EXHIBIT 99.1
[AMERICAN HOME MORTGAGE LOGO]
FOR IMMEDIATE RELEASE
- ---------------------
American Home Mortgage Announces Second Quarter Results
Quarterly earnings are $1.52 per diluted share
Quarterly earnings excluding tax benefit are $1.43 per diluted share
Dividend policy increased $0.10 per quarter to $0.86 per share,
or $3.44 per share annually
2005 adjusted earnings guidance increased to $4.60 to $4.80 per diluted share
(2005 earnings guidance in accordance with GAAP increased to $6.35 to
$6.55 per diluted share)
2006 earnings guidance is $4.85 to $5.15 per diluted share
Quarterly loan production reaches a record $10.8 billion
Company announces changes to its asset retention strategy
and its securitization structuring strategy
Melville, NY (July 19, 2005) - American Home Mortgage Investment Corp. (NYSE:
AHM) announced today results for the quarter ended June 30, 2005.
FINANCIAL HIGHLIGHTS
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Comparison of the Three Months Ended June 30, 2005 and 2004
o Revenue for the second quarter of 2005 was $203.3 million compared to
revenue of $89.2 million for the second quarter of 2004, an increase of
127.9%.
o Net earnings for the second quarter of 2005 were $65.5 million compared to
net earnings of $33.5 million for the second quarter of 2004, an increase
of 95.6%.
o Earnings per diluted share for the second quarter of 2005 were $1.52
compared to earnings per diluted share of $0.83 for the second quarter of
2004, an increase of 83.1%.
o Dividends per common share for the second quarter of 2005 were $0.76,
compared to $0.61 for the second quarter of 2004, an increase of 24.6%.
o Book value per common share was $20.21 at June 30, 2005, compared to
$17.79 per share at June 30, 2004, an increase of 13.6%.
Comparison of the Three Months Ended June 30, 2005 and March 31, 2005
o Revenue for the second quarter of 2005 was $203.3 million compared to
adjusted revenue of $164.0 million for the first quarter of 2005, an
increase of 24.0%. GAAP revenue for the first quarter of 2005 totaled
$235.3 million.
o Net earnings for the second quarter of 2005 were $65.5 million compared to
adjusted net earnings of $54.0 million for the first quarter of 2005, an
increase of 21.2%. GAAP net earnings for the first quarter of 2005 totaled
$125.4 million.
o Earnings per diluted share for the second quarter of 2005 were $1.52
compared to adjusted earnings per diluted share of $1.24 for the first
quarter of 2005, an increase of 22.6%. GAAP earnings per diluted share for
the first quarter of 2005 were $2.99.
o Dividends per common share for the second quarter of 2005 were $0.76,
compared to $0.71 for the first quarter of 2005, an increase of 7.0%.
o Book value per common share was $20.21 at June 30, 2005, compared to book
value per common share of $19.41 at March 31, 2005, an increase of 4.1%.
Comparison of the Six Months Ended June 30, 2005 and 2004
o Adjusted revenue for the six months ended June 30, 2005 was $367.3 million
compared to revenue of $173.3 million for the six months ended June 30,
2004, an increase of 111.9%. GAAP revenue for the six months ended June
30, 2005 totaled $438.6 million.
o Adjusted net earnings for the six months ended June 30, 2005 were $119.5
million compared to net earnings of $54.7 million for the six months ended
June 30, 2004, an increase of 118.5%. GAAP net earnings for the six months
ended June 30, 2005 totaled $190.9 million.
o Adjusted earnings per diluted share for the six months ended June 30, 2005
were $2.76 compared to earnings per diluted share of $1.54 for the six
months ended June 30, 2004, an increase of 79.2%. GAAP earnings per
diluted share for the six months ended June 30, 2005 were $4.51.
o Dividends per common share for the six months ended June 30, 2005 were
$1.47, compared to $1.16 for the six months ended June 30, 2004, an
increase of 26.7%.
o Book value per common share was $20.21 at June 30, 2005, compared to
$17.79 per share at June 30, 2004, an increase of 13.6%.
Michael Strauss, American Home's Chief Executive Officer, commented, "I am very
pleased with our company's strong results for the second quarter, including
earnings per diluted share reaching $1.52. During the quarter, our holdings and
originations businesses earned solid profits, while our servicing segment
experienced a loss as falling mortgage rates resulted in impairment of our
servicing assets. Of special note in the quarter was the success of our
origination business, which achieved loan production of $10.8 billion and an
estimated market share of 1.58%, both records for our company. I would like to
congratulate and thank our production officers and staff for their continued
exceptional performance.
During this third quarter, our company is making important changes in how we
select the self-originated assets we choose to retain, and how we structure and
consequently account for our securitizations. One specific change is that, going
forward, we will structure our securitizations so they will be accounted for as
financings rather than sales. These changes offer many potential benefits,
including likely further enhancements to ongoing net interest income, but will
reduce quarterly earnings in the near-term from what they otherwise might have
been. I am happy to report, however, that the trends in our overall business are
strong enough so that we now project that our 2005 earnings will exceed our
previous 2005 earnings guidance, even given the impact of the changes we are
making. Details about the changes are described below.
I am delighted to announce that, based on our company's financial results and
prospects, our Board of Directors has raised our quarterly dividend policy to
$0.86 per share, equal to an annualized rate of $3.44 per share. This is the
tenth increase in our quarterly dividend policy since we began paying dividends
in April 2001. Also, I am pleased
2
to announce an upward revision in our company's earnings guidance for 2005, and
positive earnings guidance for 2006, the specifics of which are discussed below.
CHANGES TO ASSET RETENTION STRATEGY
- -----------------------------------
American Home's originations have included approximately half adjustable and
half fixed rate loans. To build its portfolio, American Home has been retaining
securities backed by most of the adjustable rate loans it has originated. Now
that its portfolio is developed, American Home will become more selective about
the types of adjustable, securitized loans it retains, and will concentrate on
those loans which offer the best risk-to-return profile. By concentrating on
such loans, American Home believes it has an ongoing opportunity to continue to
materially increase the yield on its mortgage-backed securities portfolio by
substituting more selectively chosen securitized loans for the broader spectrum
of securitized adjustable loans currently being held. As a result of this
change, American Home expects that, going forward, it will retain securitized
interests in approximately 20% to 30% of its total new loan production compared
to its current practice of retaining securitized interests in 45% to 55% of
total production. As it becomes more selective in the assets it retains,
American Home will continue its focus on loans with high credit quality and
limited exposure to convexity risk.
Tom McDonagh, American Home's Chief Investment Officer, commented, "Different
loans offer different projected returns on equity and different variance
distributions around the projected returns on equity. Factors contributing to
these different risk-to-return profiles include a loan's product type, whether
the loan has a prepayment penalty and whether the borrower paid a discount at
settlement. American Home's portfolio is now developed to the point where we can
more narrowly focus our retention on loans with advantaged risk-to-return
profiles."
CHANGES TO SECURITIZATION STRUCTURING AND
CONSEQUENT CHANGES TO SECURITIZATION ACCOUNTING
- -----------------------------------------------
Beginning in the third quarter, American Home will generally change the way it
structures its securitizations so the securitizations will be accounted for as
financings rather than sales under Statement of Financial Accounting Standards
No. 140 ("SFAS 140"). This change is expected to, over time, increase American
Home's ongoing net interest income, while reducing the potential for earnings
volatility due to valuation adjustments. As a result of the change, income from
self-originated securitized loans will only be recognized as payments become due
on the loans, and securitized loans will initially be carried at their cost
rather than the securities' market value. The change is expected to reduce
quarterly income over the near-term, since the Company will no longer recognize
a current period gain on the loans it securitizes, but will still recognize
current period non-direct origination costs associated with the loans. The
change's forecasted impact on the Company's earnings has been included in the
Company's 2005 and 2006 earnings guidance. An additional impact of the change is
that securitized loans will, going forward, be carried as balance sheet assets,
while sold securities will be carried as balance sheet liabilities. The change
will not apply to those securitizations where American Home sells all of the
resulting securities, as these securitizations will continue to generally be
structured so they are accounted for as sales under SFAS 140. Additionally,
during this third quarter, a portion of securitized loans will continue to be
treated as sales, due to the Company's need to fill the pre-funding balance of
its second quarter securitization, and to make other adjustments to transition
to the new securitization structure.
Steve Hozie, American Home's Chief Financial Officer, commented, "Structuring
our new, retained securitizations so they will be accounted for as financings
should increase the yield from those securitizations since they will initially
be booked at their carrying cost rather than their market value, and
consequently will incur less
3
amortization cost. The result is that accounting for our securitizations as
financings offers the potential that each quarter's securitizations will
increase our net interest income until such time as all of our self-originated
assets are carried at cost. I also believe accounting for our securitizations as
financings will illustrate for stockholders that our origination business is
strong enough to produce assets to increase the yield from our portfolio, while
simultaneously absorbing the non-direct costs of producing those assets, and
earning a substantial overall origination profit."
SECOND QUARTER RESULTS
- ----------------------
During the second quarter of 2005, American Home's mortgage-backed securities
("MBS") portfolio averaged $6.8 billion, and earned a net interest margin of
1.48%, resulting in net interest income of $24.9 million. By comparison, during
the first quarter of 2005, the adjusted MBS portfolio averaged $7.4 billion and
earned an adjusted net interest margin of 1.70% resulting in adjusted net
interest income of $31.5 million. Tom McDonagh commented, "During the quarter,
sharp movements in interest rates resulted in unusually high convexity costs
which caused our annualized return to decline slightly, by 22 basis points on
assets, or roughly 2.7% on equity. Still, the fact that our return was
substantially sustained, even as interest rates moved sharply illustrates the
benefit of our duration neutral, shape-of-the-yield curve neutral strategy. I
would expect our net interest margin to recover if interest rate movements are
less severe during the third quarter."
During the second quarter of 2005, the Company's inventory of warehouse loans
pending sale or securitization averaged $3.9 billion, earned a net interest
margin of 2.37% and earned net interest income of $22.5 million. This compares
with an adjusted average balance of $2.8 billion, an adjusted net interest
margin of 2.70% and adjusted net interest income of $18.9 million in the first
quarter of 2005. During the second quarter, the Company had interest expense on
servicing financing and other obligations of $2.4 million compared to $1.8
million during the first quarter of 2005.
At June 30, 2005, the composition of the Company's MBS portfolio by type of loan
was 69.2% 5/1 adjustable-rate mortgages (ARMs), 22.1% short reset ARMs, and 8.7%
3/1 ARMs. The composition of the MBS portfolio by credit quality based on
Standard & Poor's ratings was 90.5% Agency and AAA, 5.9% AA, A, and BBB and 3.6%
unrated. On June 30, 2005, the MBS portfolio's duration, net of liabilities and
hedges, was estimated to be 0.08 years and its projected average life was 2.06
years.
During the second quarter, the Company's loan production was $10.8 billion. Of
the $10.8 billion, 59% of loans were to homebuyers while 41% were for
refinancing. During the quarter, the Company estimates its national market share
reached 1.58% based on Freddie Mac's recent forecast of national market size,
compared to 1.23% in the first quarter of 2005 and 0.90% during the second
quarter of 2004. At June 30, 2005, the Company employed approximately 2,334 loan
officers and account executives, including call center representatives, but
excluding sales assistants, compared to approximately 2,143 on March 31, 2005.
During the quarter, the Company securitized $5.8 billion of newly originated
loans. Of the securities created, $5.4 billion were sold for a gain of $104.4
million, while net associated hedges resulted in a realized loss of $3.3
million, and an unrealized loss of $4.1 million. Additionally, $463 million of
the securities created were retained for a gain of $8.5 million, while
associated hedges were sold for a loss of $0.3 million. The $463 million of
retained securities had a projected yield of 6.64%, an estimated duration of 2.4
years, an expected average life of 2.2 years, and were valued at an average
market value of 96.8% of par. Changes to prepayment speeds and other factors may
prevent the projected yield, estimated duration or expected average life from
being realized. Also during the quarter, the Company sold $4.5 billion of
non-securitized, primarily fixed-rate loans to third parties for a net gain of
$77.4 million including net mortgage origination fees.
4
During the quarter, the Company recognized realized and unrealized losses, net
of hedges on the value of its securities portfolio of $11.4 million, of which,
$10.5 was charged to current period income, and $0.9 million resulted in other
comprehensive loss.
During the quarter the company's servicing operations experienced a loss
primarily due to lower interest rates causing impairment of the Company's
servicing asset. During the quarter, servicing fees and ancillary income were
$16.9 million, while amortization was $12.8 million and impairment was $20.4
million. Consequently servicing fees net of amortization and impairment resulted
in a pretax loss of $16.3 million or $9.9 million, net of taxes. At the end of
the quarter the notional amount of the loans being serviced including warehouse
loans was $24.7 billion compared to $19.9 billion at the end of the first
quarter.
The Company's total revenues for the quarter were $203.3 million. Of these
revenues, $45.0 million was from net interest income, $77.4 million was from
gains on sales of loans to third parties and from net mortgage origination fees,
$104.4 million was from gains on sales of newly securitized loans reduced by
$3.3 million of realized losses and $4.1 million of unrealized losses on
associated hedges, $8.5 million was from unrealized gains on securities created
and retained during the quarter reduced by $0.3 million of realized losses on
associated hedges, $16.9 million was from mortgage servicing fees, and $2.5
million was from other sources. Revenues were decreased by $10.5 million of
realized and unrealized losses on mortgage-backed securities, net of hedges, and
by $33.2 million of servicing amortization and impairment. During the quarter,
the Company's expenses were $141.7 million, and the Company's pre-tax profit was
$61.6 million. During the quarter, the Company's taxable subsidiary experienced
a loss of $11.0 million, primarily as a result of the servicing impairment
expense of $20.4 million. As a result, the Company had a net tax benefit in the
quarter of $3.9 million. Net income for the quarter was $65.5 million, preferred
dividends were $3.3 million and net income available to common stockholders was
$62.2 million, resulting in earnings per diluted share of $1.52. Book value
attributable to common stockholders on June 30, 2005 was $819.1 million, or
$20.21 per common share compared to $782.9 million, or $19.41 per common share
on March 31, 2005.
DIVIDEND POLICY INCREASE
- ------------------------
The Company's Board of Directors sets dividend policy based primarily on the
Company's projected earnings and cash flow. Cash flow is primarily generated
from net interest income, from the sale to third parties of loans and newly
originated securities, from applying leverage to retained newly originated
securities and to increases in the value of mortgage servicing rights and
securities held, and from loan servicing and loan origination fees. Cash flow is
used to pay operating expenses, fund increases in working capital, make capital
expenditures, post securities and derivatives margins and pay preferred and
common dividends.
Based on the Company's projections for earnings and cash flow, the Company's
Board of Directors has changed the Company's dividend policy to increase the
quarterly dividend on its common stock to $0.86 per share, or $3.44 per share
annualized. It is expected that the first dividend of $0.86 per common share
will be payable in October 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, among other things, the Company's business
prospects, financial condition, earnings projections and cash flow projections,
and the Board may, when it deems doing so is advisable, lower or eliminate the
dividend without prior notice.
5
EARNINGS GUIDANCE
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American Home is raising its 2005 adjusted earnings guidance to $4.60 to $4.80
per diluted share. American Home is also issuing earnings guidance for 2006 of
$4.85 to $5.15 per diluted share. Included in the earnings guidance is the
projected impact of the Company accounting for retained securitizations as
financings rather than sales. The 2005 revised adjusted earnings guidance
anticipates loan originations of $36.0 billion to $39.0 billion. The 2006
earnings guidance anticipates loan originations of $38.0 billion to $42.0
billion.
OTHER SECOND QUARTER HIGHLIGHTS
- -------------------------------
During the quarter, the Company launched a correspondent channel to complement
its retail and wholesale origination capabilities. The correspondent channel
will be led by Rick Pishalski, who previously managed correspondent lending at
E*TRADE Bank.
Also during the quarter, the Company increased the size of its commercial paper
program by $1.25 billion. The program now has a facility size of $3.25 billion.
In connection with the increase, Citibank joined Bank of America, ABN AMRO and
Calyon as swap counter-parties that back the interest rate risk associated with
the facility.
During the quarter, the Company privately placed $50 million of trust preferred
stock at a yield of LIBOR + 300. The trust preferred is callable by the Company
after 5 years, and matures after 30 years.
ADJUSTED FINANCIAL MEASURES
- ---------------------------
Throughout this news release the terms adjusted revenues, adjusted net earnings,
adjusted earnings per diluted share, adjusted net interest income, adjusted net
interest margin, 2005 adjusted earnings guidance and other similar terms are
used to identify financial measures that are not prepared in accordance with
Generally Accepted Accounting Principles ("GAAP"). The Company has been, and
expects to continue to be managed on the basis of the adjusted financial
measures. The adjusted financial measures should be read in conjunction with the
Company's GAAP results. A reconciliation of the adjusted financial measures to
financial measures prepared in accordance with GAAP is included on pages A-1
through A-4 of this release.
CONFERENCE CALL TODAY
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American Home will hold an investor conference call today, July 19, 2005, at
10:30 a.m., Eastern Time, to discuss earnings. Interested parties may listen to
the live conference call by visiting the investor relations section of American
Home's corporate website, www.americanhm.com. A replay of the online broadcast
will be available on the site through August 2, 2005.
DIVIDEND REINVESTMENT & DIRECT STOCK PURCHASE AND SALE PLAN
- -----------------------------------------------------------
American Home Mortgage Investment Corp. has established an Investors Choice
Dividend Reinvestment & Direct Stock Purchase and Sale Plan for its
shareholders. The plan offers affordable alternatives for buying and selling
common stock of American Home Mortgage Investment Corp. Participants in the plan
may also reinvest cash dividends and make periodic supplemental cash payments to
purchase additional shares of the Company's common stock. If you have additional
questions or would like to enroll in the plan, please contact the plan
administrator, American Stock Transfer & Trust Company, at 1-888-777-0319 (toll
free) or visit their website at www.amstock.com.
6
ABOUT AMERICAN HOME
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American Home Mortgage Investment Corp. is a mortgage real estate investment
trust ("REIT") focused on earning net interest income from self-originated
mortgage-backed securities, and through its taxable subsidiaries, from
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 correspondents and are serviced at the Company's Irving,
Texas servicing center. For additional information, please visit the Company's
website at www.americanhm.com.
FORWARD-LOOKING STATEMENTS
- --------------------------
This news release contains "forward-looking statements" that are based upon
expectations, estimates, forecasts, projections and assumptions. Any statement
in this news release that is not a statement of historical fact, including, but
not limited to, earnings guidance and forecasts, projections of financial
results and loan origination volume, expected future financial position,
dividend plans or business strategy, and any other statements of plans,
expectations, objectives, estimates and beliefs, is a forward looking statement.
Words such as "look forward," "will," "anticipate," "may," "expect," "plan,"
"believe," "intend," "opportunity," "potential," and similar words, or the
negatives of those words, are intended to identify forward-looking statements.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors that are difficult to predict, and are not guarantees of
future performance. As a result, actual future events may differ materially from
any future results, performance or achievements expressed in or implied by this
news release. Specific factors that might cause such a difference include, but
are not limited to: American Home's limited operating history with respect to
its portfolio strategy; the potential fluctuations in American Home's operating
results; American Home's potential need for additional capital; the direction of
interest rates and their subsequent effect on the business of American Home and
its subsidiaries; risks associated with the use of leverage; changes in federal
and state tax laws affecting REITs; federal and state regulation of mortgage
banking; and those risks and uncertainties discussed in filings made by American
Home 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 does not assume any
responsibility, and expressly disclaims any responsibility, to issue updates to
any forward-looking statements discussed in this news release, whether as a
result of new information, future events or otherwise.
###
CONTACT:
Mary M. Feder
Vice President, Investor Relations
American Home Mortgage Investment Corp.
(631) 622-6469
mary.feder@americanhm.com
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Financial Table Presentation
The following financial tables include GAAP, adjusted and reconciling
information for the reasons and purposes described under the heading ADJUSTED
FINANCIAL MEASURES herein.
Financial Tables to Follow on Next Pages
8
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
OPERATING STATISTICS
Three Months Ended Six Months Ended
-------------------------- --------------------------
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
---------- ---------- ----------- -----------
(1)
As Adjusted
---------- ---------- ----------- -----------
Mortgage-Backed Securities Holdings Segment:*
- ---------------------------------------------------------------
Average mortgage-backed securities held ($ billions) 6.8 4.8 7.1 3.4
Interest income ($ millions) 77.1 41.3 155.3 56.4
Average portfolio yield 4.53% 3.43% 4.37% 3.34%
Interest expense ($ millions) 52.2 30.5 98.9 39.9
Average cost of funds and hedges 3.29% 2.70% 2.99% 2.54%
Net interest income ($ millions) 24.9 10.8 56.4 16.5
Net interest margin 1.48% 0.91% 1.60% 0.98%
Mortgage-backed securities held - end of period ($ billions) 6.9 7.3 6.9 7.3
Period end duration gap (in years) 0.08 (0.04) 0.08 (0.04)
* - Excludes loans held pending securitization
Loan Origination Segment:
- ---------------------------------------------------------------
Loan originations ($ billions) 10.8 6.6 18.0 11.0
Refinance 41% 52% 44% 54%
ARM 50% 49% 51% 43%
Average mortgage loans held for sale, net ($ billions) 3.9 2.2 3.3 1.8
Net interest income ($ millions) 22.5 10.6 41.4 18.9
Net interest margin 2.37% 1.92% 2.51% 2.08%
Loans securitized and held ($ billions) 0.4 1.5 1.7 2.4
Loans securitized and sold ($ billions) 5.4 0.6 8.9 0.7
Loans sold to third parties ($ billions) 4.5 4.5 7.6 7.9
Applications accepted ($ billions) 17.3 8.8 30.3 17.9
Application pipeline ($ billions) 10.7 6.5 10.7 6.5
June 30, June 30,
Loan Servicing Segment: 2005 2004
- --------------------------------------------------------------- ---------- ----------
Loan servicing portfolio - total with warehouse ($ billions) 24.7 11.6
Loan servicing portfolio - loans sold or securitized ($ billions) 22.6 10.2
Weighted average note rate 5.62% 5.39%
Weighted average service fee 0.336% 0.358%
Average age (in months) 13 20
Note:
(1) - Adjustments reflect the net effect on the period presented to reconcile
the Company's operating statistics, results of operations and financial
condition prepared in accordance with GAAP to the amounts adjusted as if the
Company's fourth quarter 2004 securitization had qualified for SFAS 140 sale
accounting treatment in the fourth quarter of 2004.
Please refer to the detailed reconciliation of the Company's GAAP and as
adjusted results on pages A-1 through A-4.
9
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
OPERATING STATISTICS
Three Months Ended
------------------------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
2005 2005 2004 2004 2004
----------- ----------- ----------- ----------- ----------
(1) (1)
As Adjusted As Adjusted
----------- ----------- ----------- ----------- ----------
Mortgage-Backed Securities Holdings Segment:*
- ---------------------------------------------------------------
Average mortgage-backed securities held ($ billions) 6.8 7.4 7.3 7.2 4.8
Interest income ($ millions) 77.1 78.2 70.6 66.7 41.3
Average portfolio yield 4.53% 4.23% 3.89% 3.72% 3.43%
Interest expense ($ millions) 52.2 46.7 42.6 42.1 30.5
Average cost of funds and hedges 3.29% 2.71% 2.48% 2.47% 2.70%
Net interest income ($ millions) 24.9 31.5 28.0 24.6 10.8
Net interest margin 1.48% 1.70% 1.57% 1.39% 0.91%
Mortgage-backed securities held - end of period ($ billions) 6.9 7.2 7.6 7.3 7.3
Period end duration gap (in years) 0.08 0.09 0.07 (0.002) (0.04)
* - Excludes loans held pending securitization
Loan Origination Segment:
- ---------------------------------------------------------------
Loan originations ($ billions) 10.8 7.2 6.7 5.3 6.6
Refinance 41% 48% 46% 36% 52%
ARM 50% 53% 55% 56% 49%
Average mortgage loans held for sale, net ($ billions) 3.9 2.8 2.7 2.4 2.2
Net interest income ($ millions) 22.5 18.9 20.2 9.7 10.6
Net interest margin 2.37% 2.70% 2.97% 1.60% 1.92%
Loans securitized and held ($ billions) 0.4 1.3 1.5 1.4 1.5
Loans securitized and sold ($ billions) 5.4 2.5 2.0 1.3 0.6
Loans sold to third parties ($ billions) 4.5 3.1 2.9 2.9 4.5
Applications accepted ($ billions) 17.3 13.0 9.9 8.7 8.8
Application pipeline ($ billions) 10.7 8.4 6.2 6.5 6.5
June 30, March 31, Dec. 31, Sept. 30, June 30,
2005 2005 2004 2004 2004
----------- ----------- ----------- ----------- ----------
Loan Servicing Segment:
- ---------------------------------------------------------------
Loan servicing portfolio - total with warehouse ($ billions) 24.7 19.9 16.8 13.6 11.6
Loan servicing portfolio - loans sold or securitized ($ billions) 22.6 18.2 15.5 12.5 10.2
Weighted average note rate 5.62% 5.21% 5.45% 5.41% 5.39%
Weighted average service fee 0.336% 0.344% 0.345% 0.354% 0.358%
Average age (in months) 13 14 16 18 20
Note:
(1) - Adjustments reflect the net effect on the period presented to reconcile
the Company's operating statistics, results of operations and financial
condition prepared in accordance with GAAP to the amounts adjusted as if the
Company's fourth quarter 2004 securitization had qualified for SFAS 140 sale
accounting treatment in the fourth quarter of 2004.
Please refer to the detailed reconciliation of the Company's GAAP and as
adjusted results on pages A-1 through A-4.
10
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
---------------------- ----------------------
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
--------- --------- --------- ---------
(1)
As
Adjusted
--------- --------- --------- ---------
Net interest income:
Interest income $ 135,318 $ 69,999 $ 255,287 $ 104,049
Interest expense (90,336) (49,913) (161,661) (71,191)
--------- --------- --------- ---------
Net interest income 44,982 20,086 93,626 32,858
--------- --------- --------- ---------
Non-interest income:
Gain on sales of mortgage loans 77,377 17,141 112,630 69,722
Gain on sales of current period securitized mortgage loans 104,377 7,803 144,169 9,659
Gain (loss) on sales of mortgage-backed securities and derivatives 620 (1,322) 5,352 5,310
Unrealized (loss) gain on mortgage-backed securities and derivatives (10,292) 36,063 14,813 54,972
Loan servicing fees 16,970 8,730 31,133 19,048
Amortization (12,832) (7,764) (23,503) (15,110)
Impairment reserve (provision) recovery (20,398) 7,252 (14,931) (5,332)
--------- --------- --------- ---------
Net loan servicing (loss) fees (16,260) 8,218 (7,301) (1,394)
--------- --------- --------- ---------
Other non-interest income 2,543 1,226 4,009 2,204
--------- --------- --------- ---------
Non-interest income 158,365 69,129 273,672 140,473
--------- --------- --------- ---------
Non-interest expenses:
Salaries, commissions and benefits, net 94,859 42,696 163,334 82,323
Occupancy and equipment 14,397 8,008 27,068 16,102
Data processing and communications 5,957 3,338 11,907 6,551
Office supplies and expenses 5,657 3,215 10,086 6,333
Marketing and promotion 5,126 2,196 9,256 4,408
Travel and entertainment 5,427 2,887 9,355 5,464
Professional fees 3,432 1,829 6,902 4,257
Other 6,843 4,082 13,712 9,520
--------- --------- --------- ---------
Non-interest expenses 141,698 68,251 251,620 134,958
--------- --------- --------- ---------
Net income before income tax benefit 61,649 20,964 115,678 38,373
Income tax benefit (3,851) (12,518) (3,851) (16,332)
--------- --------- --------- ---------
Net income $ 65,500 $ 33,482 $ 119,529 $ 54,705
========= ========= ========= =========
Dividends on preferred stock 3,304 -- 6,609 --
--------- --------- --------- ---------
Net income available to common shareholders $ 62,196 $ 33,482 $ 112,920 $ 54,705
========= ========= ========= =========
Per share data:
Basic $ 1.54 $ 0.84 $ 2.80 $ 1.56
Diluted $ 1.52 $ 0.83 $ 2.76 $ 1.54
Weighted average number of shares - basic 40,384 40,000 40,346 35,015
Weighted average number of shares - diluted 40,886 40,445 40,849 35,476
Note:
(1) - Adjustments reflect the net effect on the period presented to reconcile
the Company's operating statistics, results of operations and financial
condition prepared in accordance with GAAP to the amounts adjusted as if the
Company's fourth quarter 2004 securitization had qualified for SFAS 140 sale
accounting treatment in the fourth quarter of 2004.
Please refer to the detailed reconciliation of the Company's GAAP and as
adjusted results on pages A-1 through A-4.
11
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share amounts)
Three Months Ended
---------------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
2005 2005 2004 2004 2004
--------- --------- --------- --------- ---------
(1) (1)
As As
Adjusted Adjusted
--------- --------- --------- --------- ---------
Net interest income:
Interest income $ 135,318 $ 119,969 $ 113,785 $ 94,298 $ 69,999
Interest expense (90,336) (71,325) (67,002) (61,405) (49,913)
--------- --------- --------- --------- ---------
Net interest income 44,982 48,644 46,783 32,893 20,086
--------- --------- --------- --------- ---------
Non-interest income:
Gain on sales of mortgage loans 77,377 35,253 36,004 28,373 17,141
Gain on sales of current period securitized mortgage loans 99,508 44,661 40,674 30,460 7,803
Gain (loss) on sales of mortgage-backed securities and derivatives 620 4,732 2,873 (8,120) (1,322)
Unrealized (loss) gain on mortgage-backed securities and derivatives (5,423) 20,236 27,224 27,069 36,063
Loan servicing fees 16,970 14,163 11,701 9,822 8,730
Amortization (12,832) (10,671) (9,750) (7,755) (7,764)
Impairment reserve (provision) recovery (20,398) 5,467 (5,013) (4,807) 7,252
--------- --------- --------- --------- ---------
Net loan servicing (loss) fees (16,260) 8,959 (3,062) (2,740) 8,218
--------- --------- --------- --------- ---------
Other non-interest income 2,543 1,466 1,480 3,350 1,226
--------- --------- --------- --------- ---------
Non-interest income 158,365 115,307 105,193 78,392 69,129
--------- --------- --------- --------- ---------
Non-interest expenses:
Salaries, commissions and benefits, net 94,859 68,475 60,588 46,482 42,696
Occupancy and equipment 14,397 12,671 11,556 9,984 8,008
Data processing and communications 5,957 5,950 5,869 3,745 3,338
Office supplies and expenses 5,657 4,429 4,385 3,012 3,215
Marketing and promotion 5,126 4,130 3,391 2,610 2,196
Travel and entertainment 5,427 3,928 5,106 3,620 2,887
Professional fees 3,432 3,470 5,378 2,524 1,829
Other 6,843 6,869 6,333 6,363 4,082
--------- --------- --------- --------- ---------
Non-interest expenses 141,698 109,922 102,606 78,340 68,251
--------- --------- --------- --------- ---------
Net income before income tax (benefit) expense 61,649 54,029 49,370 32,945 20,964
Income tax (benefit)expense (3,851) -- 755 (9,998) (12,518)
--------- --------- --------- --------- ---------
Net income $ 65,500 $ 54,029 $ 48,615 $ 42,943 $ 33,482
========= ========= ========= ========= =========
Dividends on preferred stock 3,304 3,305 2,340 1,648 --
--------- --------- --------- --------- ---------
Net income available to common shareholders $ 62,196 $ 50,724 $ 46,275 $ 41,295 $ 33,482
========= ========= ========= ========= =========
Per share data:
Basic $ 1.54 $ 1.26 $ 1.15 $ 1.03 $ 0.84
Diluted $ 1.52 $ 1.24 $ 1.14 $ 1.02 $ 0.83
Weighted average number of shares - basic 40,384 40,308 40,216 40,145 40,000
Weighted average number of shares - diluted 40,886 40,811 40,737 40,605 40,445
Note:
(1) - Adjustments reflect the net effect on the period presented to reconcile
the Company's operating statistics, results of operations and financial
condition prepared in accordance with GAAP to the amounts adjusted as if the
Company's fourth quarter 2004 securitization had qualified for SFAS 140 sale
accounting treatment in the fourth quarter of 2004.
Please refer to the detailed reconciliation of the Company's GAAP and as
adjusted results on pages A-1 through A-4.
12
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands)
June 30, March 31, December 31, December 31, December 31,
2005 2005 2004 2004 2004
------------ ------------ ------------ ----------- ------------
(1) (1)
Assets: GAAP Adjustments As Adjusted
------------ ------------ ------------ ----------- ------------
Cash and cash equivalents $ 197,375 $ 162,762 $ 192,821 $ -- $ 192,821
Accounts receivable and servicing advances 116,835 103,295 116,978 (11,640) 105,338
Mortgage-backed securities 6,917,986 7,181,170 6,016,866 1,584,927 7,601,793
Mortgage loans held for sale, net 1,965,074 1,627,891 4,853,394 (3,536,785) 1,316,609
Mortgage loans held for investment, net 134,597 -- -- -- --
Derivative assets 35,756 73,383 24,803 (1,459) 23,344
Mortgage servicing rights, net 261,839 228,412 151,436 37,793 189,229
Premises and equipment, net 61,441 55,986 51,576 -- 51,576
Goodwill 98,826 92,745 90,877 -- 90,877
Other assets 21,185 49,332 57,046 (10,490) 46,556
------------ ------------ ------------ ----------- ------------
Total assets $ 9,810,914 $ 9,574,976 $ 11,555,797 $ (1,937,654) $ 9,618,143
============ ============ ============ ============ ============
Liabilities and Stockholders' Equity:
Liabilities:
Warehouse lines of credit $ 665,697 $ 658,686 $ 735,783 $ -- $ 735,783
Drafts payable 26,538 28,391 26,200 -- 26,200
Commercial paper 1,291,684 858,382 529,790 -- 529,790
Reverse repurchase agreements 6,337,630 6,720,167 7,071,168 -- 7,071,168
Collateralized debt obligations -- -- 2,022,218 (2,022,218) --
Payable for securities purchased -- -- -- -- --
Derivative liabilities 6,195 1,945 1,860 -- 1,860
Trust preferred securities 48,414 -- -- -- --
Accrued expenses and other liabilities 177,761 176,859 152,413 13,213 165,626
Notes payable 256,060 159,339 135,761 -- 135,761
Income taxes payable 47,753 54,250 54,342 -- 54,342
------------ ------------ ------------ ----------- ------------
Total liabilities 8,857,732 8,658,019 10,729,535 (2,009,005) 8,720,530
------------ ------------ ------------ ----------- ------------
Stockholders' Equity:
Preferred stock 134,040 134,040 134,040 -- 134,040
Common stock 405 403 403 -- 403
Additional paid-in capital 638,595 632,828 631,530 -- 631,530
Retained earnings 224,442 193,064 99,628 71,351 170,979
Accumulated other comprehensive loss (44,300) (43,378) (39,339) -- (39,339)
------------ ------------ ------------ ----------- ------------
Total stockholders' equity 953,182 916,957 826,262 71,351 897,613
------------ ------------ ------------ ----------- ------------
Total liabilities and stockholders' equity $ 9,810,914 $ 9,574,976 $ 11,555,797 $ (1,937,654) $ 9,618,143
============ ============ ============ ============ ============
Number of shares outstanding - preferred 5,600,000 5,600,000 5,600,000 5,600,000
Number of shares outstanding - common 40,538,479 40,335,255 40,288,077 40,288,077
September 30, June 30,
2004 2004
------------ ------------
Assets:
------------ ------------
Cash and cash equivalents $ 186,480 $ 433,918
Accounts receivable and servicing advances 101,105 100,489
Mortgage-backed securities 7,331,888 7,331,162
Mortgage loans held for sale, net 1,131,661 1,435,998
Mortgage loans held for investment, net -- --
Derivative assets 11,630 44,608
Mortgage servicing rights, net 160,435 141,818
Premises and equipment, net 47,955 44,541
Goodwill 89,196 88,799
Other assets 16,645 13,788
------------ ------------
Total assets $ 9,076,995 $ 9,635,121
============ ============
Liabilities and Stockholders' Equity:
Liabilities:
Warehouse lines of credit $ 547,584 $ 672,456
Drafts payable 45,526 86,300
Commercial paper 462,712 1,047,036
Reverse repurchase agreements 6,899,024 6,413,506
Collateralized debt obligations -- --
Payable for securities purchased -- 423,909
Derivative liabilities 18,237 10,098
Trust preferred securities -- --
Accrued expenses and other liabilities 154,339 119,885
Notes payable 128,448 107,237
Income taxes payable 30,133 41,128
------------ ------------
Total liabilities 8,286,003 8,921,555
------------ ------------
Stockholders' Equity:
Preferred stock 50,857 --
Common stock 402 401
Additional paid-in capital 629,807 629,203
Retained earnings 151,297 134,515
Accumulated other comprehensive loss (41,371) (50,553)
------------ ------------
Total stockholders' equity 790,992 713,566
------------ ------------
Total liabilities and stockholders' equity $ 9,076,995 $ 9,635,121
============ ============
Number of shares outstanding - preferred 2,150,000 --
Number of shares outstanding - common 40,184,333 40,111,559
Note:
(1) - Adjustments reflect the net effect on the period presented to reconcile
the Company's operating statistics, results of operations and financial
condition prepared in accordance with GAAP to the amounts adjusted as if the
Company's fourth quarter 2004 securitization had qualified for SFAS 140 sale
accounting treatment in the fourth quarter of 2004.
Please refer to the detailed reconciliation of the Company's GAAP and as
adjusted results on pages A-1 through A-4.
13
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)
(In thousands)
Six Months
Three Months Ended Ended
--------------------------------------------------------- ----------
June 30, Mar. 31, Dec. 31, Sept. 30, June 30, June 30,
2005 2005 2004 2004 2004 2005
--------- --------- --------- --------- --------- ---------
Preferred stock
Balance at beginning of period $ 134,040 $ 134,040 $ 50,857 $ -- $ -- $ 134,040
Issuance of preferred stock - offering -- -- 83,183 50,857 -- --
--------- --------- --------- --------- --------- ---------
Balance at end of period $ 134,040 $ 134,040 $ 134,040 $ 50,857 $ -- $ 134,040
--------- --------- --------- --------- --------- ---------
Common stock
Balance at beginning of period $ 403 $ 403 $ 402 $ 401 $ 399 $ 403
Issuance of common stock - earnouts 2 -- -- -- 2 2
Issuance of common stock - Omnibus Stock Plan -- -- 1 1 -- --
--------- --------- --------- --------- --------- ---------
Balance at end of period $ 405 $ 403 $ 403 $ 402 $ 401 $ 405
--------- --------- --------- --------- --------- ---------
Additional paid-in capital
Balance at beginning of period $ 632,828 $ 631,530 $ 629,807 $ 629,203 $ 623,953 $ 631,530
Issuance of common stock - earnouts 5,005 846 734 151 4,583 5,851
Issuance of common stock - Omnibus Stock Plan 588 311 823 374 331 899
Restricted shares amortization 174 141 166 79 336 315
--------- --------- --------- --------- --------- ---------
Balance at end of period $ 638,595 $ 632,828 $ 631,530 $ 629,807 $ 629,203 $ 638,595
--------- --------- --------- --------- --------- ---------
Retained earnings
Balance at beginning of period $ 193,064 $ 99,628 $ 151,297 $ 134,515 $ 125,504 $ 99,628
Net income 65,500 125,380 (22,736) 42,943 33,482 190,880
Dividends declared (34,122) (31,944) (28,933) (26,161) (24,471) (66,066)
--------- --------- --------- --------- --------- ---------
Balance at end of period $ 224,442 $ 193,064 $ 99,628 $ 151,297 $ 134,515 $ 224,442
--------- --------- --------- --------- --------- ---------
Other comprehensive loss
Balance at beginning of period $ (43,378) $ (39,339) $ (41,371) $ (50,553) $ (8,675) $ (39,339)
Unrealized gain (loss) on mortgage-backed securities 6,901 (24,435) (12,491) 52,945 (61,386) (17,534)
(Loss) gain on cash flow hedges, net of amortization (7,823) 20,396 14,523 (43,763) 19,508 12,573
--------- --------- --------- --------- --------- ---------
Balance at end of period $ (44,300) $ (43,378) $ (39,339) $ (41,371) $ (50,553) $ (44,300)
--------- --------- --------- --------- --------- ---------
Total stockholders' equity $ 953,182 $ 916,957 $ 826,262 $ 790,992 $ 713,566 $ 953,182
========= ========= ========= ========= ========= =========
Adjustment (1) -- -- 71,351 -- -- --
--------- --------- --------- --------- --------- ---------
Adjusted total stockholders' equity (1) $ 953,182 $ 916,957 $ 897,613 $ 790,992 $ 713,566 $ 953,182
========= ========= ========= ========= ========= =========
Note:
(1) - Adjustments reflect the net effect on the period presented to reconcile
the Company's operating statistics, results of operations and financial
condition prepared in accordance with GAAP to the amounts adjusted as if the
Company's fourth quarter 2004 securitization had qualified for SFAS 140 sale
accounting treatment in the fourth quarter of 2004.
Please refer to the detailed reconciliation of the Company's GAAP and as
adjusted results on pages A-1 through A-4.
14
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Three Months Ended
--------------------------------------------------------------------
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
2005 2005 2004 2004 2004
------------ ------------ ------------ ------------ ------------
Cash flows from operating activities:
Net income $ 65,500 $ 125,380 $ (22,736) $ 42,943 $ 33,482
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 2,739 2,439 2,288 2,151 1,988
Amortization and impairment of mortgage servicing rights 33,230 5,082 12,034 12,562 512
Accretion and amortization of mortgage-backed securities, net (1,169) 4,593 7,700 9,455 7,208
Deferred cash flow hedge gain (loss), net of amortization 1,738 17,052 515 (7,019) 1,871
Loss on sales of mortgage-backed securities and derivatives 447 3,336 390 6,998 4,246
Unrealized (gain) loss on mortgage-backed securities (4,533) 51,003 15,850 (33,525) 20,976
Unrealized loss (gain) on free standing derivatives 25,903 (40,312) (14,482) 14,856 (41,451)
Additions to mortgage servicing rights on securitized loans (62,629) (79,711) (123) (27,203) (22,514)
Additions to mortgage servicing rights on sold loans (4,027) (2,347) (2,912) (3,976) (6,297)
(Increase) decrease in interest rate lock commitments (6,264) 210 (395) 7,358 21,613
(Increase) decrease in mortgage loan basis adjustments (10,584) 30,954 (27,113) (1,817) 15,684
Other (2,155) 1,177 (3,720) 2,611 2,856
(Increase) decrease in operating assets:
Accounts receivable and servicing advances (13,540) 13,683 (15,873) (616) (20,063)
Other assets 28,147 7,714 (40,401) (2,857) (1,575)
Increase (decrease) in operating liabilities:
Accrued expenses and other liabilities (1,269) 21,432 (4,695) 32,761 41,252
Income taxes payable (6,497) (92) 24,209 (10,995) (12,561)
Forward delivery contracts 13,930 (9,595) 766 (9,004) 9,249
Origination of mortgage loans held for sale (10,647,029) (7,255,400) (6,744,078) (5,292,191) (6,619,642)
Proceeds from sales and repayments of mortgage loans 4,457,519 3,080,795 2,974,379 2,806,070 4,643,542
Proceeds from securitizations and repayments of mortgage loans 5,855,914 7,336,612 75,209 2,765,737 1,876,443
Additions to mortgage-backed securities and derivatives (466,522) (2,840,259) (15,112) (1,435,334) (1,470,246)
Proceeds from sales of mortgage-backed securities 1,104,227 -- 852,283 1,023,037 121,454
Principal repayments of mortgage-backed securities 195,711 124,959 147,219 100,306 72,697
------------ ------------ ------------ ------------ ------------
Net cash provided by (used in) operating activities 558,787 598,705 (2,778,798) 2,308 (1,319,276)
------------ ------------ ------------ ------------ ------------
Cash flows from investing activities:
Purchases of premises and equipment (8,194) (6,849) (5,909) (5,565) (5,295)
Origination of mortgage loans held for investment (133,757) -- -- -- --
Purchases of mortgage-backed securities (933,929) -- (107,009) (535,056) (2,557,318)
Proceeds from sales of mortgage-backed securities 20,962 1,133,989 50,710 633,036 208,283
Principal repayments of mortgage-backed securities 361,049 368,671 351,687 296,974 218,826
Other -- -- -- -- 109
------------ ------------ ------------ ------------ ------------
Net cash (used in) provided by investing activities (693,869) 1,495,811 289,479 389,389 (2,135,395)
------------ ------------ ------------ ------------ ------------
Cash flows from financing activities:
Increase (decrease) in warehouse lines of credit, net 7,011 (77,097) 188,199 (124,872) (579,389)
(Decrease) increase in reverse repurchase agreements, net (382,537) (351,001) 172,144 485,518 3,018,565
(Decrease) increase in collateralized debt obligations -- (2,022,218) 2,022,218 -- --
(Decrease) increase in payable for securities purchased -- -- -- (423,909) 289,262
Increase (decrease) in commercial paper, net 433,302 328,592 67,078 (584,324) 1,047,036
(Decrease) increase in drafts payable, net (1,853) 2,191 (19,326) (40,774) 21,990
Increase in trust preferred securities 48,414 -- -- -- --
Proceeds from issuance of preferred stock -- -- 83,425 52,057 --
Proceeds from issuance of common stock 587 311 776 426 329
Dividends paid (31,950) (28,931) (26,167) (24,468) (7,575)
Increase in notes payable, net 96,721 23,578 7,313 21,211 814
------------ ------------ ------------ ------------ ------------
Net cash provided by (used in) financing activities 169,695 (2,124,575) 2,495,660 (639,135) 3,791,032
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents 34,613 (30,059) 6,341 (247,438) 336,361
Cash and cash equivalents, beginning of period 162,762 192,821 186,480 433,918 97,557
------------ ------------ ------------ ------------ ------------
Cash and cash equivalents, end of period $ 197,375 $ 162,762 $ 192,821 $ 186,480 $ 433,918
============ ============ ============ ============ ============
15
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Six Months
Ended
----------------
June 30,
2005
----------------
Cash flows from operating activities:
Net income $ 190,880
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 5,178
Amortization and impairment of mortgage servicing rights 38,312
Accretion and amortization of mortgage-backed securities, net 3,424
Deferred cash flow hedge gain, net of amortization 18,790
Loss on sales of mortgage-backed securities and derivatives 3,783
Unrealized loss on mortgage-backed securities 46,470
Unrealized gain on free standing derivatives (14,409)
Additions to mortgage servicing rights on securitized loans (142,340)
Additions to mortgage servicing rights on sold loans (6,374)
Increase in interest rate lock commitments (6,054)
Decrease in mortgage loans basis adjustments 20,370
Other (978)
Decrease in operating assets:
Accounts receivable and servicing advances 143
Other assets 35,861
Increase (decrease) in operating liabilities:
Accrued expenses and other liabilities 20,163
Income taxes payable (6,589)
Forward delivery contracts 4,335
Origination of mortgage loans held for sale (17,902,429)
Proceeds from sales and repayments of mortgage loans 7,538,314
Proceeds from securitizations and repayments of mortgage loans 13,192,526
Additions to mortgage-backed securities and derivatives (3,306,781)
Proceeds from sales of mortgage-backed securities 1,104,227
Principal repayments of mortgage-backed securities 320,670
----------------
Net cash provided by operating activities 1,157,492
----------------
Cash flows from investing activities:
Purchases of premises and equipment (15,043)
Origination of mortgage loans held for investment (133,757)
Purchases of mortgage-backed securities (933,929)
Proceeds from sales of mortgage-backed securities 1,154,951
Principal repayments of mortgage-backed securities 729,720
----------------
Net cash provided by investing activities 801,942
----------------
Cash flows from financing activities:
Decrease in warehouse lines of credit, net (70,086)
Decrease in reverse repurchase agreements, net (733,538)
Decrease in collateralized debt obligations (2,022,218)
Increase in commercial paper, net 761,894
Increase in drafts payable, net 338
Increase in trust preferred securities 48,414
Proceeds from issuance of common stock 898
Dividends paid (60,881)
Increase in notes payable, net 120,299
----------------
Net cash used in financing activities (1,954,880)
----------------
Net increase in cash and cash equivalents 4,554
Cash and cash equivalents, beginning of period 192,821
----------------
Cash and cash equivalents, end of period $ 197,375
================
16
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
FAIR VALUE OF FINANCIAL INSTRUMENTS (Unaudited)
(In thousands)
June 30, 2005
----------------------------------------------------
Fair Value in
Excess of
Carrying Value Fair Value Carrying Value
-------------- -------------- --------------
Assets:
Cash and cash equivalents $ 197,375 $ 197,375 $ --
Accounts receivable and servicing advances 116,835 116,835 --
Mortgage-backed securities 6,917,986 6,917,986 --
Mortgage loans held for sale, net 1,965,074 1,984,910 19,836
Mortgage loans held for investment, net 134,597 135,876 1,279
Mortgage servicing rights, net 261,839 261,839 --
Derivative assets* 35,756 83,823 48,067
--------------
$ 69,182
--------------
Carrying Value
in Excess of
Fair Value
--------------
Liabilities:
Warehouse lines of credit $ 665,697 $ 665,697 $ --
Drafts payable 26,538 26,538 --
Commercial paper 1,291,684 1,291,684 --
Reverse repurchase agreements 6,337,630 6,337,352 278
Derivative liabilities 6,195 6,195 --
Trust preferred securities 48,414 48,414 --
Notes payable 256,060 256,060 --
--------------
$ 278
--------------
$ 69,460
==============
* Derivative assets includes 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. 105. The fair value includes the value of MSRs.
17
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
OPERATING STATISTICS
Three Months Ended
-------------------------------------------------------------------
March 31, 2005 December 31, 2004
----------------------------------- -------------------------------
(1) (1) (1) (1)
GAAP Adjustments As Adjusted GAAP Adjustments As Adjusted
------- ------------ ------------- ------ ------------ ------------
Mortgage-Backed Securities Holdings Segment:*
- -----------------------------------------------------------------
Average mortgage-backed securities held ($ billions) 5.9 1.5 7.4 7.1 0.2 7.3
Interest income ($ millions) 58.3 19.9 78.2 68.4 2.2 70.6
Average portfolio yield 3.98% 4.23% 3.86% 3.89%
Interest expense ($ millions) 39.0 7.7 46.7 42.4 0.2 42.6
Average cost of funds and hedges 2.79% 2.71% 2.52% 2.48%
Net interest income ($ millions) 19.3 12.2 31.5 26.0 2.0 28.0
Net interest margin 1.33% 1.70% 1.49% 1.57%
Mortgage-backed securities held - end of period ($ billions) 7.2 7.2 6.0 1.6 7.6
Period end duration gap (in years) 0.09 0.09 0.07 0.07
* - Excludes loans held pending securitization
Loan Origination Segment:
- -----------------------------------------------------------------
Loan originations ($ billions) 7.2 7.2 6.7 6.7
Refinance 48% 48% 46% 46%
ARM 53% 53% 55% 55%
Average mortgage loans held for sale, net ($ billions) 6.2 -3.4 2.8 3.1 -0.4 2.7
Net interest income ($ millions) 41.3 -22.4 18.9 22.6 -2.4 20.2
Net interest margin 2.64% 2.70% 2.93% 2.97%
Loans securitized and held ($ billions) 2.8 -1.5 1.3 --- 1.5 1.5
Loans securitized and sold ($ billions) 4.5 -2.0 2.5 --- 2.0 2.0
Loans sold to third parties ($ billions) 3.1 3.1 2.9 2.9
Applications accepted ($ billions) 13.0 13.0 9.9 9.9
Application pipeline ($ billions) 8.4 8.4 6.2 6.2
March 31, 2005 December 31, 2004
--------------------------------- --------------------------------
Loan Servicing Segment:
- -----------------------------------------------------------------
Loan servicing portfolio - total with warehouse ($ billions) 19.9 19.9 16.8 16.8
Loan servicing portfolio - loans sold or securitized ($ billions) 18.2 18.2 12.0 3.5 15.5
Weighted average note rate 5.21% 5.21% 5.48% 5.45%
Weighted average service fee 0.344% 0.344% 0.348% 0.345%
Average age (in months) 14 14 20 16
Note:
(1) - Adjustments reflect the net effect on the period presented to reconcile
the Company's operating statistics, results of operations and financial
condition prepared in accordance with GAAP to the amounts adjusted as if the
Company's fourth quarter 2004 securitization had qualified for SFAS 140 sale
accounting treatment in the fourth quarter of 2004.
A-1
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
OPERATING STATISTICS
Six Months Ended
-------------------------------------------
June 30, 2005
-------------------------------------------
(1) (1)
GAAP Adjustments As Adjusted
---------- ---------------- ---------------
Mortgage-Backed Securities Holdings Segment:*
- -----------------------------------------------------------------
Average mortgage-backed securities held ($ billions) 6.3 0.8 7.1
Interest income ($ millions) 135.4 19.9 155.3
Average portfolio yield 4.28% 4.37%
Interest expense ($ millions) 91.2 7.7 98.9
Average cost of funds and hedges 3.05% 2.99%
Net interest income ($ millions) 44.2 12.2 56.4
Net interest margin 1.41% 1.60%
Mortgage-backed securities held - end of period ($ billions) 6.9 6.9
Period end duration gap (in years) 0.08 0.08
* - Excludes loans held pending securitization
Loan Origination Segment:
- -----------------------------------------------------------------
Loan originations ($ billions) 18.0 18.0
Refinance 44% 44%
ARM 51% 51%
Average mortgage loans held for sale, net ($ billions) 5.0 -1.7 3.3
Net interest income ($ millions) 63.8 -22.4 41.4
Net interest margin 2.55% 2.51%
Loans securitized and held ($ billions) 3.2 -1.5 1.7
Loans securitized and sold ($ billions) 10.9 -2.0 8.9
Loans sold to third parties ($ billions) 7.6 7.6
Applications accepted ($ billions) 30.3 30.3
Application pipeline ($ billions) 10.7 10.7
June 30, 2005
-------------------------------------------
Loan Servicing Segment:
- -----------------------------------------------------------------
Loan servicing portfolio - total with warehouse ($ billions) 24.7 24.7
Loan servicing portfolio - loans sold or securitized ($ billions) 22.6 22.6
Weighted average note rate 5.62% 5.62%
Weighted average service fee 0.336% 0.336%
Average age (in months) 13 13
Note:
(1) - Adjustments reflect the net effect on the period presented to reconcile
the Company's operating statistics, results of operations and financial
condition prepared in accordance with GAAP to the amounts adjusted as if the
Company's fourth quarter 2004 securitization had qualified for SFAS 140 sale
accounting treatment in the fourth quarter of 2004.
A-2
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share amounts)
Three Months Ended
----------------------------------------------------------------------------
March 31, 2005 December 31, 2004
------------------------------------- -------------------------------------
(1) (1) (1) (1)
GAAP Adjustments As Adjusted GAAP Adjustments As Adjusted
----------- ----------- ----------- ----------- ----------- -----------
Net interest income:
Interest income $ 146,894 $ (26,925) $ 119,969 $ 115,957 $ (2,172) $ 113,785
Interest expense (88,091) 16,766 (71,325) (68,777) 1,775 (67,002)
----------- ----------- ----------- ----------- ----------- -----------
Net interest income 58,803 (10,159) 48,644 47,180 (397) 46,783
----------- ----------- ----------- ----------- ----------- -----------
Non-interest income:
Gain on sales of mortgage loans 35,253 -- 35,253 36,004 -- 36,004
Gain on sales of current period securitized
mortgage loans 69,919 (25,258) 44,661 -- 40,674 40,674
Gain on sales of mortgage-backed securities
and derivatives 6,132 (1,400) 4,732 2,873 -- 2,873
Unrealized gain (loss) on mortgage-backed
securities and derivatives 57,499 (37,263) 20,236 (6,579) 33,803 27,224
Loan servicing fees 11,312 2,851 14,163 11,701 -- 11,701
Amortization (8,501) (2,170) (10,671) (9,750) -- (9,750)
Impairment reserve recovery (provision) 3,419 2,048 5,467 (2,284) (2,729) (5,013)
----------- ----------- ----------- ----------- ----------- -----------
Net loan servicing fees (loss) 6,230 2,729 8,959 (333) (2,729) (3,062)
----------- ----------- ----------- ----------- ----------- -----------
Other non-interest income 1,466 -- 1,466 1,480 -- 1,480
----------- ----------- ----------- ----------- ----------- -----------
Non-interest income 176,499 (61,192) 115,307 33,445 71,748 105,193
----------- ----------- ----------- ----------- ----------- -----------
Non-interest expenses:
Salaries, commissions and benefits, net 68,475 -- 68,475 60,588 -- 60,588
Occupancy and equipment 12,671 -- 12,671 11,556 -- 11,556
Data processing and communications 5,950 -- 5,950 5,869 -- 5,869
Office supplies and expenses 4,429 -- 4,429 4,385 -- 4,385
Marketing and promotion 4,130 -- 4,130 3,391 -- 3,391
Travel and entertainment 3,928 -- 3,928 5,106 -- 5,106
Professional fees 3,470 -- 3,470 5,378 -- 5,378
Other 6,869 -- 6,869 6,333 -- 6,333
----------- ----------- ----------- ----------- ----------- -----------
Non-interest expenses 109,922 -- 109,922 102,606 -- 102,606
----------- ----------- ----------- ----------- ----------- -----------
Net income before income tax expense 125,380 (71,351) 54,029 (21,981) 71,351 49,370
Income tax expense -- -- -- 755 -- 755
----------- ----------- ----------- ----------- ----------- -----------
Net income $ 125,380 $ (71,351) $ 54,029 $ (22,736) $ 71,351 $ 48,615
=========== =========== =========== =========== =========== ===========
Dividends on preferred stock 3,305 -- 3,305 2,340 -- 2,340
----------- ----------- ----------- ----------- ----------- -----------
Net income available to common shareholders $ 122,075 $ (71,351) $ 50,724 $ (25,076) $ 71,351 $ 46,275
=========== =========== =========== =========== =========== ===========
Per share data:
Basic $ 3.03 $ (1.77) $ 1.26 $ (0.62) $ 1.77 $ 1.15
Diluted $ 2.99 $ (1.75) $ 1.24 $ (0.62) $ 1.75 $ 1.14
Weighted average number of shares - basic 40,308 40,308 40,308 40,216 40,216 40,216
Weighted average number of shares - diluted 40,811 40,811 40,811 40,737 40,737 40,737
Note:
(1) - Adjustments reflect the net effect on the period presented to reconcile
the Company's operating statistics, results of operations and financial
condition prepared in accordance with GAAP to the amounts adjusted as if the
Company's fourth quarter 2004 securitization had qualified for SFAS 140 sale
accounting treatment in the fourth quarter of 2004.
A-3
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share amounts)
Six Months Ended
---------------------------------------------
June 30, 2005
---------------------------------------------
(1) (1)
GAAP Adjustments As Adjusted
----------- ----------- -----------
Net interest income:
Interest income $ 282,212 $ (26,925) $ 255,287
Interest expense (178,427) 16,766 (161,661)
----------- --------- -----------
Net interest income 103,785 (10,159) 93,626
----------- --------- -----------
Non-interest income:
Gain on sales of mortgage loans 112,630 -- 112,630
Gain on sales of current period securitized mortgage loans 169,427 (25,258) 144,169
Gain on sales of mortgage-backed securities and derivatives 6,752 (1,400) 5,352
Unrealized gain on mortgage-backed securities and derivatives 52,076 (37,263) 14,813
Loan servicing fees 28,282 2,851 31,133
Amortization (21,333) (2,170) (23,503)
Impairment reserve provision (16,979) 2,048 (14,931)
----------- --------- -----------
Net loan servicing loss (10,030) 2,729 (7,301)
----------- --------- -----------
Other non-interest income 4,009 -- 4,009
----------- --------- -----------
Non-interest income 334,864 (61,192) 273,672
----------- --------- -----------
Non-interest expenses:
Salaries, commissions and benefits, net 163,334 -- 163,334
Occupancy and equipment 27,068 -- 27,068
Data processing and communications 11,907 -- 11,907
Office supplies and expenses 10,086 -- 10,086
Marketing and promotion 9,256 -- 9,256
Travel and entertainment 9,355 -- 9,355
Professional fees 6,902 -- 6,902
Other 13,712 -- 13,712
----------- --------- -----------
Non-interest expenses 251,620 -- 251,620
----------- --------- -----------
Net income before income tax benefit 187,029 (71,351) 115,678
Income tax benefit (3,851) -- (3,851)
----------- --------- -----------
Net income $ 190,880 $ (71,351) $ 119,529
=========== =========== ===========
Dividends on preferred stock 6,609 -- 6,609
----------- --------- -----------
Net income available to common shareholders $ 184,271 $ (71,351) $ 112,920
=========== =========== ===========
Per share data:
Basic $ 4.57 $ (1.77) $ 2.80
Diluted $ 4.51 $ (1.75) $ 2.76
Weighted average number of shares - basic 40,346 40,346 40,346
Weighted average number of shares - diluted 40,849 40,849 40,849
Note:
(1) - Adjustments reflect the net effect on the period presented to reconcile
the Company's operating statistics, results of operations and financial
condition prepared in accordance with GAAP to the amounts adjusted as if the
Company's fourth quarter 2004 securitization had qualified for SFAS 140 sale
accounting treatment in the fourth quarter of 2004.
A-4