Exhibit 99.1
AmNet Mortgage Inc. Reports Fourth Quarter and 2004 Results
SAN DIEGO--(BUSINESS WIRE)--March 9, 2005--AmNet Mortgage Inc.
(NASDAQ:AMNT), the parent company of American Mortgage Network (AmNet), a
nationwide wholesale mortgage bank, today reported fourth quarter and 2004
results.
Results of the fourth quarter include:
-- Fourth quarter consolidated net income was $123 thousand, or $0.01 per
diluted share, compared to a loss of $406 thousand or $0.05 per
diluted share in Q4, 2003;
-- Mortgage loans funded through AmNet were $2.5 billion in the fourth
quarter of 2004 compared to $1.9 billion in the fourth quarter of
2003; and
-- For the fourth quarter of 2004, AmNet's income before income taxes was
$1.0 million, compared to a loss before income taxes of $2.9 million
in the fourth quarter of 2003.
Results for the full year 2004 include:
-- Consolidated net loss was $6.3 million, or $0.83 per diluted share,
inclusive of $2.9 million, or $0.38 per diluted share related to
charges for a valuation adjustment on the sale of the REIT portfolio,
compared to net income of $29.0 million, or $3.57 per diluted share,
for the year ended December 31, 2003, inclusive of tax benefits;
-- Funded $9.0 billion of mortgage loans compared to $10.2 billion for
the year ended December 31, 2003;
-- AmNet's loss before income taxes was $5.3 million in 2004, compared to
income before income taxes of $23.5 million in 2003;
-- Established new correspondent and subprime channels;
-- Opened seven new loan production offices and expanded the sales force
from 89 at year-end 2003 to 171 at year-end 2004;
-- Increased cash and cash equivalents to $52.7 million as of December
31, 2004 from $46.5 million at December 31, 2003;
-- Sold the majority of its remaining REIT portfolio; and
-- Repurchased approximately 605 thousand shares of its common stock,
representing 7.7% of the outstanding shares at the beginning of 2004.
Consolidated Results
AmNet Mortgage Inc. reported consolidated net income of $123 thousand, or
$0.01 per diluted share, for the fourth quarter of 2004 compared to a net loss
of $406 thousand, or $0.05 per diluted share for the fourth quarter of 2003. The
consolidated net loss for 2004 was $6.3 million, or $0.83 per diluted share,
inclusive of $2.9 million, or $0.38 per diluted share, related to the
reclassification and sale of the majority of its mortgage asset portfolio.
Commenting on results for the year, John M. Robbins, Chief Executive
Officer, said, "2004 was a challenging operating environment for the mortgage
industry, yet it was a year of investment and growth for the Company. We
capitalized on a number of opportunities to build shareholder value. From a de
novo start in 2001, we have become one of the country's top twenty wholesale
lenders. Despite a major market contraction, competitive pressures and margin
compression, we expanded our wholesale branch network across the United States
and greatly increased the size of our sales force."
Robbins continued, "Despite a competitive mortgage market, we launched
subprime and correspondent channels to further leverage our infrastructure and
operating platform. Because we believe it will benefit the Company over the long
term, we made investments of an estimated $6.8 million in the new correspondent
and subprime businesses as well as in net costs associated with new branches."
Robbins added, "We sold the majority of our remaining REIT portfolio which
simplified our balance sheet, improved liquidity and eliminated nearly all
future prepayment or credit risk represented by the portfolio. Net cash proceeds
from the sale were approximately $26 million. More than $90 million of bond
collateral debt was extinguished."
The Company repurchased approximately 605 thousand shares of its common
stock, representing 7.7% of the outstanding shares at the beginning of 2004.
"The Company's book value has continued to exceed its stock price trading range,
making stock repurchases a prudent utilization of the Company's capital,"
Robbins stated. "We believe this program is an excellent way to enhance
stockholder value."
Mortgage Banking Business - American Mortgage Network (AmNet)
AmNet funded $2.5 billion in home loans during the fourth quarter, a 34%
increase over $1.9 billion funded in the fourth quarter of 2003, reflecting the
impact of improved market penetration over the past year. According to the
Mortgage Bankers Association (MBA), fourth quarter total mortgage market
origination volumes increased approximately 6% from fourth quarter 2003 levels.
For the year ended December 31, 2004, AmNet funded $9.0 billion in home loans, a
12% decrease compared to $10.2 billion in 2003. The MBA estimates that 2004
total mortgage market origination volumes declined 25% from 2003.
AmNet Operating Results
For the fourth quarter of 2004, AmNet's income before income taxes was $1.0
million, compared to a loss before income taxes of $2.9 million in the fourth
quarter of 2003. The loss before income taxes in 2004 was $5.3 million, compared
to $23.5 million of income before income taxes in 2003. Throughout 2004,
profitability was affected by price competition and margin compression as the
mortgage market contracted due to the industry-wide reduction in refinancing
volume. Although 2004 was often marked by very competitive pricing, AmNet's
fourth quarter margins improved due primarily to greater production of higher
margin products.
Gain on the sale of loans, net of derivative financial instruments in the
fourth quarter totaled $19.8 million, or 75 basis points, on $2.6 billion of
loan sales volume, as compared to $12.9 million, or 66 basis points, on $1.9
billion of loan sales volume during the fourth quarter of 2003. AmNet increased
its volume of higher margin loan products, including Alt-A, seconds/HELOCS and
subprime, to 30.9% in the fourth quarter of 2004 from 5.0% in the comparable
period in 2003.
Interest on mortgage assets in the fourth quarter of 2004 was $10.0 million
and was offset by interest expenses of $6.3 million, resulting in a net interest
spread of $3.7 million, or 15 basis points, on $2.5 billion of loan fundings. In
the fourth quarter of 2003, interest on mortgage assets was $6.0 million and was
offset by interest expense of $2.8 million, resulting in a net interest spread
of $3.2 million, or 17 basis points on fundings of $1.9 billion.
AmNet's operating expenses, which were total expenses of $29.0 million less
interest expense $6.3 million, totaled $22.7 million during the fourth quarter
of 2004, or 91 basis points, on loan fundings. These expenses included an
estimated $8.5 million in sales commissions and other variable expenses,
representing approximately 37% of total operating expenses. For the fourth
quarter of 2003, AmNet's operating expenses, which were total expenses of $21.8
million less interest expense $2.8 million, totaled $19.0 million, or 102 basis
points, on loan fundings. These expenses included an estimated $6.6 million in
sales commissions and other variable expenses, representing approximately 35% of
total operating expenses. The year-over-year fourth quarter increase in
operating expenses is tied mainly to a larger branch system and infrastructure
investments in the subprime and correspondent businesses.
Commenting on mortgage operations in the fourth quarter, Robbins stated,
"There was continuing momentum throughout the quarter as new account executives
increased their loan production. With our subprime and home equity offerings now
in place, we are confident that our 'one-stop shopping' wholesale model will
help to differentiate us from other lenders."
Liquidity and Book Value
Cash and cash equivalents were $52.7 million as of December 31, 2004,
compared to $46.5 million at December 31, 2003. Cash per outstanding share was
$7.22 at December 31, 2004, compared to $5.91 at December 31, 2003. Book value
per outstanding share was $10.56 at December 31, 2004, compared to $11.24 at
December 31, 2003.
2005 Strategic Initiatives
The MBA is forecasting that total mortgage originations for 2005 will be
$2.6 trillion, one of the five largest mortgage markets in history. The average
30-year fixed mortgage rate is predicted by the MBA to rise to 6.4% in the
fourth quarter of 2005, up from 5.7% in the fourth quarter of 2004.
AmNet's 2005 strategic initiatives are focused on leveraging its scale
across channels and growing production by:
-- Expanding our sales force and intensifying recruitment of top
performing account executives;
-- Continuing to grow market share and sales penetration through our
wholesale branch network;
-- Increasing production from correspondent and subprime channels as well
as through home equity offerings;
-- Implementing specific technology platform enhancements that increase
functionality for our broker customers and make it easier for them to
do business with us; and
-- Continuing to improve product mix.
Conference Call and Webcast
Management will host a conference call with a simultaneous webcast today at
8:30 a.m. Pacific/10:30 a.m. Central/11:30 a.m. Eastern to discuss fourth
quarter and year-end 2004 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 by
telephone and via the Internet.
To participate by telephone, please dial 800-201-1027 at least five minutes
before start time. For international callers, please dial 706-634-0805. A
telephone replay will be available through March 16, 2005 by dialing (800)
642-1687 or (706) 645-9291 and entering the pass code #3722165.
To listen to the webcast, log on to
www.amnetmortgageinc.com/webcasts.shtml. The webcast will also be available live
at www.fulldisclosure.com. An online replay will be available at
www.amnetmortgageinc.com/webcasts.shtml for one year. Electronic versions of
news releases may be accessed via the Company's web site at
www.amnetmortgageinc.com.
About AmNet Mortgage, Inc.
AmNet Mortgage Inc. is the parent company of American Mortgage Network. For
more information, please visit www.amnetmortgageinc.com.
About American Mortgage Network
Headquartered in San Diego, California, AmNet is a wholly owned subsidiary
of AmNet Mortgage, Inc. AmNet originates loans for the national mortgage broker
community through its network of branches and business-to-business over the
Internet. Through its correspondent channel, the Company purchases loans from
small to mid-size mortgage banks, credit unions and community banks.
AmNet has loan production offices in Arizona, California, Colorado,
Connecticut, Florida, Georgia, Illinois, Kansas, Minnesota, New Jersey, New
York, North Carolina, Ohio, Oregon, Rhode Island, Texas, Utah, Virginia and
Washington. AmNet has a total of $1.4 billion in warehouse borrowing capacity
and is approved to do business in 50 states and the District of Columbia either
by license or exemption. For more information, please visit
www.amnetmortgage.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 belief that certain
investments made in 2004 will benefit the Company over the long term; the
elimination of nearly all future prepayment and credit risk represented by the
sale of mortgage portfolio assets; stock repurchase being an excellent way to
enhance stockholder value; the MBA's estimates of 2004 mortgage market
origination volume; Company differentiation resulting from the addition of
subprime and home equity mortgage product offerings; MBA estimates for 2005
total mortgage originations and 30-year fixed mortgage interest rates; and the
Company's 2005 strategic initiatives growing loan production. The Company's
ability to meet its operational and financial goals are subject to risks
including risks related to: The Company's ability to continue to sell its loans
to a competitor who is its largest purchaser; the Company's ability to maintain
and renew its warehouse lines; the large concentration of the Company's loans in
California; the effectiveness of the Company's hedging strategies; the Company's
ability to increase its loan origination volume in a contracting market; and the
Company's lack of significant experience with subprime loans and correspondent
lending. Actual results and the timing of certain events could also differ
materially from those projected in or contemplated by our forward-looking
statements due to a number of other 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
entire 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 ability to retain and renew warehouse lending facilities for the funding of
all of the Company's mortgage loans; the Company's liquidity position; the
availability of qualified mortgage professionals; the ability to attract and
retain qualified mortgage professionals and other risk factors outlined in the
Company's SEC reports.
AMNET MORTGAGE, INC.
(unaudited)
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Three Three Twelve Twelve
Months Months Months Months
------ ------ ------ ------
Ended Ended Ended Ended
----- ----- ----- -----
12/31/2004 12/31/2003 12/31/2004 12/31/2003
---------- ---------- ---------- ----------
Income Statement
- ----------------
Mortgage Banking Segment:
Revenues
Gain on sales of loans $22,582 $16,444 $64,619 $79,203
---------------------------------------------
Derivative financial
instruments:
Forward sales of
mortgage backed
securities (MBS) and
options on MBS (2,928) 1,067 (5,351) 2,182
Market adjustment on
loan commitment
pipeline 96 (4,644) (424) (2,104)
---------------------------------------------
Total derivative
financial instruments (2,832) (3,577) (5,775) 78
---------------------------------------------
Gain on sales of loans,
net of derivative
financial instruments 19,750 12,867 58,844 79,281
Interest on mortgage
assets 10,042 6,032 32,250 29,875
Other income 205 18 508 94
---------------------------------------------
Total revenue, net of
derivative financial
instruments 29,997 18,917 91,602 109,250
---------------------------------------------
Expenses
Interest expense 6,295 2,826 17,370 13,482
Operating expenses 22,691 19,005 79,531 72,220
---------------------------------------------
Total expenses 28,986 21,831 96,901 85,702
---------------------------------------------
Income (loss) before
income taxes - Mortgage
Banking Segment $1,011 $(2,914) $(5,299) $23,548
Mortgage Asset Portfolio
Segment:
Revenues
Interest on mortgage
assets $784 $2,065 $3,013 $10,906
Other income (556) 226 152 1,171
---------------------------------------------
Total revenue 228 2,291 3,165 12,077
---------------------------------------------
Expenses
Interest expense 111 1,040 1,451 4,840
Provision for loan losses (1) 964 206 3,442
Gain on sale of real
estate owned, net (2) (170) (408) (921)
Valuation adjustment
(gain)/loss - bond
collateral sale (8) - 4,864 -
Operating expenses 389 610 1,782 2,344
---------------------------------------------
Total expenses 489 2,444 7,895 9,705
---------------------------------------------
(Loss) income before
income taxes - Mortgage
Asset Portfolio Segment $(261) $(153) $(4,730) $2,372
Consolidated Income (loss)
- Combined Segments $750 $(3,067) $(10,029) $25,920
Provision for income tax
expense (benefit) $627 (1,642) $(3,702) 7,781
Income tax (benefit) from
termination of REIT
status - (1,019) - (10,884)
Consolidated Net
Income (loss) $123 $(406) $(6,327) $29,023
Per Share Data
- --------------
Weighted average common
shares outstanding 7,309,079 7,862,949 7,613,773 7,861,988
Consolidated income
(loss) per share basic $0.02 $(0.05) $(0.83) $3.69
Consolidated income
(loss) per share diluted $0.01 $(0.05) $(0.83) $3.57
Loan Origination and Sale
- -------------------------
Data
----
Total mortgage loans
funded in period
($ millions) $2,490 $1,855 $9,002 $10,173
Number of loans funded 13,502 11,055 50,902 57,814
Total mortgage loans sold
in period ($ millions) $2,640 $1,932 $9,039 $10,277
Percentage of mortgage
loans funded in period
by type (based on
$ funded):
Conventional conforming 42.2% 70.4% 50.0% 75.8%
Alt-A 26.1% 3.7% 18.6% 2.1%
Jumbo/Non conforming 21.4% 12.1% 19.3% 11.2%
Government 5.5% 12.5% 8.7% 10.2%
Second/HELOC 4.0% 1.3% 3.1% 0.7%
Subprime 0.8% 0.0% 0.4% 0.0%
100.0% 100.0% 100.0% 100.0%
Balance Sheet Data
- ------------------
Cash and cash equivalents $50,600 $44,400 $50,600 $44,400
Restricted cash 2,100 2,100 2,100 2,100
Bond collateral mortgage
loans and real estate
owned, net of reserves,
held for investment 14,988 161,252 14,988 161,252
Mortgage loans held for
sale, net 238,440 276,781 238,440 276,781
Total assets 340,479 500,972 340,479 500,972
Short-term debt 232,236 268,619 232,236 268,619
Long-term debt, net 13,500 130,295 13,500 130,295
Total stockholders'
equity $77,151 $88,485 $77,151 $88,485
Book value per share
basic $10.56 $11.24 $10.56 $11.24
Book value per share
diluted $9.58 $10.86 $9.58 $10.86
Debt to equity ratio 3.2:1 4.5:1 3.2:1 4.5:1
- ----------------------------------------------------------------------
($ in thousands, except per share data and as noted)
CONTACT: AmNet Mortgage, Inc.
Investor and Analyst Relations Contacts
Judith Berry, 858-909-1230
jberry@amnetmortgage.com
or
Clay Strittmatter, 858-909-1340
cstrittmatter@amnetmortgage.com
or
Financial Relations Board
Deanna Hobson, 310-854-8318
dhobson@financialrelationsboard.com
or
Media Relations Contacts
Kasey Emmel, 858-909-1335
kemmel@amnetmortgage.com
or
Forti Communications Inc.
Corinne Forti, 805-498-0113
cforti@amnetmortgage.com
forticomm@aol.com