Exhibit 99.1
AMERICAN HOME [LOGO] FOR IMMEDIATE RELEASE
American Home Mortgage Announces First Quarter Results
Earnings are $1.02 per diluted share
Quarterly Loan Production is $13.2 Billion, Market Share Reaches Record 2.55%
Company Increases Dividend Policy to $0.96 per share per quarter,
or $3.84 per share on an annualized basis
2006 Earnings Guidance of $4.85 to $5.15 is Reaffirmed
Other Comprehensive Income is $14.0 million
Melville, NY (April 26, 2006) - American Home Mortgage Investment Corp. (NYSE:
AHM) announced today results for the quarter ended March 31, 2006.
FINANCIAL HIGHLIGHTS
- --------------------
Comparison of the Three Months Ended March 31, 2006 and 2005
o Revenue for the first quarter of 2006 was $233.1 million, compared to
adjusted revenue of $164.0 million for the first quarter of 2005, an
increase of 42.2%. GAAP revenue for the first quarter of 2005 was $235.3
million.
o Net earnings for the first quarter of 2006 were $54.5 million, compared to
adjusted net earnings of $54.0 million for the first quarter of 2005, an
increase of 0.8%. GAAP net earnings for the first quarter of 2005 was
$125.4 million.
o Earnings per diluted share for the first quarter of 2006 were $1.02,
compared to adjusted earnings per diluted share of $1.24 for the first
quarter of 2005, a decrease of 17.7%. GAAP earnings per diluted share for
the first quarter of 2005 was $2.99.
o Dividends per common share for the first quarter of 2006 were $0.91,
compared to $0.71 for the first quarter of 2005, an increase of 28.2%.
o Book value per common share was $22.01 at March 31, 2006, compared to book
value per common share of $19.41 at March 31, 2005, an increase of 13.4%.
Comparison of the Three Months Ended March 31, 2006 and December 31, 2005
o Revenue for the first quarter of 2006 was $233.1 million, compared to
revenue of $150.5 million for the fourth quarter of 2005, an increase of
54.9%.
o Net earnings for the first quarter of 2006 were $54.5 million, compared to
net earnings of $16.7 million for the fourth quarter of 2005, an increase
of 226.1%.
o Earnings per diluted share for the first quarter of 2006 were $1.02,
compared to earnings per diluted share of $0.27 for the fourth quarter of
2005, an increase of 277.8%.
o Dividends per common share for the first quarter of 2006 and the fourth
quarter of 2005 were $0.91.
o Book value per common share was $22.01 at March 31, 2006, compared to book
value per common share of $21.62 at December 31, 2005, an increase of
1.8%.
Michael Strauss, American Home's Chief Executive Officer, commented, "During the
first quarter of 2006 our company regained its financial footing, with revenues
and income for the quarter coming in slightly better than anticipated. In
particular, our company's first quarter gain on sale margin from loans sold to
third parties returned to a more typical rate of 1.27%, resulting in revenue
from loans sold to third parties of $171.9 million. By contrast, in the fourth
quarter of 2005, our gain on sale margin was 0.96%, resulting in revenue from
loans sold to third parties of $105.4 million.
During the first quarter of 2006, our company's net interest income, including
$3.9 million of carry earnings on free standing swaps, was $50.5 million,
compared to $51.3 million, including $1.0 million of free standing swap carry
earnings, in the fourth quarter of 2005. The $50.5 million of net interest
income included $30.3 million of net interest income from our portfolio of
securitized loans and mortgage securities, $9.4 million of net interest income
from loans held for investment which are pending securitization, $18.6 million
of net interest income on warehouse loans held for sale and $7.8 million of
interest expense associated with trust preferred, servicing financing and other
borrowings. By contrast, the $51.3 million of net interest income earned during
the fourth quarter of 2005 consisted of $30.8 million of net interest income
from our portfolio, $2.1 million of net interest income from investment loans
pending securitization, $24.3 million of net interest income from warehouse
loans held for sale, and $5.9 million of interest expense for trust preferred,
servicing financing and other borrowings.
During the first quarter of 2006, our company's loan production was $13.2
billion compared to $13.6 billion in the fourth quarter of 2005. While
production was down slightly on a quarter-over-quarter basis, our company's
market share, based on Freddie Mac's projection of the national market, reached
a record 2.55% of US originations in the first quarter, up sharply from our
2.02% share in the fourth quarter of 2005. During the first quarter each of our
retail, wholesale and correspondent channels gained share.
Changes in the valuation of our assets had only a limited impact on our
financial results in the first quarter. During the quarter our investment
portfolio experienced a gain excluding carry earnings from free standing swaps,
which increased income $4.5 million, and which resulted in other comprehensive
income of $14.0 million. The gain was partially offset by write-downs and
reserving associated with our servicing assets which reduced after-tax income by
$4.5 million.
During the first quarter of 2006, our company added $970.3 million principal
amount of self-originated loans to its investment portfolio. These loans had a
market value of $991.2 million, but were carried at their cost basis of $977.2
million. Our company anticipates that its future period net interest income will
be enhanced by adding self-originated loans to its investment portfolio that are
carried at their cost. We also anticipate that the volume of self-originated
loans added to our portfolio will increase in the second quarter due to the
positive impact of seasonality on our total loan production.
Based upon our results and prospects, I am very pleased to announce that our
Board of Directors has again voted to increase our dividend policy, increasing
the quarterly policy to $0.96 per common share, or $3.84 per common share on an
annualized basis. The increased dividend is expected to be effective for the
dividends to be paid in July 2006. This is the twelfth increase in our quarterly
dividends since our company began paying dividends in April 2001."
2
FIRST QUARTER RESULTS
- ---------------------
During the first quarter of 2006, American Home's mortgage loans and
mortgage-backed securities in portfolio averaged $11.1 billion, and earned net
interest income of $26.4 million equal to a net interest margin of 0.95%. In
addition, during the quarter, the Company earned $3.9 million of positive carry
on interest rate swaps which economically hedge the trading portion of the
Company's portfolio. Under accounting rules these swaps are classified as free
standing derivatives and consequently are not included in GAAP net interest
income, but are instead included in unrealized gains and losses on mortgage
backed securities and derivatives. For the first quarter, the combined net
interest income and positive swap carry was $30.3 million, or 1.09% of average
portfolio assets. By comparison, during the fourth quarter of 2005, the
Company's mortgage loans and mortgage-backed securities portfolio averaged $10.5
billion and earned net interest income of $29.8 million equal to a net interest
margin of 1.17%. During the fourth quarter, the Company had $1.0 million of
positive carry on the interest rate swaps which economically hedge the trading
portion of the Company's portfolio. Consequently, in the fourth quarter the
combined net interest income and positive swap carry was $30.8 million, or 1.21%
of average portfolio assets.
During the first quarter of 2006, American Home's inventory of loans averaged
$9.6 billion, earned a net interest margin of 1.16% and earned net interest
income of $28.0 million. This compares with an average balance of $8.6 billion,
a net interest margin of 1.28% and net interest income of $26.4 million in the
fourth quarter of 2005. During the first quarter of 2006, the Company had
interest expense on trust preferred, servicing financing and other obligations
of $7.8 million compared to $5.9 million during the fourth quarter of 2005.
At March 31, 2006, the composition of the Company's loans held for investment
and MBS portfolio by type of loan was 60.5% 5/1 adjustable-rate mortgages
("ARMs"), 29.2% short reset ARMs, 3.1% 3/1 ARMs, 1.6% HELOC and closed end
seconds and 5.6% other fixed and ARM types. The composition of the MBS portfolio
by credit quality based on Standard & Poor's ratings was 93.5% Agency and AAA,
4.0% AA, A, BB and BBB and 2.5% unrated. On March 31, 2006, the MBS portfolio's
duration, net of liabilities and hedges, was estimated to be 0.15 years and its
projected average life was 2.60 years.
During the first quarter of 2006, the Company's loan production was $13.2
billion. Of the $13.2 billion, 49% of loans were to homebuyers while 51% were
for refinancing. During the first quarter of 2006, the Company estimates its
national market share reached 2.55%, based on Freddie Mac's recent forecast of
national market size, compared to 2.02% in the fourth quarter of 2005 and 1.17%
during the first quarter of 2005. At March 31, 2006, the Company employed
approximately 2,680 loan officers and account executives, including call center
representatives, but excluding sales assistants, compared to approximately 2,373
on December 31, 2005.
During the quarter, the Company continued to pursue its strategy of holding
loans in its investment portfolio, which are carried at their cost, less any
associated loan loss allowance. The amount of such loans placed into the
investment portfolio during the quarter was $970.3 million. These loans had an
excess of fair value over carrying value of $14.0 million, or 1.44% of
principal.
During the quarter, the Company sold $13.5 billion of non-securitized loans to
third parties for a gain, net of hedges, fees and direct costs, of $171.9
million.
During the quarter, the Company recognized realized and unrealized gains, net of
hedges, on the value of its securities portfolio of $22.4 million, of which $8.4
million resulted in current period income, and $14.0 million resulted in other
comprehensive income.
During the quarter, income associated with the Company's servicing assets was
$5.7 million. Effective at the beginning of the first quarter, the Company
adopted the newly issued Statement of Financial Accounting Standards No. 156 -
Accounting for Servicing of Financial Assets, an amendment of FASB Statement No.
140 ("SFAS 156") and elected the fair value option to subsequently measure its
mortgage servicing rights ("MSRs"). Under the fair
3
value option, all changes in the fair value of MSRs are reported in the income
statement. The Company's results from servicing include $24.3 million of
servicing fee revenue, $18.7 million of reduction in fair value due to servicing
runoff and $0.1 million of gain due to higher interest rates reducing projected
future runoff. In addition, the Company took a charge to retained earnings in
the amount of $2.9 million as a result of its adoption of SFAS 156. At the end
of the quarter, the principal amount of the loans being serviced including loans
held for sale and loans held for investment was $34.8 billion, compared to $30.7
billion at the end of the fourth quarter.
The Company's total revenues for the quarter were $233.1 million. Of these
revenues, $46.6 million was from net interest income, $171.9 million was from
sales of newly originated mortgage loans including origination fees and net of
hedges, $24.3 million was from mortgage servicing fees, $8.4 million was from
realized and unrealized gains on mortgage securities held, net of hedges, and
$1.8 million was from other sources. Revenues were decreased by $18.6 million of
change in fair value of servicing assets and $1.3 million of provision for loan
losses. During the quarter, the Company's expenses were $162.4 million, and the
Company's pre-tax income was $70.7 million. During the quarter, the Company's
taxable subsidiary had pre-tax income of $38.9 million resulting in tax expense
of $16.2 million. Consequently, net income for the quarter was $54.5 million
while preferred dividends were $3.3 million and net income available to common
stockholders was $51.2 million, resulting in earnings per diluted share of
$1.02. Book value attributable to common stockholders on March 31, 2006 was $1.1
billion, or $22.01 per common share, compared to $1.1 billion, or $21.62 per
common share, on December 31, 2005.
EARNINGS GUIDANCE
- -----------------
American Home is reaffirming its 2006 earnings guidance of $4.85 to $5.15 per
diluted share. The Company expects the distribution of 2006 earnings among the
year's quarters will be affected by seasonality in the Company's loan
origination segment and by progressively increasing net interest income due to
the Company's buildup of its investment portfolio.
DIVIDEND POLICY
- ---------------
American Home's dividend policy is increasing to $0.96 per share per quarter or
$3.84 per share on an annualized basis. The dividend policy is increasing due to
the Company's strong quarter, and its projected earnings for the balance of
2006. Investors are advised that the Company's earnings projections are based on
a number of assumptions, and if such assumptions do not materialize the Company
may not be able to maintain its dividend policy. 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.
OTHER COMPANY HIGHLIGHTS
- ------------------------
During the quarter, the Company completed its acquisition of Waterfield
Financial. The Waterfield acquisition was closely aligned with the Company's
strategy of growing its origination capabilities through acquisitions of
established franchises available for purchase at reasonable prices. In
connection with its acquisition of Waterfield, the Company acquired Waterfield's
closed loan inventory which consisted of $559 million of residential mortgage
loans.
4
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 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 and A-2 of this release.
CONFERENCE CALL TODAY
- ---------------------
American Home will hold an investor conference call today, April 26, 2006, 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 May 10, 2006.
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.
ABOUT AMERICAN HOME
- -------------------
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 mortgage loans, 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
5
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
6
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 Page
7
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
OPERATING STATISTICS
Three Months Ended
-------------------------------------------------------------
March 31, Dec. 31, Sept. 30, June 30, March 31,
2006 2005 2005 2005 2005
--------- -------- --------- -------- -----------
(1)
As Adjusted
--------- -------- --------- -------- -----------
Mortgage Holdings Segment:
- ----------------------------------------------------------------
Average loans and mortgage-backed securities in portfolio
($ billions) (2) 11.1 10.5 7.1 6.8 7.4
Interest income ($ millions) 154.9 138.0 84.5 77.1 78.2
Average portfolio yield 5.60% 5.27% 4.76% 4.53% 4.23%
Interest expense ($ millions) 128.5 108.2 62.9 52.2 46.7
Average cost of funds and hedges 4.89% 4.36% 3.84% 3.29% 2.71%
Net interest income ($ millions) 26.4 29.8 21.6 24.9 31.5
Net interest margin 0.95% 1.17% 1.24% 1.48% 1.70%
Interest carry on free standing derivatives ($ millions) 3.9 1.0 -0.6 -2.7 -5.0
Net interest income including interest carry on
free standing derivatives ($ millions) 30.3 30.8 21.0 22.2 26.5
Net interest margin including interest carry on free standing
derivatives 1.09% 1.21% 1.21% 1.32% 1.43%
Net change in mortgage-backed securities ($ billions) -1.0 1.4 1.2 -0.7 -1.6
Additions to loans in portfolio ($ billions) 1.0 2.1 1.3 0.1 0.0
Principal repayments of loans in portfolio ($ billions) 0.2 0.0 0.0 0.0 0.0
Net additions to loans in portfolio ($ billions) 0.8 2.1 1.3 0.1 0.0
Loans and mortgage-backed securities held - end of period
($ billions) 13.9 14.1 10.7 7.1 7.2
Mortgage-backed securities period end duration gap (in years) 0.15 -0.03 0.17 0.08 0.09
Loan Origination Segment:
- ----------------------------------------------------------------
Loan originations ($ billions) (3) 13.2 13.6 13.7 10.8 7.2
Refinance 51% 51% 46% 41% 48%
ARM 51% 50% 48% 50% 53%
Average mortgage loans, net ($ billions) 9.6 8.6 5.7 3.9 2.8
Net interest income excluding trust preferred and other interest
expense ($ millions) 28.0 26.4 28.5 23.0 18.9
Net interest margin excluding trust preferred and other interest
expense 1.17% 1.28% 2.12% 3.86% 2.70%
Trust preferred and other interest expense ($ millions) 4.7 3.3 2.0 0.8 0.4
Net interest income ($ millions) 23.3 23.1 26.5 22.2 18.5
Net interest margin 0.97% 1.12% 1.98% 2.34% 2.65%
Loans securitized and held ($ billions) 0.0 0.0 1.2 0.4 1.3
Loans securitized and sold ($ billions) 0.0 0.0 1.3 5.4 2.5
Loans sold to third parties ($ billions) 13.5 11.0 9.9 4.5 3.1
Gain on sales of loans, net of hedge gains ($ millions) (4) 171.9 105.4 176.5 182.6 112.9
Excess of fair value over carrying value of loans added
to investment portfolio ($ millions) 14.0 30.2 26.5 1.3 0.0
--------- -------- --------- -------- -----------
Total ($ millions) 185.9 135.6 203.0 183.9 112.9
--------- -------- --------- -------- -----------
Gain on sales of loans, net of hedge gains (% of principal) (4) 1.27% 0.96% 1.42% 1.78% 1.64%
Excess of fair value over carrying value of loans added
to investment portfolio (% of principal) 1.44% 1.43% 2.02% 0.95% 0.00%
Total (% of principal) 1.28% 1.03% 1.48% 1.77% 1.64%
Applications accepted ($ billions) 20.8 17.8 19.7 17.3 13.0
Application pipeline ($ billions) 11.8 9.2 11.6 10.7 8.4
March 31, Dec. 31, Sept. 30, June 30, March 31,
2006 2005 2005 2005 2005
--------- -------- --------- -------- -----------
Loan Servicing Segment:
- ----------------------------------------------------------------
Loan servicing portfolio - total with warehouse ($ billions) 34.8 30.7 27.5 24.7 19.9
Loan servicing portfolio - loans sold or securitized
($ billions) 29.0 25.0 24.2 22.6 18.2
Interest expense ($ millions) 3.1 2.6 1.3 2.0 1.4
Weighted average note rate 6.09% 5.79% 5.73% 5.62% 5.21%
Weighted average service fee 0.329% 0.330% 0.331% 0.336% 0.344%
Average age (in months) 14 15 13 13 14
Notes:
(1) 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 and A-2.
(2) Excludes loans held pending securitization.
(3) Loan originations of $13.2 billion in the first quarter of 2006 exclude $559
million of loans purchased in the Waterfield acquisition.
(4) Prior to the fourth quarter of 2005, includes gain on current period
securitizations, net of hedge gains.
8
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share amounts)
Three Months Ended
--------- --------- --------- --------- ---------
March 31, Dec. 31, Sept. 30, June 30, March 31,
2006 2005 2005 2005 2005
--------- --------- --------- --------- ---------
(1)
As
Adjusted
--------- --------- --------- --------- ---------
Net interest income:
Interest income $ 300,613 $ 265,435 $ 180,038 $ 135,318 $ 119,969
Interest expense (254,035) (215,057) (133,169) (90,336) (71,325)
--------- --------- --------- --------- ---------
Net interest income 46,578 50,378 46,869 44,982 48,644
--------- --------- --------- --------- ---------
Provision for loan losses (1,311) (2,142) -- -- --
--------- --------- --------- --------- ---------
Net interest income after provision for loan losses 45,267 48,236 46,869 44,982 48,644
--------- --------- --------- --------- ---------
Non-interest income:
Gain on sales of mortgage loans 171,907 98,777 123,658 77,377 35,253
Gain on sales of current period securitized mortgage loans -- -- 19,960 104,377 44,661
(Loss) gain on sales of mortgage-backed securities and
derivatives (850) 38,068 6,116 620 4,732
Unrealized gain (loss) on mortgage-backed securities and
derivatives 9,315 (44,778) (10,965) (10,292) 20,236
Loan servicing fees 24,333 26,715 21,099 16,970 14,163
Amortization and impairment of mortgage servicing rights -- (18,745) (3,478) (33,230) (5,204)
Change in fair value of mortgage servicing rights (18,621) -- -- -- --
--------- --------- --------- --------- ---------
Net loan servicing fees (loss) 5,712 7,970 17,621 (16,260) 8,959
--------- --------- --------- --------- ---------
Other non-interest income 1,769 2,181 1,585 2,543 1,466
--------- --------- --------- --------- ---------
Non-interest income 187,853 102,218 157,975 158,365 115,307
--------- --------- --------- --------- ---------
Non-interest expenses:
Salaries, commissions and benefits, net 99,267 95,237 101,378 94,859 68,475
Occupancy and equipment 17,970 16,459 15,328 14,397 12,671
Data processing and communications 7,126 6,402 6,479 5,957 5,950
Office supplies and expenses 4,332 4,612 5,024 5,657 4,429
Marketing and promotion 5,800 5,951 5,104 5,126 4,130
Travel and entertainment 6,753 6,982 4,670 5,427 3,928
Professional fees 5,331 3,586 3,744 3,432 3,470
Other 15,882 10,946 7,360 6,843 6,869
--------- --------- --------- --------- ---------
Non-interest expenses 162,461 150,175 149,087 141,698 109,922
--------- --------- --------- --------- ---------
Net income before income tax expense (benefit) 70,659 279 55,757 61,649 54,029
Income tax expense (benefit) 16,200 (16,419) 2,549 (3,851) --
--------- --------- --------- --------- ---------
Net income $ 54,459 $ 16,698 $ 53,208 $ 65,500 $ 54,029
========= ========= ========= ========= =========
Dividends on preferred stock 3,305 3,304 3,304 3,304 3,305
--------- --------- --------- --------- ---------
Net income available to common shareholders $ 51,154 $ 13,394 $ 49,904 $ 62,196 $ 50,724
========= ========= ========= ========= =========
Per share data:
Basic $ 1.03 $ 0.27 $ 1.10 $ 1.54 $ 1.26
Diluted $ 1.02 $ 0.27 $ 1.09 $ 1.52 $ 1.24
Weighted average number of shares - basic 49,715 49,605 45,174 40,384 40,308
Weighted average number of shares - diluted 50,070 49,998 45,669 40,886 40,811
Note:
(1) - 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 and A-2.
9
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands)
March 31, December 31, September 30, June 30, March 31,
2006 2005 2005 2005 2005
------------ ------------ ------------- ------------ ------------
Assets:
Cash and cash equivalents $ 572,591 $ 575,650 $ 624,424 $ 197,375 $ 162,762
Accounts receivable and servicing advances 327,586 329,132 335,736 116,835 103,295
Mortgage-backed securities 9,580,963 10,602,104 9,208,172 6,917,986 7,181,170
Mortgage loans held for sale, net 1,589,613 2,208,749 1,901,293 1,965,074 1,627,891
Mortgage loans held for investment, net 4,315,384 3,479,721 1,445,429 134,597 --
Derivative assets 102,267 44,594 67,185 35,756 73,383
Mortgage servicing rights, net 371,974 319,671 300,659 261,839 228,412
Premises and equipment, net 75,594 68,782 64,174 61,441 55,986
Goodwill 110,330 99,527 99,268 98,826 92,745
Other assets 30,708 26,815 31,697 21,185 49,332
------------ ------------ ------------- ------------ ------------
Total assets $ 17,077,010 $ 17,754,745 $ 14,078,037 $ 9,810,914 $ 9,574,976
============ ============ ============= ============ ============
Liabilities and Stockholders' Equity:
Liabilities:
Warehouse lines of credit $ 1,754,581 $ 3,474,191 $ 2,165,154 $ 665,697 $ 658,686
Drafts payable 16,377 20,754 18,763 26,538 28,391
Commercial paper 1,073,630 1,079,179 1,334,296 1,291,684 858,382
Reverse repurchase agreements 8,899,050 9,806,144 8,041,579 6,337,630 6,720,167
Collateralized debt obligations 2,905,199 1,057,906 -- -- --
Payable for securities purchased 215,114 261,539 554,717 -- --
Derivative liabilities 7,512 16,773 -- 6,195 1,945
Trust preferred securities 204,018 203,688 96,964 48,414 --
Accrued expenses and other liabilities 385,392 277,476 239,382 177,761 176,859
Notes payable 330,714 319,309 305,766 256,060 159,339
Income taxes payable 51,016 30,770 56,310 47,753 54,250
------------ ------------ ------------- ------------ ------------
Total liabilities 15,842,603 16,547,729 12,812,931 8,857,732 8,658,019
------------ ------------ ------------- ------------ ------------
Stockholders' Equity:
Preferred stock 134,040 134,040 134,040 134,040 134,040
Common stock 500 496 496 405 403
Additional paid-in capital 958,175 947,512 946,105 638,595 632,828
Retained earnings 206,512 203,778 235,556 224,442 193,064
Accumulated other comprehensive loss (64,820) (78,810) (51,091) (44,300) (43,378)
------------ ------------ ------------- ------------ ------------
Total stockholders' equity 1,234,407 1,207,016 1,265,106 953,182 916,957
------------ ------------ ------------- ------------ ------------
Total liabilities and stockholders' equity $ 17,077,010 $ 17,754,745 $ 14,078,037 $ 9,810,914 $ 9,574,976
============ ============ ============= ============ ============
Number of shares outstanding - preferred 5,600,000 5,600,000 5,600,000 5,600,000 5,600,000
Number of shares outstanding - common 50,004,965 49,639,646 49,590,821 40,538,479 40,335,255
10
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)
(In thousands)
Three Months Ended
-------------------------------------------------------------------
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
2006 2005 2005 2005 2005
----------- ----------- ----------- --------- ---------
Preferred stock
Balance at end of period $ 134,040 $ 134,040 $ 134,040 $ 134,040 $ 134,040
----------- ----------- ----------- --------- ---------
Common stock
Balance at beginning of period $ 496 $ 496 $ 405 $ 403 $ 403
Issuance of common stock - earnouts 3 -- -- 2 --
Issuance of common stock - Omnibus Stock Plan 1 -- 1 -- --
Issuance of common stock - offering -- -- 90 -- --
----------- ----------- ----------- --------- ---------
Balance at end of period $ 500 $ 496 $ 496 $ 405 $ 403
----------- ----------- ----------- --------- ---------
Additional paid-in capital
Balance at beginning of period $ 947,512 $ 946,105 $ 638,595 $ 632,828 $ 631,530
Issuance of common stock - earnouts 9,555 -- 139 5,005 846
Issuance of common stock - Omnibus Stock Plan 651 857 488 588 311
Issuance of common stock - offering -- -- 304,033 -- --
Stock-based employee compensation expense 410 -- -- -- --
Tax benefit for stock options exercised -- 434 2,638 -- --
Restricted shares amortization 47 116 212 174 141
----------- ----------- ----------- --------- ---------
Balance at end of period $ 958,175 $ 947,512 $ 946,105 $ 638,595 $ 632,828
----------- ----------- ----------- --------- ---------
Retained earnings
Balance at beginning of period $ 203,778 $ 235,556 $ 224,442 $ 193,064 $ 99,628
Cumulative-effect adjustment as of beginning of period (1) (2,917) -- -- -- --
Net income 54,459 16,698 53,208 65,500 125,380
Dividends declared (48,808) (48,476) (42,094) (34,122) (31,944)
----------- ----------- ----------- --------- ---------
Balance at end of period $ 206,512 $ 203,778 $ 235,556 $ 224,442 $ 193,064
----------- ----------- ----------- --------- ---------
Other comprehensive loss
Balance at beginning of period $ (78,810) $ (51,091) $ (44,300) $ (43,378) $ (39,339)
Unrealized (loss) gain on mortgage-backed securities (35,765) (7,730) (15,918) 6,901 (24,435)
Gain (loss) on cash flow hedges, net of amortization 49,755 (19,989) 9,127 (7,823) 20,396
----------- ----------- ----------- --------- ---------
Balance at end of period $ (64,820) $ (78,810) $ (51,091) $ (44,300) $ (43,378)
----------- ----------- ----------- --------- ---------
Total stockholders' equity $ 1,234,407 $ 1,207,016 $ 1,265,106 $ 953,182 $ 916,957
=========== =========== =========== ========= =========
Note:
(1) Effective January 1, 2006, the Company adopted SFAS 156 and elected the fair
value option to subsequently measure its MSRs.
11
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Three Months Ended
---------------------------------------------------------------------------
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
2006 2005 2005 2005 2005
------------ ------------ ------------ ------------ -----------
Cash flows from operating activities:
Net income $ 54,459 $ 16,698 $ 53,208 $ 65,500 $ 125,380
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 3,953 3,454 3,098 2,739 2,439
Provision for loan losses 1,311 2,142 -- -- --
Change in fair value of mortgage servicing rights 18,621 -- -- -- --
Amortization and impairment of mortgage servicing
rights -- 18,745 3,478 33,230 5,082
Accretion and amortization of mortgage-backed
securities, net 2,331 1,509 (2,571) (1,169) 4,593
Deferred cash flow hedge gain (loss), net of
amortization 3,909 (346) 1,689 1,738 17,052
Loss on sales of mortgage-backed securities and
derivatives -- 876 2,819 447 3,336
Unrealized loss (gain) on mortgage-backed securities 3,090 40,968 74,595 (4,533) 51,003
Unrealized (gain) loss on free standing derivatives (4,765) 6,149 (31,137) 25,903 (40,312)
(Decrease) increase in forward delivery contracts (24,041) 24,124 (13,547) 13,930 (9,595)
Capitalized mortgage servicing rights on securitized
loans -- -- (27,536) (62,629) (79,711)
Capitalized mortgage servicing rights on sold loans (69,768) (37,757) (14,762) (4,027) (2,347)
Decrease (increase) in interest rate lock commitments 7,131 (10,508) 14,501 (6,264) 210
Decrease (increase) in mortgage loan basis
adjustments 4,731 (32,201) (12,649) (10,584) 30,954
Other (198) (645) 2,196 (2,155) 1,177
(Increase) decrease in operating assets:
Accounts receivable 6,829 18,156 (218,519) (14,401) 12,952
Servicing advances (3,281) (11,552) (382) 861 731
Income taxes receivable -- -- -- 25,797 --
Other assets (1,451) 4,882 (10,512) 2,350 7,714
Increase (decrease) in operating liabilities:
Accrued expenses and other liabilities 93,876 31,696 53,657 (1,269) 21,432
Income taxes payable 16,173 (25,106) 8,557 (6,497) (92)
Origination of mortgage loans held for sale (12,203,014) (11,482,292) (12,394,139) (10,647,029) (7,255,400)
Principal received from sales of mortgage loans held
for sale 13,372,574 11,179,015 9,448,293 4,457,519 3,080,795
Proceeds from securitizations of mortgage loans held
for sale -- -- 2,993,315 5,855,914 7,336,612
Additions to mortgage-backed securities and
derivatives -- (152,666) (1,191,209) (466,522) (2,840,259)
Principal proceeds from sales of self-originated
mortgage-backed securities 1,809,796 1,333,188 -- 1,104,227 --
Cash received from residual assets in securitizations 27,353 26,958 35,431 23,539 16,556
Principal repayments of mortgage-backed securities 93,845 212,927 274,035 172,172 108,403
------------ ------------ ------------ ------------ -----------
Net cash provided by (used in) operating activities 3,213,464 1,168,414 (948,091) 558,787 598,705
------------ ------------ ------------ ------------ -----------
Cash flows from investing activities:
Purchases of premises and equipment (10,765) (8,062) (5,831) (8,194) (6,849)
Origination of mortgage loans held for investment (970,335) (2,084,025) (1,301,364) (133,757) --
Proceeds from repayments of mortgage loans held for
investment 137,545 75,613 5,108 -- --
Purchases of mortgage-backed securities (1,389,336) (3,298,636) (2,417,565) (933,929) --
Principal proceeds from sales of purchased
mortgage-backed securities -- 24,592 518,517 20,962 1,133,989
Principal repayments of purchased mortgage-backed
securities 438,297 409,080 414,667 361,049 368,671
Acquisition of business (550,077) -- -- -- --
------------ ------------ ------------ ------------ -----------
Net cash (used in) provided by investing activities (2,344,671) (4,881,438) (2,786,468) (693,869) 1,495,811
------------ ------------ ------------ ------------ -----------
Cash flows from financing activities:
(Decrease) increase in warehouse lines of credit, net (1,719,610) 1,309,037 1,499,457 7,011 (77,097)
(Decrease) increase in reverse repurchase agreements,
net (907,094) 1,764,565 1,703,949 (382,537) (351,001)
Increase (decrease) in collateralized debt
obligations 1,847,293 1,057,906 -- -- (2,022,218)
(Decrease) increase in payable for securities
purchased (46,425) (293,178) 554,717 -- --
(Decrease) increase in commercial paper, net (5,549) (255,117) 42,612 433,302 328,592
(Decrease) increase in drafts payable, net (4,377) 1,991 (7,775) (1,853) 2,191
Increase in trust preferred securities 330 106,724 48,550 48,414 --
Increase in notes payable, net 11,405 13,543 49,706 96,721 23,578
Proceeds from issuance of common stock 652 857 304,522 587 311
Dividends paid (48,477) (42,078) (34,130) (31,950) (28,931)
------------ ------------ ------------ ------------ -----------
Net cash (used in) provided by financing activities (871,852) 3,664,250 4,161,608 169,695 (2,124,575)
------------ ------------ ------------ ------------ -----------
Net (decrease) increase in cash and cash equivalents (3,059) (48,774) 427,049 34,613 (30,059)
Cash and cash equivalents, beginning of period 575,650 624,424 197,375 162,762 192,821
------------ ------------ ------------ ------------ -----------
Cash and cash equivalents, end of period $ 572,591 $ 575,650 $ 624,424 $ 197,375 $ 162,762
============ ============ ============ ============ ===========
12
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
FAIR VALUE OF FINANCIAL INSTRUMENTS (Unaudited)
(In thousands)
March 31, 2006
-------------------------------------------------
Fair Value in
Excess of
Carrying Value Fair Value Carrying Value
--------------- ------------ ------------------
Assets:
Cash and cash equivalents $ 572,591 $ 572,591 $ --
Accounts receivable and servicing advances 327,586 327,586 --
Mortgage-backed securities 9,580,963 9,580,963 --
Mortgage loans held for sale, net 1,589,613 1,607,056 17,443
Mortgage loans held for investment, net 4,315,384 4,386,173 70,789
Mortgage servicing rights, net 371,974 371,974 --
Derivative assets* 102,267 165,072 62,805
------------------
$ 151,037
------------------
Carrying Value in
Excess of Fair
Value
------------------
Liabilities:
Warehouse lines of credit $ 1,754,581 $1,754,581 $ --
Drafts payable 16,377 16,377 --
Commercial paper 1,073,630 1,073,630 --
Reverse repurchase agreements 8,899,050 8,898,132 918
Collateralized debt obligations 2,905,199 2,905,199 --
Payable for securities purchased 215,114 215,114 --
Derivative liabilities 7,512 7,512 --
Trust preferred securities 204,018 204,018 --
Notes payable 330,714 330,714 --
------------------
$ 918
------------------
Fair Value in
Excess of
Carrying Value
------------------
$ 151,955
==================
* 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.
13
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
OPERATING STATISTICS
Three Months Ended
--------------------------------------------
March 31, 2005
--------------------------------------------
(1)
GAAP Adjustments As Adjusted
-------------- ------------- -------------
Mortgage Holdings Segment:
- ------------------------------------------------------------------
Average loans and mortgage-backed securities in portfolio
($ billions) (2) 5.9 1.5 7.4
Interest income ($ millions) 58.3 19.9 78.2
Average portfolio yield 3.98% 4.23%
Interest expense ($ millions) 39.0 7.7 46.7
Average cost of funds and hedges 2.79% 2.71%
Net interest income ($ millions) 19.3 12.2 31.5
Net interest margin 1.33% 1.70%
Interest carry on free standing derivatives ($ millions) -5.0 -5.0
Net interest income including interest carry on
free standing derivatives ($ millions) 14.3 12.2 26.5
Net interest margin including interest carry on free standing
derivatives 0.98% 1.43%
Net change in mortgage-backed securities ($ billions) -1.6 -1.6
Additions to loans in portfolio ($ billions) 0.0 0.0
Principal repayments of loans in portfolio ($ billions) 0.0 0.0
Net additions to loans in portfolio ($ billions) 0.0 0.0
Loans and mortgage-backed securities held - end of period
($ billions) 7.2 7.2
Mortgage-backed securities period end duration gap (in years) 0.09 0.09
Loan Origination Segment:
- ------------------------------------------------------------------
Loan originations ($ billions) 7.2 7.2
Refinance 48% 48%
ARM 53% 53%
Average mortgage loans, net ($ billions) 6.2 -3.4 2.8
Net interest income excluding trust preferred and other interest
expense ($ millions) 41.3 -22.4 18.9
Net interest margin excluding trust preferred and other interest
expense 2.64% 2.70%
Trust preferred and other interest expense ($ millions) 0.4 0.4
Net interest income ($ millions) 40.9 -22.4 18.5
Net interest margin 2.62% 2.65%
Loans securitized and held ($ billions) 2.8 -1.5 1.3
Loans securitized and sold ($ billions) 4.5 -2.0 2.5
Loans sold to third parties ($ billions) 3.1 3.1
Gain on sales of loans, net of hedge gains ($ millions) (3) 156.4 -43.5 112.9
Excess of fair value over carrying value of loans added
to investment portfolio ($ millions) 0.0 0.0
-------------- ------------ ------------
Total ($ millions) 156.4 -43.5 112.9
-------------- ------------ ------------
Gain on sales of loans, net of hedge gains (% of principal) (3) 2.26% 1.64%
Excess of fair value over carrying value of loans added
to investment portfolio (% of principal) 0.00% 0.00%
Total (% of principal) 2.26% 1.64%
Applications accepted ($ billions) 13.0 13.0
Application pipeline ($ billions) 8.4 8.4
March 31, 2005
--------------------------------------------
Loan Servicing Segment:
- ------------------------------------------------------------------
Loan servicing portfolio - total with warehouse ($ billions) 19.9 19.9
Loan servicing portfolio - loans sold or securitized ($ billions) 18.2 18.2
Interest expense ($ millions) 1.4 1.4
Weighted average note rate 5.21% 5.21%
Weighted average service fee 0.344% 0.344%
Average age (in months) 14 14
Notes:
(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.
(2) Excludes loans held pending securitization.
(3) Prior to the fourth quarter of 2005, includes gain on current period
securitizations, net of hedge gains.
A-1
AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share amounts)
Three Months Ended
---------------------------------------
March 31, 2005
---------------------------------------
(1)
GAAP Adjustments As Adjusted
--------- ----------- -----------
Net interest income:
Interest income $ 146,894 $ (26,925) $ 119,969
Interest expense (88,091) 16,766 (71,325)
--------- ----------- -----------
Net interest income 58,803 (10,159) 48,644
--------- ----------- -----------
Non-interest income:
Gain on sales of mortgage loans 35,253 -- 35,253
Gain on sales of current period securitized mortgage loans 69,919 (25,258) 44,661
Gain on sales of mortgage-backed securities and derivatives 6,132 (1,400) 4,732
Unrealized gain (loss) on mortgage-backed securities and derivatives 57,499 (37,263) 20,236
Loan servicing fees 11,312 2,851 14,163
Amortization and impairment of mortgage servicing rights (5,082) (122) (5,204)
Change in fair value of mortgage servicing rights -- -- --
--------- ----------- -----------
Net loan servicing fees (loss) 6,230 2,729 8,959
--------- ----------- -----------
Other non-interest income 1,466 -- 1,466
--------- ----------- -----------
Non-interest income 176,499 (61,192) 115,307
--------- ----------- -----------
Non-interest expenses:
Salaries, commissions and benefits, net 68,475 -- 68,475
Occupancy and equipment 12,671 -- 12,671
Data processing and communications 5,950 -- 5,950
Office supplies and expenses 4,429 -- 4,429
Marketing and promotion 4,130 -- 4,130
Travel and entertainment 3,928 -- 3,928
Professional fees 3,470 -- 3,470
Other 6,869 -- 6,869
--------- ----------- -----------
Non-interest expenses 109,922 -- 109,922
--------- ----------- -----------
Net income before income tax expense 125,380 (71,351) 54,029
Income tax expense -- -- --
--------- ----------- -----------
Net income $ 125,380 $ (71,351) $ 54,029
========= =========== ===========
Dividends on preferred stock 3,305 -- 3,305
--------- ----------- -----------
Net income available to common shareholders $ 122,075 $ (71,351) $ 50,724
========= =========== ===========
Per share data:
Basic $ 3.03 $ (1.77) $ 1.26
Diluted $ 2.99 $ (1.75) $ 1.24
Weighted average number of shares - basic 40,308 40,308 40,308
Weighted average number of shares - diluted 40,811 40,811 40,811
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