
-------------- -------------- --------------- --------------
Mortgage-Backed Securities Holdings Segment:*
- --------------------------------------------------------
Average mortgage-backed securities held $7.2 billion -- $4.7 billion --
Average portfolio yield 3.7% -- 3.5% --
Average cost of funds and hedges 2.5% -- 2.5% --
Net interest margin 1.4% -- 1.2% --
Mortgage-backed securities held - end of period $7.3 billion --
Average cost of mortgage-backed securities 100.7% --
Period end duration gap (in years) (0.002) --
* - Excludes loans held pending securitization
Loan Origination Segment:
- --------------------------------------------------------
Loan originations $5.3 billion $7.1 billion $16.3 billion $17.5 billion
Refinance 36% 70% 48% 70%
ARM 56% 22% 47% 17%
Loans securitized and held $1.4 billion -- $2.6 billion --
Loans securitized and sold $1.3 billion -- $3.1 billion --
Loans sold to third parties $2.9 billion $7.0 billion $10.7 billion $16.7 billion
Applications accepted $8.7 billion $7.0 billion $26.6 billion $24.5 billion
Application pipeline $6.5 billion $5.2 billion
September 30,
-------------------------------
2004 2003
-------------- --------------
Loan Servicing Segment:
- --------------------------------------------------------
Loan servicing portfolio - total with warehouse $13.6 billion $9.4 billion
Loan servicing portfolio - loans sold or securitized $12.5 billion $7.8 billion
Weighted average note rate 5.41% 5.94%
Weighted average service fee 0.354% 0.340%
Average age (in months) 18 28
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ -------------------------
2004 2003 2004 2003
--------- --------- --------- ---------
Net interest income:
Interest income $ 94,298 $ 29,693 $ 198,347 $ 76,117
Interest expense (61,405) (16,009) (132,596) (38,790)
--------- --------- --------- ---------
Total net interest income 32,893 13,684 65,751 37,327
--------- --------- --------- ---------
Non-interest income:
Gain on sales of mortgage loans 28,373 105,577 98,095 323,070
Gain on sales of mortgage-backed securities and derivatives 22,341 -- 37,310 --
Unrealized gain on mortgage-backed securities and derivatives 27,069 -- 82,041 --
Loan servicing fees 9,822 8,306 28,870 29,255
Amortization (7,755) (14,903) (22,865) (44,958)
Impairment reserve recovery (provision) (4,807) 7,825 (10,139) (4,360)
--------- --------- --------- ---------
Net loan servicing fees (loss) (2,740) 1,228 (4,134) (20,063)
--------- --------- --------- ---------
Other non-interest income 3,349 1,423 5,553 5,592
--------- --------- --------- ---------
Total non-interest income 78,392 108,228 218,865 308,599
--------- --------- --------- ---------
Non-interest expenses:
Salaries, commissions and benefits, net 46,482 62,698 128,805 161,551
Occupancy and equipment 9,984 7,340 26,086 19,642
Data processing and communications 3,745 3,682 10,296 9,509
Office supplies and expenses 3,012 3,557 9,345 10,427
Marketing and promotion 2,610 3,232 7,018 8,836
Travel and entertainment 3,620 3,122 9,084 8,000
Professional fees 2,524 2,319 6,781 5,832
Other 6,363 5,153 15,883 17,241
--------- --------- --------- ---------
Total non-interest expenses 78,340 91,103 213,298 241,038
--------- --------- --------- ---------
Net income before income tax (benefit) expense 32,945 30,809 71,318 104,888
Income tax (benefit) expense (9,998) 12,115 (26,330) 43,004
--------- --------- --------- ---------
Net income 42,943 18,694 97,648 61,884
--------- --------- --------- ---------
Dividends on preferred stock 1,648 -- 1,648 --
--------- --------- --------- ---------
Net income available to common shareholders $ 41,295 $ 18,694 $ 96,000 $ 61,884
========= ========= ========= =========
Per share data:
Basic $ 1.03 $ 1.08 $ 2.61 $ 3.64
Diluted $ 1.02 $ 1.06 $ 2.58 $ 3.57
Weighted average number of shares - basic 40,145 17,272 36,737 17,003
Weighted average number of shares - diluted 40,605 17,705 37,198 17,358
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share amounts)
Three Months Ended
---------------------------------------------
September 30, June 30, March 31,
2004 2004 2004
------------ -------- --------
Net interest income:
Interest income $ 94,298 $ 69,999 $ 34,050
Interest expense (61,405) (49,913) (21,278)
-------- -------- --------
Total net interest income 32,893 20,086 12,772
-------- -------- --------
Non-interest income:
Gain on sales of mortgage loans 28,373 17,141 52,581
Gain on sales of mortgage-backed securities and derivatives 22,341 6,481 8,488
Unrealized gain on mortgage-backed securities and derivatives 27,069 36,063 18,909
Loan servicing fees 9,822 8,730 10,318
Amortization (7,755) (7,764) (7,346)
Impairment reserve recovery (provision) (4,807) 7,252 (12,584)
-------- -------- --------
Net loan servicing fees (loss) (2,740) 8,218 (9,612)
-------- -------- --------
Other non-interest income 3,349 1,226 978
-------- -------- --------
Total non-interest income 78,392 69,129 71,344
-------- -------- --------
Non-interest expenses:
Salaries, commissions and benefits, net 46,482 42,696 39,627
Occupancy and equipment 9,984 8,008 8,094
Data processing and communications 3,745 3,338 3,213
Office supplies and expenses 3,012 3,215 3,118
Marketing and promotion 2,610 2,196 2,212
Travel and entertainment 3,620 2,887 2,577
Professional fees 2,524 1,829 2,428
Other 6,363 4,082 5,438
-------- -------- --------
Total non-interest expenses 78,340 68,251 66,707
-------- -------- --------
Net income before income tax benefit 32,945 20,964 17,409
Income tax benefit (9,998) (12,518) (3,814)
-------- -------- --------
Net income 42,943 33,482 21,223
-------- -------- --------
Dividends on preferred stock 1,648 -- --
-------- -------- --------
Net income available to common shareholders $ 41,295 $ 33,482 $ 21,223
======== ======== ========
Per share data:
Basic $ 1.03 $ 0.84 $ 0.71
Diluted $ 1.02 $ 0.83 $ 0.70
Weighted average number of shares - basic 40,145 40,000 30,030
Weighted average number of shares - diluted 40,605 40,445 30,508
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands, except per share amounts)
September 30, June 30, December 31,
2004 2004 2003
------------- ------------ ------------
Assets:
Cash and due from banks $ 118,441 $ 433,918 $ 53,148
Money market investments 68,039 -- --
------------ ------------ ------------
Cash and cash equivalents 186,480 433,918 53,148
------------ ------------ ------------
Accounts receivable and servicing advances 101,105 100,489 84,311
Mortgage-backed securities 7,331,888 7,331,162 1,763,628
Mortgage loans held for sale, net 1,131,661 1,423,132 1,216,353
Derivative assets 11,630 57,474 30,611
Mortgage servicing rights, net 160,435 141,818 117,784
Premises and equipment, net 47,955 44,541 41,738
Goodwill 89,196 88,799 83,445
Other assets 16,645 13,788 13,672
------------ ------------ ------------
Total assets $ 9,076,995 $ 9,635,121 $ 3,404,690
============ ============ ============
Liabilities and Stockholders' Equity:
Liabilities:
Warehouse lines of credit $ 547,584 $ 672,456 $ 1,121,760
Drafts payable 45,526 86,300 25,625
Commercial paper 462,712 1,047,036 --
Reverse repurchase agreements 6,899,024 6,413,506 1,344,327
Payable for securities purchased -- 423,909 259,701
Derivative liabilities 18,237 10,098 12,694
Accrued expenses and other liabilities 154,339 119,885 76,156
Notes payable 128,448 107,237 99,655
Income taxes payable 30,133 41,128 66,802
------------ ------------ ------------
Total liabilities 8,286,003 8,921,555 3,006,720
------------ ------------ ------------
Stockholders' Equity:
Preferred stock 22 -- --
Common stock 402 401 252
Additional paid-in capital - preferred 50,835 -- --
Additional paid-in capital - common 629,807 629,203 281,432
Retained earnings 151,297 134,515 121,029
Accumulated other comprehensive loss (41,371) (50,553) (4,743)
------------ ------------ ------------
Total stockholders' equity 790,992 713,566 397,970
------------ ------------ ------------
Total liabilities and stockholders' equity $ 9,076,995 $ 9,635,121 $ 3,404,690
============ ============ ============
Number of shares outstanding - preferred 2,150,000 -- --
Number of shares outstanding - common 40,184,333 40,111,559 25,270,100
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)
(In thousands)
Three Months Ended Nine Months Ended
------------------------------------------------ -------------------
September 30, June 30, March 31, September 30,
2004 2004 2004 2004
------------- ----------- ----------- -------------
Preferred stock
Balance at beginning of period $ -- $ -- $ -- $ --
Issuance of preferred stock - offering 22 -- -- 22
----------- ----------- ----------- -----------
Balance at end of period $ 22 $ -- $ -- $ 22
----------- ----------- ----------- -----------
Common stock
Balance at beginning of period $ 401 $ 399 $ 252 $ 252
Issuance of common stock - earnouts -- 2 -- 2
Issuance of common stock - Omnibus Stock Plan 1 -- 3 4
Issuance of common stock - offering -- -- 144 144
----------- ----------- ----------- -----------
Balance at end of period $ 402 $ 401 $ 399 $ 402
----------- ----------- ----------- -----------
Additional paid-in capital - preferred stock
Balance at beginning of period $ -- $ -- $ -- $ --
Issuance of preferred stock - offering 50,835 -- -- 50,835
----------- ----------- ----------- -----------
Balance at end of period $ 50,835 $ -- $ -- $ 50,835
----------- ----------- ----------- -----------
Additional paid-in capital - common stock
Balance at beginning of period $ 629,203 $ 623,953 $ 281,432 $ 281,432
Issuance of common stock - earnouts 151 4,583 109 4,843
Issuance of common stock - Omnibus Stock Plan 374 331 978 1,683
Issuance of common stock - offering -- -- 339,647 339,647
Tax benefit from stock options exercised -- -- 1,599 1,599
Restricted shares amortization 79 336 188 603
----------- ----------- ----------- -----------
Balance at end of period $ 629,807 $ 629,203 $ 623,953 $ 629,807
----------- ----------- ----------- -----------
Retained earnings
Balance at beginning of period $ 134,515 $ 125,504 $ 121,029 $ 121,029
Net income 42,943 33,482 21,223 97,648
Dividends declared (26,161) (24,471) (16,748) (67,380)
----------- ----------- ----------- -----------
Balance at end of period $ 151,297 $ 134,515 $ 125,504 $ 151,297
----------- ----------- ----------- -----------
Other comprehensive loss
Balance at beginning of period $ (50,553) $ (8,675) $ (4,743) $ (4,743)
Unrealized gain (loss) on mortgage-backed securities 52,945 (61,386) 10,221 1,780
(Loss) gain on cash flow hedges, net of amortization (43,763) 19,508 (14,153) (38,408)
----------- ----------- ----------- -----------
Balance at end of period $ (41,371) $ (50,553) $ (8,675) $ (41,371)
----------- ----------- ----------- -----------
Total stockholders' equity $ 790,992 $ 713,566 $ 741,181 $ 790,992
=========== =========== =========== ===========
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Nine Months
Three Months Ended Ended
--------------------------------------------- -------------
September 30, June 30, March 31, September 30,
2004 2004 2004 2004
--------------------------------------------- -------------
Cash flows from operating activities:
Net income $ 42,943 $ 33,482 $ 21,223 $ 97,648
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 2,151 1,988 1,977 6,116
Amortization and impairment of mortgage servicing rights 12,562 512 19,930 33,004
Amortization of mortgage-backed securities premiums, net 9,477 7,330 2,952 19,759
Unrealized (loss) gain on securities held in trading (23,916) 2,423 (18,909) (40,402)
Unrealized gain (loss) on free standing derivatives 20,128 (41,451) -- (21,323)
Capitalization of mortgage servicing rights (31,179) (28,811) (15,665) (75,655)
Capitalized interest rate lock commitments 6,349 28,687 2,210 37,246
(Increase) decrease in deferred origination costs (3,894) 8,610 (7,560) (2,844)
Other (9,681) 2,724 (2,089) (9,046)
(Increase) decrease in operating assets:
Accounts receivable and servicing advances (616) (20,063) 3,885 (16,794)
Other assets (2,857) (1,575) 1,703 (2,729)
Increase (decrease) in operating liabilities:
Accrued expenses and other liabilities 32,761 41,252 (8,092) 65,921
Income taxes payable (10,995) (12,561) (13,113) (36,669)
Forward delivery contracts (9,004) 9,249 (5,809) (5,564)
--------------------------------------------- -------------
Net cash from operating activities excluding loans
held for sale 34,229 31,796 (17,357) 48,668
--------------------------------------------- -------------
Origination of mortgage loans held for sale (2,688,820) (4,458,196) (3,240,687) (10,387,703)
Proceeds from sales of mortgage loans 2,809,156 4,643,542 3,292,010 10,744,708
--------------------------------------------- -------------
Net cash provided by operating activities 154,565 217,142 33,966 405,673
--------------------------------------------- -------------
Cash flows from investing activities:
Purchases of premises and equipment, net (5,565) (5,295) (1,473) (12,333)
Origination of mortgage loans held for securitization (2,603,371) (2,161,446) (1,172,487) (5,937,304)
Proceeds from securitizations of mortgage loans 2,779,409 1,892,031 978,128 5,649,568
Purchases and additions to mortgage-backed securities (3,317,250) (4,637,358) (3,064,485) (11,019,093)
Proceeds from sales of mortgage-backed securities 2,986,182 947,659 787,486 4,721,327
Principal repayments on mortgage-backed securities 397,727 292,487 63,719 753,933
Other -- 109 (353) (244)
--------------------------------------------- -------------
Net cash provided by (used in) investing activities 237,132 (3,671,813) (2,409,465) (5,844,146)
--------------------------------------------- -------------
Cash flows from financing activities:
(Decrease) increase in warehouse lines of credit (124,872) (579,389) 130,085 (574,176)
Increase in reverse repurchase agreements 485,518 3,018,565 2,050,614 5,554,697
(Decrease) increase in payable for securities purchased (423,909) 289,262 (125,054) (259,701)
(Decrease) increase in commercial paper (584,324) 1,047,036 -- 462,712
(Decrease) increase in drafts payable (40,774) 21,990 38,685 19,901
Proceeds from issuance of preferred stock 52,057 -- -- 52,057
Proceeds from issuance of capital stock 426 329 341,882 342,637
Dividends paid (24,468) (7,575) (23,072) (55,115)
Increase in notes payable 21,211 814 6,768 28,793
--------------------------------------------- -------------
Net cash (used in) provided by financing activities (639,135) 3,791,032 2,419,908 5,571,805
--------------------------------------------- -------------
Net (decrease) increase in cash and cash equivalents (247,438) 336,361 44,409 133,332
Cash and cash equivalents, beginning of period 433,918 97,557 53,148 53,148
--------------------------------------------- -------------
Cash and cash equivalents, end of period $ 186,480 $ 433,918 $ 97,557 $ 186,480
============================================= =============
Supplemental disclosure of cash flow information:
Interest paid $ 28,887 $ 23,344 $ 13,254 $ 65,485
Income taxes paid 996 -- 6,361 7,357
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
FAIR VALUE OF FINANCIAL INSTRUMENTS
(In thousands)
September 30, 2004
--------------------------------------------------------------
Fair Value in
Excess of
Carrying Value Fair Value Carrying Value
------------------ -------------- ---------------
Assets:
Cash and cash equivalents $ 186,480 $ 186,480 $ --
Accounts receivable and servicing advances 101,105 101,105 --
Mortgage-backed securities 7,331,888 7,331,888 --
Mortgage loans held for sale, net 1,131,661 1,148,827 17,166
Mortgage servicing rights, net 160,435 163,047 2,612
Derivative assets* 11,630 37,159 25,529
----------
$ 45,307
----------
Carrying Value
in Excess of
Fair Value
---------------
Liabilities:
Warehouse lines of credit $ 547,584 $ 547,584 $ --
Commercial paper 462,712 462,712 --
Notes payable 128,448 128,448 --
Drafts payable 45,526 45,526 --
Reverse repurchase agreements 6,899,024 6,892,190 6,834
Derivative liabilities 18,237 18,237 --
----------
$ 6,834
----------
$ 52,141
==========
* Derivative assets consists of interest rate lock commitments ("IRLCs") to
fund mortgage loans. The carrying value excludes the value of the mortgage
servicing rights ("MSRs") attached to the IRLCs in accordance with SEC
Staff Accounting Bulletin No. 10