Exhibit 99.1
AmNet Mortgage Inc. Reports First Quarter Results
SAN DIEGO--(BUSINESS WIRE)--May 17, 2005--AmNet Mortgage, Inc.
(NASDAQ:AMNT), the parent company of American Mortgage Network
(AmNet), a nationwide wholesale mortgage bank, today reported first
quarter results, highlights of which included:
-- First quarter, 2005 consolidated net income was $507 thousand,
or $0.06 per diluted share, compared to a consolidated net
loss of $5.7 million, or $0.72 per diluted share, during the
first quarter of 2004;
-- Mortgage loans funded through AmNet were $2.7 billion in the
first quarter of 2005, an increase of 45% compared to $1.9
billion in the first quarter of 2004, while the overall
mortgage market declined by an estimated 5% over the same
periods; and
-- Higher margin loans made up 33% of the Company's origination
volume as compared to 6% in the first quarter of 2004.
Consolidated Results
AmNet Mortgage, Inc. reported consolidated net income of $507
thousand, or $0.06 per diluted share, for the first quarter of 2005,
compared to a consolidated net loss of $5.7 million, or $0.72 per
diluted share, in the first quarter of 2004. The loss in the first
quarter of 2004 included a $4.4 million pre-tax charge related to the
majority of the Company's mortgage asset portfolio being reclassified
as "held for sale."
AmNet funded $2.7 billion in home loans during the first quarter
of 2005, compared to $1.9 billion during the first quarter of 2004.
AmNet's loan fundings were 45% higher in the quarter, compared to an
estimated 5% year-over-year decline in the overall mortgage market.
AmNet had 182 total account executives at the end of the first
quarter. In its core wholesale business, AmNet has significantly
shifted its focus from primarily conforming loans to an array of more
than 100 mortgage products that meet changing market demographics. In
the first quarter of 2005, higher margin loans, including Alt-A,
subprime, HELOC and second mortgages, made up 33% of the Company's
origination volume as compared to 6% in the first quarter of 2004.
Commenting on 2005 first quarter results, John M. Robbins, Chief
Executive Officer, said, "To drive sustained profitability, our
national mortgage origination strategy continues to emphasize the
potential for large volumes through a specialized operations platform.
AmNet's market share and mortgage loan volumes have increased in most
areas of the country. Our core wholesale business is young and has
strong potential for further sales force expansion and market share
penetration. We continue to take advantage of opportunities in the
marketplace as they occur."
Robbins continued, "Increasing momentum in market share growth was
evident in the first quarter. Our broker-focused model is clearly
differentiating us from other wholesale lenders. Mortgage brokers have
responded positively to our distinct value proposition which combines
a broad product menu, exceptional service and a local presence in the
communities where they do business."
Robbins added, "In the first quarter, we continued to recruit
account executives for our core wholesale business and added 5 net new
Subprime account executives, bringing our total dedicated Subprime
account executive count to 19 at the end of the first quarter. We
introduced new products and expanded our investor outlets. As the
marketplace evolves, our goal is to deliver the products, services and
technology demanded by broker customers while continually focusing on
the efficiencies that increase productivity throughout our production
channels."
Operational Margins
Gain on the sale of loans, net of derivative financial instruments
and market adjustments, in the first quarter of 2005 totaled $21.3
million or 85 basis points, on $2.5 billion of loan sales volume, as
compared to $8.9 million, or 52 basis points, on $1.7 billion of loan
sales volume during the first quarter of 2004. Higher net gains were
largely the result of both higher loan sales volume and better
margins, reflecting an improvement in AmNet's loan production mix
towards higher margin products.
Net interest spread for our mortgage banking operations in the
first quarter of 2005, which was interest on mortgage assets of $10.1
million less interest income on the mortgage portfolio of $0.3
million, offset by interest expense of $6.9 million less interest
expense on the mortgage portfolio of $0.1 million, totaled $3.1
million. This equated to 11 basis points on $2.7 billion of loan
fundings. In the first quarter of 2004, net interest spread for our
mortgage banking operations, which was interest on mortgage assets of
$6.6 million less interest income on the mortgage portfolio of $1.6
million, offset by interest expense of $3.2 million less interest
expense on the mortgage portfolio of $0.9 million, totaled $2.7
million. This equated to 14 basis points on loan fundings of $1.9
billion.
Consolidated operating expenses, which were total expenses of
$30.7 million less interest expense $6.9 million, totaled $23.9
million during the first quarter of 2005, or 88 basis points on loan
fundings. These expenses included an estimated $8.8 million in sales
commissions and other variable expenses, representing approximately
37% of total operating expenses. Consolidated operating expenses in
the first quarter of 2005 also included approximately $1.5 million of
direct investment in the subprime division and the correspondent
channel. For the first quarter of 2004, consolidated operating
expenses, which were total expenses of $25.4 million less interest
expense of $3.2 million and a bond valuation adjustment of $4.4
million, totaled $17.7 million, or 95 basis points on loan fundings.
Liquidity and Book Value
Cash and cash equivalents were $40.1 million as of March 31, 2005,
compared to $29.7 million at March 31, 2004 and $52.7 million at
December 31, 2004. Cash and cash equivalents per basic share was $5.42
at March 31, 2005. Book value per basic share was $10.51 at March 31,
2005. Cash deployment during the quarter was primarily attributable to
greater loan production volume during the first quarter of 2005 and
the associated cash investments into loan inventories, which typically
are sold within 30 days of origination.
2005 Strategic Initiatives
The Mortgage Bankers Association (MBA) is forecasting that total
residential 1-4 mortgage originations for 2005 will be $2.5 trillion,
one of the four largest mortgage markets in history. The average
30-year fixed mortgage rate is predicted by the MBA to rise to 6.6% in
the fourth quarter of 2005, up from 5.8% in the first quarter of the
year.
The Company continues to focus on specific initiatives targeted at
increasing scale and leveraging its infrastructure across loan
origination channels. These initiatives include:
-- Expanding our sales force and intensifying recruitment of top
performing account executives, targeting 300 by year-end 2005,
including additions to our subprime division and correspondent
channel. Sales force growth is intended to maximize market
penetration within our current branch network, while
increasing both subprime and correspondent originations;
-- Growing market share in our core wholesale branch network
through our Small Town America initiative, which is aimed at
increasing market penetration outside the major cities where
we now have regional offices. Small Town America will build
volume through our existing network of offices, eliminating
typical brick and mortar expansion expense;
-- Increasing loan production to optimize the potential for large
volumes through our existing operations platform;
-- Implementing specific web-related and broker-focused
technology enhancements that increase functionality for our
broker customers and make it easier for them to do business
with us. A new, more robust automated underwriting engine will
generate faster underwriting decisions on a broader range of
products;
-- Continuing to increase and diversify our product mix into
higher margin products, including non-conforming loans, such
as Alt-As, jumbos, HELOCs and seconds as well as home equity
and subprime products. ARMs and interest-only products
accounted for 63% of mortgage originations in the second half
of 2004 according to the MBA and;
-- Developing our correspondent channel as a natural complement
to the core wholesale business. As a new distribution channel,
the correspondent initiative expands AmNet's target market to
include areas where the Company believes it can quickly and
effectively capture additional market share and incremental
volume through its specialized operations platform.
Conference Call and Webcast
Management will host a conference call with a simultaneous webcast
today at 10:30a.m. Pacific/12:30p.m. Central/1:30p.m. Eastern to
discuss first quarter 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 May 24,
2005 by dialing (800) 642-1687 or (706) 645-9291 and entering the pass
code #6235681.
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/press.shtml.
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,
Nevada, New Jersey, New York, North Carolina, Ohio, Oregon, Rhode
Island, 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
future size of the residential mortgage loan market and the Company's
strategic initiatives and their impact on the Company's operations.
These may include statements regarding: AmNet's potential for sales
force expansion and market share growth; the size of the 2005
residential 1-4 mortgage market; mortgage rates in the fourth quarter
of 2005; the number of AmNet account executives at the end of 2005;
the ability of the Small Town America initiative to build loan volume
through existing branch offices; technology enhancement
implementations; increasing and diversifying the amount of higher
margin products which AmNet will produce; and the development and
expansion of AmNet's correspondent channel. 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 largest
concentration of the Company's loans being from 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; the stability of the entire mortgage
secondary market; 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 Company's ability to attract and retain
qualified mortgage professionals; and other risk factors outlined in
the Company's SEC reports.
AMNET MORTGAGE, INC.
(unaudited)
Three Three
Months Months
Ended Ended
--------------------
3/31/2005 3/31/2004
--------------------
Income Statement
- ----------------
Revenues
Gain on sales of loans $18,274 $15,515
--------------------
Derivative financial instruments:
Forward sales of mortgage backed securities
(MBS) and options on MBS 3,055 (5,487)
Market adjustment on loan commitment pipeline 4 (1,157)
--------------------
Total derivative financial instruments 3,059 (6,644)
--------------------
Gain on sales of loans, net of derivative
financial instruments 21,333 8,871
Interest on mortgage assets 10,119 6,641
Other income 202 296
--------------------
Total revenue, net of derivative financial
instruments 31,654 15,808
--------------------
Expenses
Employee compensation and benefits 17,264 11,842
Interest expense 6,861 3,241
Valuation adjustment-bond collateral held for sale - 4,428
Operating expenses 6,624 5,865
--------------------
Total expenses 30,749 25,376
--------------------
Income (loss) before income taxes $905 $(9,568)
Provision for income tax expense (benefit) 398 (3,896)
Consolidated Net Income (loss) $507 $(5,672)
Per Share Data
- --------------------------------------------------
Weighted average common shares outstanding 7,361,352 7,874,347
Consolidated income (loss) per share basic $0.07 $(0.72)
Consolidated income (loss) per share diluted $0.06 $(0.72)
Loan Origination and Sale Data
- --------------------------------------------------
Total mortgage loans funded in period ($ millions) $2,708 $1,871
Number of loans funded 14,314 10,629
Total mortgage loans sold in period ($ millions) $2,497 $1,642
Percentage of mortgage loans funded in period by
type (based on $ funded):
Conventional conforming 42.1% 59.2%
Alt-A 27.2% 4.0%
Jumbo/Non conforming 21.0% 21.7%
Government 4.0% 13.5%
Second/HELOC 4.8% 1.7%
Subprime 1.0% 0.0%
100.0% 100.0%
Balance Sheet Data
- --------------------------------------------------
Cash and cash equivalents $37,286 $27,647
Restricted cash 2,850 2,100
Bond collateral, mortgage loans, net, held for
sale (lower of cost or market) - 116,226
Bond collateral mortgage loans and real estate
owned, net of reserves, held for investment 13,745 21,215
Mortgage loans held for sale, net, pledged (lower
of cost or market) 424,401 510,524
Accounts receivable-mortgage loans sold/funded 17,494 3,182
Total assets 517,414 697,060
Short-term debt 409,803 495,292
Short-term debt related to bond collateral held
for sale - 90,097
Long-term debt, net 12,155 20,078
Total stockholders' equity $77,757 $82,817
Book value per outstanding share basic $10.51 $10.52
Book value per outstanding share diluted $9.48 $9.68
Debt to equity ratio 5.4:1 7.3:1
($ in thousands, except per share data and as noted)
CONTACT: INVESTOR AND ANALYST RELATIONS CONTACTS
AmNet Mortgage, Inc.
Judith Berry, 858-909-1230
jberry@amnetmortgage.com
Clay Strittmatter, 858-909-1340
cstrittmatter@amnetmortgage.com
or
Financial Relations Board
Moira Conlon, 310-854-8311
mconlon@financialrelationsboard.com
or
MEDIA RELATIONS CONTACTS
AmNet Mortgage, Inc.
Kasey Emmel, 858-909-1335
kemmel@amnetmortgage.com
or
Forti Communications Inc.
Corinne Forti, 805-498-0113
cforti@amnetmortgage.com
forticomm@aol.com