EXHIBIT 99.1
[AMERICAN HOME MORTGAGE LOGO]
FOR IMMEDIATE RELEASE
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American Home Mortgage Expects
Reduced Earnings in the First Quarter and Full Year 2007
Market conditions are expected to reduce gain on sale revenues and necessitate
write-downs of low investment grade and residual securities
The Company now sees first quarter earnings per diluted share of $0.40 to $0.60
and full year 2007 earnings per diluted share of $3.75 to $4.25
Common stock dividend policy is changed to $0.70 per share per quarter or $2.80
on an annualized basis
MELVILLE, NY-April 6, 2007 - American Home Mortgage Investment Corp. (NYSE: AHM)
announced today that it expects lower income in the first quarter and full year
2007 than previously forecasted due to conditions in the secondary mortgage and
mortgage-backed securities markets.
Michael Strauss, American Home's Chairman and Chief Executive Officer,
commented, "During March, conditions in the secondary mortgage and mortgage
securities markets changed sharply. In particular, these markets were
characterized by far few buyers offering materially lower prices, both for loan
pools and for "AA", "A", "BBB" and residual mortgage securities. These changes
had a significant, adverse impact on our Company's first quarter results,
reducing our gain on sale revenue and causing mark-to- market losses in our
portfolio. While the market may recover, and while we will attempt to restore
our gain on sale margins by raising interest rates charged to consumers, our
working assumption must be that current market conditions will persist and that
our gain on sale margins will not recover through the balance of the year.
Consequently, I am disappointed to report that our Company is lowering its full
year earnings guidance and its dividend policy."
First Quarter Results
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The Company's first quarter results will be adversely affected by lower gain on
sale margins. As March progressed, loan pools offered for sale by the Company
received relatively few bids at lower than expected prices. As a result, those
loans originated by the Company in late February and during March earned lower
gain on sale revenues than were anticipated.
The Company's first quarter results will also be adversely affected by
write-downs of its portfolio of low investment grade and residual securities. In
particular, the Company's approximately $484 million of securities rated "AA",
"A" or "BBB" will be written down to account for an unusually large widening in
the first quarter of the spread over LIBOR at which these securities trade.
Additionally, the Company's first quarter results will be adversely affected by
ongoing high delinquency related charges due to the Company establishing
additional reserves for increases in non-performing loans. While high
delinquency charges were expected, their impact on quarterly results continues
to be significant. A disproportionate share of the Company's non-performing
loans are repurchased Alternate "A" loans. The Company has ceased offering those
types of Alternate "A" loans that have resulted in a high proportion of its
repurchases, and consequently believes the portion of delinquency related charge
resulting from repurchases will diminish toward year-end. While non-performing
loans increased during the quarter, the Company did experience a decline in
early stage delinquencies, with loans in early stage delinquencies lower at the
end of the first quarter than at year-end 2006.
During the first quarter, the Company's loan production was approximately $16.7
billion. Also during the quarter, the Company's net interest income and mortgage
servicing income were near forecast levels.
First Quarter Earnings Guidance
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Investors are strongly cautioned that the Company has not yet closed its first
quarter, and its actual financial results for the first quarter are unknown and
difficult to forecast. Given information currently available, the Company
believes its first quarter diluted earnings per share will approximate $0.40 to
$0.60.
Full Year 2007 Earnings Guidance
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Due to the Company's first quarter earnings shortfall, and based on the
possibility that current market conditions will continue to prevail for an
extended period, the Company is lowering its full year 2007 earnings guidance to
$3.75 to $4.25 per diluted share. Assumptions underlying the revised guidance
include slightly lower gain on sale margins in the second quarter compared to
the first quarter, and gain on sale margins in the third and fourth quarters
similar to the first quarter. Also underlying the revised guidance are the
absence of further write-downs of low investment grade and residual securities,
and delinquency related charges similar to the first quarter through the balance
of the year, except that repurchase related charges are projected to diminish
slightly in the fourth quarter.
Dividend Policy
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Due to the Company's first quarter earnings shortfall and the Company's revised
outlook for the balance of 2007, the Company is lowering its common stock
dividend policy to $0.70 per share per quarter or $2.80 per share on an
annualized basis. The new dividend policy applies to the second quarter 2007
dividend payable in July 2007. Please note, however, that the Company's dividend
policy does not represent an obligation to pay dividends, and that dividends are
only due and payable upon their declaration by the Company's Board of Directors.
Earnings Release and Conference Call
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American Home will announce its first quarter results in a press release that
will be issued before the market opens on Monday, April 30, 2007. The Company
will hold a conference call that same day at 10:30 AM EST 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 14, 2007.
About American Home Mortgage
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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 loans
and mortgage-backed securities, and, through its taxable subsidiaries, from
originating and selling mortgage loans and servicing mortgage loans for
institutional investors. Mortgages are originated through a network of loan
production offices and mortgage brokers as well as purchased from correspondent
lenders, and are serviced at the Company's Irving, Texas servicing center. For
additional information, please visit the Company's website at
www.americanhm.com.
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.
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CONTACT:
Mary M. Feder
Vice President, Investor Relations
(631) 622-6469
mary.feder@americanhm.com