Exhibit 99.1
American Residential Reports Fourth-Quarter and 2003 Results
SAN DIEGO--(BUSINESS WIRE)--Feb. 12, 2004--American Residential
Investment Trust, Inc. (Amex(R): INV), the parent company of American
Mortgage Network (AmNet), a wholesale mortgage bank serving mortgage
brokers nationwide, today reported fourth-quarter and 2003 results,
highlights of which included:
-- Fourth-quarter consolidated net loss was $406,000, or
$0.05 per diluted share, inclusive of $1.0 million, or
$0.13 per diluted share related to tax benefits;
-- 2003 consolidated net income, however, was a record $29.0
million, or $3.57 per diluted share, inclusive of $10.9
million, or $1.34 per diluted share related to tax
benefits; compared to net income of $1.6 million or $0.20
a share for the year ended December 31, 2002;
-- Exclusive of tax benefits, 2003 consolidated net income
was $18.1 million or $2.23 per diluted share;
-- Mortgage loans funded through AmNet were $1.9 billion in
the fourth quarter and $10.2 billion for 2003, compared to
$1.9 billion in the fourth quarter of 2002 and $4.2
billion for the year ended December 31, 2002; and
-- Book value per outstanding share was $11.24 and cash and
cash equivalents were $46.5 million as of December 31,
2003, compared to $7.57 and $14.8 million at December 31,
2002.
Consolidated Results
American Residential reported a consolidated net loss of $406,000,
or $0.05 per diluted share, for the fourth quarter of 2003.
Consolidated net income for 2003 was $29.0 million, or $3.57 per
diluted share, inclusive of $10.9 million, or $1.34 per diluted share,
related to tax benefits. Exclusive of tax benefits, 2003 consolidated
net income was $18.1 million or $2.23 per diluted share. Consolidated
net income in 2002 was $1.6 million, or $0.20 per diluted share.
Commenting on results for the fourth quarter and year, John M.
Robbins, Jr., Chief Executive Officer, said, "While the fourth quarter
did not meet expectations, 2003 as a whole was a year of significant
achievement for American Mortgage Network. Since its inception two
years ago, AmNet has become one of the top 25 wholesale lenders in the
country. We strengthened our operating platform, enabling us to expand
rapidly, grow market share and create value for stockholders. We
aggressively expanded into new geographic areas by opening 12 new
regional loan production offices, bringing our total to 21. Our
product offerings now cover some 80 programs ranging from conforming
to Alt-A loans to serve a wide range of borrower's needs in a purchase
market. This growth has been accomplished organically as we
simultaneously strengthened our balance sheet and accumulated
substantial cash reserves.
Robbins continued, "Loan volume did decline in the fourth quarter
and margins on that volume were compressed. During the second and
third quarter, we aggressively entered new markets and increased staff
to handle volume and to capitalize on this unprecedented market
opportunity. However, when fourth-quarter activity abruptly slowed,
the staffing levels we put in place to respond to second and third
quarter volumes were no longer necessary, so we have reduced headcount
in most branches and eliminated overtime and temporary labor costs.
Our ongoing challenge will be to balance future growth opportunities
with the reality of today's mortgage market. Consequently, as we enter
new markets and add to our sales force, operations in existing
branches will continue to be evaluated and rightsized to align
infrastructure costs with volume levels."
The Company reports its results in two segments -- mortgage
banking (AmNet) and mortgage asset portfolio investments (AMREIT).
Mortgage Banking Business -- American Mortgage Network (AmNet)
AmNet funded $1.9 billion in home loans during the fourth quarter,
a 39% decrease over the third quarter of 2003. For the year ended
December 31, 2003, AmNet funded $10.2 billion in home loans, compared
to $4.2 billion in 2002, an increase of 145%.
AmNet Operating Results
For the fourth quarter of 2003, AmNet's loss before income taxes
was $2.9 million, compared to income before income taxes of $5.1
million in the fourth quarter of 2002. Income before income taxes in
2003 was $23.5 million, compared to 2002's loss before income taxes of
$7.4 million. The loss in the fourth quarter of 2003 was a result of a
sharp decrease in loan volumes and compressed margins on that volume.
Gain on the sale of loans and other fee income, net of hedging,
totaled $12.9 million or 69 basis points on $1.9 billion of loan
fundings, as compared to 81 basis points in the third quarter,
reflecting competitive pricing pressure in the fourth quarter.
Interest on mortgage assets in the fourth quarter was $6.0 million
and was offset by interest expense of $2.8 million, resulting in a net
interest spread on loans held for sale of $3.2 million, or 17 basis
points on $1.9 billion of loan fundings. AmNet's operating expenses,
excluding interest, totaled $19.0 million during the fourth quarter,
or 102 basis points on loan fundings. These expenses included an
estimated $6.5 million in sales commissions and other variable
expenses, representing approximately 34% of total operating expenses.
Commenting on mortgage operations in the fourth quarter, Robbins
said, "Although we have reduced our administrative infrastructure, we
also expanded our sales presence nationally by opening offices in
Dallas and Houston, Texas and recruiting mortgage banking
professionals for offices in Florida, New York and Utah. We also added
new account executives to our 21 existing offices, bringing the total
number of commissioned account executives to 91 at year-end. AmNet's
new technology platform, through investment in the IBM I Series, is
helping AmNet deliver more speed and flexibility to our broker
customers.
AmNet's warehouse loan funding capacity totals $1.4 billion at
year-end, compared to $750 million at December 31, 2002. AmNet has
lending partnerships with Countrywide Warehouse Lending, JPMorgan
Chase Bank, UBS Warburg Real Estate Securities Inc and GMAC
Residential Funding.
Mortgage Asset Portfolio Investments (AMREIT)
The Company's total mortgage assets held for portfolio investment
were $161.3 million at December 31, 2003 compared to $267.1 million at
December 31, 2002. Since 2000, the dollar value of the Company's
portfolio of mortgage assets has declined due to the decision to cease
loan portfolio acquisitions, build cash reserves and re-deploy capital
into the Company's mortgage banking business.
In the fourth quarter of 2003, interest on mortgage assets was
$2.1 million and interest expense was $1.0 million, resulting in a net
interest spread of approximately $1.1 million, or approximately 2.5%
of December 31, 2003 bond collateral and real estate owned on an
annualized basis. Non-cash loan premium amortization expense totaled
$878 thousand for the period. At year-end 2003, remaining unamortized
premiums were $3.8 million, down from $7.3 million at December 31,
2002.
Liquidity and Book Value
Cash and cash equivalents were $ 46.5 million as of December 31,
2003, an increase of 215 % from December 31, 2002, and cash per
outstanding share increased from $1.88 at December 31, 2002 to $5.91
at December 31, 2003. The Company's book value per outstanding share
was $11.24 at December 31, 2003, compared to $7.57 at December 31,
2002.
Strategic Initiatives
Robbins added, "Several strategic initiatives are essential to
ensure top-line growth and preserve margins. These include:
-- Growing our market share through the addition of experienced,
commissioned account executives coupled with market
penetration of new metropolitan statistical areas (MSAs);
-- Expanding our product line to specifically target brokers'
needs in a purchase market and deliver loan products that
yield higher margins; and
-- Leveraging our technology platform to improve efficiencies and
increase productivity.
We have not let the slowdown in the market stop us. Rather, we
intend to pursue the plans for growing our sales presence that have
been in place for some time, leveraging the infrastructure already in
place. Offices in Fort Lauderdale and Orlando began funding loans in
January to extend our presence in Florida. AmNet's loan production
office in Long Island, New York also began funding loans. By the end
of 2004, we plan to have 32 loan production offices operational--a key
element of our carefully orchestrated plan to expand the branch
network into the other top MSAs. We continue to recruit experienced
mortgage banking professionals and have increased the number of
commissioned account executives by 65% since June 30, 2003. In
January, we reached a critical milestone -- there are nearly 5,000
broker customers approved to do business with us.
Robbins continued, "One of our most significant initiatives was
the launch of a subprime program led by Laura Swartz, a recognized
industry leader. Laura and her team join a group of senior managers at
AmNet who have a wealth of experience in the subprime arena. All
subprime loans will be underwritten centrally in our home office, not
at the branch offices. Loans will be underwritten to meet the
specifications of investors. We have already lined up capital market
and investor partners for this program. As with our other loan
products, we will sell subprime loans on a servicing released basis to
minimize our long-term credit risk to AmNet, as is the case with any
other type of loan we originate. In addition, we intend to continue to
make investments in our technology platform to increase our value
proposition to our broker customers, as well as to give us the ability
to more effectively align cost structure with current loan demand by
maximizing productivity and efficiency, and lowering unit costs."
"I am very pleased to announce that two new directors will join
the Board. They are Robert T. Barnum, former Chief Operating Officer
of American Savings Bank, a $20 billion California thrift, and Robert
A. Gunst, Chairman of the Board of Directors for Garden Fresh
Restaurants Corporation and former President and CEO of The Good Guys,
Inc. (Nasdaq: GGUY). Both individuals bring immense knowledge and
experience to AmNet and are committed to our growth and
profitability."
Discussing specific metrics for the year, Judith A. Berry,
Executive Vice President and Chief Financial Officer, said, "While we
expect losses in the first quarter, we anticipate that profitability
will be restored during the second quarter with profits increasing in
the third and fourth quarters of 2004 as quarter-over-quarter volumes
increase and the branch network matures. We are optimistic that a
well-executed expansion plan, coupled with the rollout of our subprime
initiative, will drive up loan production and help us to expand
margins."
"We are also looking at a variety of options to enhance
stockholder value in 2004," Robbins concluded. At the end of 2003, our
cash position exceeded 50% of our stockholders equity balance. Some of
our cash will be used to support the anticipated growth in loan
funding volume, including investments in the rollout of our subprime
business, the expansion of our regional network and marketing support
for our broker customers. We continue to evaluate the capital and cash
needed for our growth plans as well as other possible uses of cash
such as strategic acquisitions. Opportunities occur in a consolidating
market and benefit those who have the capital to invest. As growth
goals are met, the Board of Directors will continue to consider
alternatives which could include dividends and share repurchase."
Conference Call and Webcast
Management will host a conference call with a simultaneous webcast
today at 1:30 p.m. Pacific/4:30 p.m. Eastern to discuss fourth quarter
and full-year operating performance. The conference call, featuring
Chairman and Chief Executive Officer John M. Robbins and Executive
Vice President and Chief Financial Officer Judith A. Berry, will be
available live via the Internet. To listen to the webcast, log on to
the Company's web site at www.amerreit.com and click on the link that
appears on the home page. The webcast will also be available live at
www.fulldisclosure.com.
An online replay will be available at www.amerreit.com for one
year. A telephone replay will be available through February 19, 2004
by dialing (800) 642-1687 or (706) 645-9291 and entering the pass code
5271673. Electronic versions of news releases may be accessed via the
Company's web site at www.amerreit.com.
About American Mortgage Network
Headquartered in San Diego, California, AmNet is a wholly owned
subsidiary of American Residential Investment Trust, Inc. AmNet
originates loans for the national mortgage broker community through
its network of branches and business-to-business over the Internet.
AmNet has loan production offices in Arizona, California, Colorado,
Connecticut, Florida, Georgia, Illinois, Minnesota, New Jersey, New
York, North Carolina, Oregon, Rhode Island, Texas, Virginia and
Washington.
AmNet has a total of $1.4 billion in warehouse borrowing capacity
and is approved to do business in 49 states and the District of
Columbia either by license or exemption. AmNet has nearly 5,000
approved broker customers across the nation. For more information,
please visit www.amnetmortgage.com.
About American Residential Investment Trust
American Residential Investment Trust, Inc. is the parent company
of American Mortgage Network. For more information, please visit
www.amerreit.com.
Forward Looking Statement
Certain matters discussed in this press release may constitute
forward-looking statements within the meaning of federal securities
laws. Forward-looking statements include statements regarding the
growth of AmNet's sales presence, the number of operational loan
production offices by the end of 2004, underwriting locations and
specifications for subprime loans, the planned servicing released
sales for subprime loans, the Company's intent to continue investing
in its technology platform, expected losses for the Company in the
first quarter of 2004, profitability being restored and increasing
during the second through fourth quarters of 2004, the expectation
that the Company's expansion plan and subprime initiative will
increase loan production and expand margins, uses of cash in 2004 and
the Company's Board of Directors consideration of dividends and share
repurchase. Actual results and the timing of certain events could
differ materially from those projected in or contemplated by these
forward-looking statements due to a number of factors, including but
not limited to: the level of interest rates generally; economic
conditions generally; the size of the national mortgage market,
including subprime loans; the stability of the subprime mortgage
secondary market; the predictability of the Company's expenses and
margins; the future correlation of volatility in forward mortgage sale
instruments to the Company's loan lock commitments; interest rate
volatility; the availability of financing for the funding of mortgage
loans, including subprime loans; the Company's liquidity position; the
availability of qualified mortgage professionals and other risk
factors outlined in American Residential's SEC reports.
AMERICAN RESIDENTIAL INVESTMENT TRUST, INC.
- ----------------------------------------------------------------------
Three Three Twelve Twelve
Months Months Months Months
Ended Ended Ended Ended
--------------------------------------------
12/31/2003 12/31/2002 12/31/2003 12/31/2002
--------------------------------------------
Income Statement -- -- -- --
-- -- -- --
-- -- -- --
Mortgage Banking Segment:
Revenues
Gain on sales of loans $16,444 $21,413 $79,203 $46,667
--------------------------------------------
Derivative financial
instruments:
Treasury futures and
options and related
commissions and fees -- (49) -- (18,171)
Forward sales of
mortgage backed
securities (MBS) and
options on MBS 1,067 (6,470) 2,182 (16,262)
Market adjustment on
loan commitment
pipeline (4,644) (1,648) (2,104) 2,663
--------------------------------------------
Total
derivative
financial
instruments (3,577) (8,167) 78 (31,770)
--------------------------------------------
Interest on mortgage
assets 6,032 6,857 29,875 14,908
Other income 18 1 94 10
--------------------------------------------
Total revenue,
net of
derivative
financial
instruments 18,917 20,104 109,250 29,815
--------------------------------------------
Expenses
Interest expense 2,826 3,557 13,482 7,790
Operating expenses 19,005 11,475 72,220 29,427
--------------------------------------------
Total expenses 21,831 15,032 85,702 37,217
--------------------------------------------
Income (loss) before
income taxes - Mortgage
Banking Segment $(2,914) $5,072 $23,548 $(7,402)
Mortgage Asset Portfolio
Segment:
Revenues
Interest on mortgage
assets $2,065 $3,110 $10,906 $16,630
Other income 226 253 1,171 1,326
Litigation Settlement -- -- -- 10,281
--------------------------------------------
Total revenue 2,291 3,363 12,077 28,237
--------------------------------------------
Expenses
Interest expense 1,040 1,972 4,840 10,430
Provision for loan losses 964 835 3,441 5,454
(Gain) Loss on sale of
real estate owned, net (170) (31) (921) 121
Operating expenses 610 982 2,345 3,263
--------------------------------------------
Total expenses 2,444 3,758 9,705 19,268
--------------------------------------------
Income (loss) before
income taxes - Mortgage
Asset Portfolio Segment $(153) $(395) $2,372 $8,969
Consolidated Income
(loss)- Combined Segments $(3,067) $4,677 $25,920 $1,567
Provision for income tax
expense (benefit) (1,642) -- 7,781 7
Income tax benefit from
termination of REIT
status (1,019) -- (10,884) --
Consolidated Net
Income (loss) $(406) $4,677 $29,023 $1,560
Per Share Data
- --------------------------
Weighted average common
shares outstanding 7,862,949 7,862,490 7,861,988 7,884,983
Consolidated income (loss)
per share basic $(0.05) $.59 $3.69 $0.20
Consolidated income (loss)
per share diluted $(0.05) $0.59 $3.57 $0.20
Loan Origination Data
- --------------------------
Total mortgage loans
funded in period ($
millions) $1,855 $1,943 $10,173 $4,159
Number of loans funded 11,055 10,968 57,814 23,553
Balance Sheet Data
- --------------------------
Cash and cash equivalents $44,400 $13,647
Restricted cash 2,100 1,125
Bond collateral mortgage
loans and real estate
owned, net of reserves 161,252 267,094
Mortgage loans held for
sale, net 276,781 390,125
Total assets 507,387 685,307
Short-term debt 268,619 378,553
Long-term debt, net 130,295 237,456
Total stockholders' equity $88,486 $59,485
Book value per share basic $11.24 $7.57
Book value per share
diluted $10.86 $7.57
Debt to equity ratio 4.7:1 10.5:1
($ in thousands, except per share data and as noted)
CONTACT: American Residential Investment Trust, Inc., San Diego
Investor and Analyst Relations:
Judith Berry, Executive Vice President and Chief
Financial Officer, 858-909-1230
jberry@amnetmortgage.com
or
Clay Strittmatter, Senior Vice President, Finance
858-909-1340
cstrittmatter@amnetmortgage.com
or
FRB -- Weber Shandwick
Rose Tucker, 310-407-6522
rtucker@webershandwick.com
or
American Residential Investment Trust, Inc.
Media Relations:
Kasey Emmel, Vice President, Marketing & Communications
858-909-1335
kemmel@amnetmortgage.com
or
Forti Communications Inc.
Corinne Forti, President, 805-498-0113
cforti@amnetmortgage.com
forticomm@aol.com