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AHM AmeriHome Inc

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Share Name Share Symbol Market Type
AmeriHome Inc NYSE:AHM NYSE Common Stock
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American Home Mortgage Announces Fourth Quarter and Full Year Results

25/01/2007 12:00pm

Business Wire


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American Home Mortgage Investment Corp. (NYSE: AHM) announced today results for the quarter and full year ended December 31, 2006. FINANCIAL HIGHLIGHTS Comparison of the Three Months Ended December 31, 2006 and 2005 Revenue for the fourth quarter of 2006 was $257.7 million, compared to revenue of $150.5 million for the fourth quarter of 2005, an increase of 71.3%. Net earnings for the fourth quarter of 2006 were $64.7 million, compared to net earnings of $16.7 million for the fourth quarter of 2005, an increase of 287.5%. Earnings per diluted share for the fourth quarter of 2006 were $1.21, compared to earnings per diluted share of $0.27 for the fourth quarter of 2005, an increase of 348.1%. Dividends declared per common share for the fourth quarter of 2006 were $1.06, compared to $0.91 for the fourth quarter of 2005, an increase of 16.5%. Book value per common share was $22.64 at December 31, 2006, compared to book value per common share of $21.62 at December 31, 2005, an increase of 4.7%. Comparison of the Three Months Ended December 31, 2006 and September 30, 2006 Revenue for the fourth quarter of 2006 was $257.7 million, compared to revenue of $258.9 million for the third quarter of 2006, a decrease of 0.5%. Net earnings for the fourth quarter of 2006 were $64.7 million, compared to net earnings of $72.0 million for the third quarter of 2006, a decrease of 10.2%. Earnings per diluted share for the fourth quarter of 2006 were $1.21, compared to earnings per diluted share of $1.36 for the third quarter of 2006, a decrease of 11.0%. Dividends declared per common share for the fourth quarter of 2006 were $1.06, compared to $1.01 for the third quarter of 2006, an increase of 5.0%. Book value per common share was $22.64 at December 31, 2006, compared to book value per common share of $22.52 at September 30, 2006, an increase of 0.5%. Comparison of the Year Ended December 31, 2006 and 2005 Revenue for the year ended December 31, 2006 was $1.03 billion, compared to adjusted revenue of $722.6 million for the year ended December 31, 2005, an increase of 42.0%. GAAP revenue for the year ended December 31, 2005 was $793.9 million. Net earnings for the year ended December 31, 2006 were $263.5 million compared to adjusted net earnings of $189.4 million for the year ended December 31, 2005, an increase of 39.1%. GAAP net earnings for the year ended December 31, 2005 were $260.8 million. Earnings per diluted share for the year ended December 31, 2006 were $4.96 compared to adjusted earnings per diluted share of $3.97 for the year ended December 31, 2005, an increase of 24.9%. GAAP earnings per diluted share for the year ended December 31, 2005 were $5.58. Dividends per common share for the year ended December 31, 2006 were $3.94, compared to $3.24 for the year ended December 31, 2005, an increase of 21.6%. Michael Strauss, American Home’s Chief Executive Officer commented, “The fourth quarter was highly successful for our company with earnings of $1.21 per diluted share. During the quarter, we added $1.0 billion of recently originated loans to our portfolio, which are carried at cost. Loan origination volume was a record $15.5 billion due to our company achieving a record market share of 2.48% of national originations. Net interest income was stable while our servicing portfolio produced record revenues. During the quarter, our company did however experience its highest delinquency related charges to date, which reduced our quarterly earnings. The fourth quarter concluded a very successful year for our company, with earnings per diluted share reaching a record $4.96. By comparison, diluted earnings per share were $3.97 in 2005, $3.74 in 2004, $4.07 in 2003 and $2.65 in 2002*. A key financial goal for our company in 2007 is to continue our multi-year growth trend in earnings per share. During 2006, our company’s return on average common equity was 22.7%, which surpassed our target of 20%, and compares favorably to 2005 when our adjusted return on average common equity was 19.7%. Also during 2006 our company originated $58.9 billion of loans compared to $45.3 billion in 2005. Finally, during 2006, our company reached a milestone as, for the first time; its revenues exceeded $1.0 billion. In this earnings release, our company is providing 2007 earnings guidance of $5.40 to $5.70 per fully diluted share with the earnings per diluted share for each quarter in 2007 projected to be approximately 9% to 15% higher than for the comparable quarter in 2006. Our earnings guidance is based on stable net interest margins applied to a growing portfolio of loans held for investment, loan production of $68 billion to $74 billion, and a reduction in gain on sale margins of approximately 12 basis points. Lower gain on sale margins are expected in part because delinquency losses on loans held for sale, including losses due to repurchases, are projected to continue at high levels throughout 2007. Projections for continued high losses are based on our company’s view that while there are signs that housing prices are starting to stabilize, future abatements in foreclosure activity will lag a recovery in the housing market. As a result, our 2007 earnings guidance anticipates a highly stressed credit environment. Not included in our earnings guidance are potential benefits from new strategies that offer the possibility of higher portfolio income, increased loan production and reduced income tax expense. Our company will keep investors apprised if material benefits from these strategies become likely. I am very pleased to announce that based on our company’s results and prospects, our Board of Directors has voted to increase our company’s dividend policy by $0.06 to $1.12 per share per quarter or $4.48 per share on an annualized basis. The new dividend policy is expected to take effect with our April dividend payment. Please note, however, that our company is not obligated to pay dividends until such dividends are declared by our Board of Directors, and our Board of Directors may change our company’s dividend policy at any time without prior notice.” FOURTH QUARTER RESULTS During the fourth quarter, the Company’s net interest income, plus the positive carry from interest rate swaps, was $48.9 million compared to $50.5 million in the third quarter of 2006. Of the $48.9 million, $12.4 million was from portfolio loans, $14.7 million was from mortgage-backed securities, $6.3 million was from swaps associated with mortgage-backed securities, $0.6 million was from Flower Bank, and $26.8 million was from loans in warehouse, reduced by $11.9 million of interest expense on trust preferred securities and the financing of servicing assets. By comparison, the components of the $50.5 million of net interest income, plus the positive carry from interest rate swaps, earned in the third quarter were $11.8 million from portfolio loans, $16.6 million from mortgage-backed securities, $7.5 million from swaps associated with mortgage-backed securities and $25.1 million from loans in warehouse, including loans held for investment pending securitization, reduced by $10.5 million of interest expense on trust preferred securities and the financing of servicing assets. During the fourth quarter, portfolio loans earned a net interest margin of 1.42% and had an average balance of $3.5 billion, compared to a net interest margin of 1.27% and an average balance of $3.7 billion in the third quarter of 2006. During the fourth quarter, mortgage-backed securities had an average balance of $9.2 billion, earned a net interest margin on a stand-alone basis of 0.64%, and earned a net interest margin including income from associated swaps of 0.91%. By comparison, in the third quarter of 2006, mortgage-backed securities had an average balance of $9.3 billion, earned net interest margin on a stand-alone basis of 0.72%, and earned a net interest margin including income from associated swaps of 1.04%. In the fourth quarter, loans in warehouse, including loans held for investment pending securitization, had an average balance of $10.0 billion and earned a net interest margin of 1.08%. By comparison, during the third quarter of 2006 loans in warehouse, including loans held for investment pending securitization, had an average balance of $8.1 billion and earned a net interest margin of 1.24%. Delinquencies and delinquency related charges were up sharply in the fourth quarter and are expected to remain at elevated levels throughout 2007. For the fourth quarter, the Company’s provision expense associated with loans held for investment was $6.7 million, while its quarter-end allowance for loan loss balance was $14.2 million and its non-performing loans held for investment were $82.4 million. By comparison, for the third quarter of 2006, the Company’s provision expense was $5.4 million, while its quarter-end allowance for loan loss balance was $10.9 million and its non-performing loans held for investment were $66.9 million. Additionally, in the fourth quarter, the Company added $14.5 million to its reserves for delinquent loans held for sale which include repurchased loans. These added reserves resulted in a charge to the Company’s gain on sale which reduced its net gain on sale revenue. At quarter-end, reserves associated with delinquent loans held for sale were $22.0 million, while non-performing loans held for sale were $124.3 million. By comparison, in the third quarter, additions to reserves charged to gain on sale were $2.8 million, reserves associated with loans held for sale were $8.7 million, and non-performing loans held for sale were $50.3 million. During the fourth quarter, the value of the Company’s residual assets decreased approximately $12.1 million due to changes in anticipated credit losses, future interest rates and prepayment speeds, and consequently resulted in a write-down that was charged to income. The Company estimates that approximately half of the write-down in the value of residual securities was attributable to delinquencies. During the fourth quarter, the Company completed foreclosures and sold repossessed real estate for loans with an aggregate unpaid principal balance of $43.4 million. Losses on these loans were $7.0 million, net of mortgage insurance, resulting in a severity rate of 16.2%. By comparison, during the third quarter, the Company completed foreclosures and sold repossessed real estate for loans with an aggregate unpaid principal balance of $29.4 million. Losses on those loans were $4.6 million, net of mortgage insurance, resulting in a severity rate of 15.7%. Throughout the fourth quarter, the Company continued to pursue a strategy of matching the duration of its portfolio assets with the duration of its liabilities, net of hedges. At December 31, 2006, the composition of the Company’s loans held for investment and loans underlying its mortgage-backed securities was 45.0% 5/1 ARM loans, 26.0% short reset ARMs, 13.7% fixed rate loans, 8.9% 7/1 ARM loans, 2.0% 3/1 ARM loans, 1.3% HELOC and closed-end seconds, and 3.1% other ARM types. On December 31, 2006, the mortgage-backed securities portfolio’s duration, net of liabilities and hedges, was estimated to be 0.07 years and its projected average life was 2.36 years. The composition of the mortgage-backed securities portfolio by credit quality based on Standard & Poor’s ratings was 93.9% Agency and AAA, 3.8% AA, A, and BBB and 2.3% BB and unrated. During the fourth quarter, the Company’s loan origination business continued to produce strong results. Loan originations reached a record $15.5 billion compared to $15.3 billion in this year’s third quarter. During the fourth quarter, the Company sold $14.3 billion of loans to third parties for a gross gain on sale excluding reserving for delinquencies of $217.4 million equal to a gross gain on sale margin of 1.52%. By comparison, during this year’s third quarter, the Company sold $14.3 billion of loans to third parties for a gross gain on sale of $213.4 million equal to a gain on sale margin of 1.49%. The Company’s gain on sale net of additions to its reserves for delinquent loans held for sale was $202.9 million in the fourth quarter compared to $210.6 million in the third quarter of 2006. During the fourth quarter, the Company’s loan origination expenses were $157.9 million, or 1.11% of loans sold, or 1.02% of loans originated, compared to $152.6 million, or 1.06% of loans sold, or 1.00% of loans originated in the third quarter. The Company estimates that its national market share, based on Freddie Mac’s recent, revised estimate of national market size, was 2.48% in the fourth quarter compared to 2.24% in this year’s third quarter and 1.69% during the fourth quarter of 2005. At the end of the fourth quarter, the Company employed approximately 2,450 loan officers and account executives, including call center representatives, but excluding sales assistants, compared to approximately 2,640 on September 30, 2006. During the fourth quarter, the Company’s servicing income and ancillary fees reached a record $47.3 million gross, and $18.4 million net of $28.9 million of reduction of fair value due to realization of servicing cash flows. By comparison, during the third quarter, servicing income and ancillary fees were $43.4 million gross, and $14.6 million net of $28.8 million reduction of fair value due to realization of servicing cash flows. At the end of the fourth quarter, the principal amount of the loans underlying the Company’s servicing assets was $38.5 billion. By comparison, the amount of loans underlying the Company’s servicing assets at the end of this year’s third quarter was $35.9 billion. The principal amount of the servicing portfolio, including warehouse loans, was $46.3 billion at the end of the fourth quarter and $43.0 billion at the end of this year’s third quarter. The Company’s total revenues in the fourth quarter were $257.7 million. Of these revenues, $42.7 million was from net interest income, $202.9 million was from sales of newly originated mortgage loans including origination fees and net of hedges and additions to loss reserves, $47.3 million was from mortgage servicing fees, $3.9 million was from an increase in the value of servicing due to changes in assumptions, net of hedges, $6.3 million was from interest carry on free-standing swaps and $2.9 million was from other sources. Revenues were decreased by $28.9 million due to realization of servicing cash flows, $12.7 million due to realized and unrealized losses on mortgage-backed securities held, net of hedges and $6.7 million due to provisioning for loan losses. During the fourth quarter, the Company’s expenses were $173.4 million, and the Company’s pre-tax income was $84.3 million. Also during the quarter, the Company’s tax expense was $19.6 million. Consequently, net income for the quarter was $64.7 million while preferred dividends were $3.3 million and net income available to common stockholders was $61.4 million, resulting in earnings per diluted share of $1.21. Book value attributable to common stockholders at December 31, 2006 was $1.14 billion, or $22.64 per common share, compared to $1.13 billion, or $22.52 per common share, at September 30, 2006. EARNINGS GUIDANCE The Company is providing earnings guidance for 2007 of $5.40 to $5.70 per diluted share. Quarterly earnings per diluted share are projected to be approximately 9% to 15% higher for each quarter in 2007 compared to the comparable quarter in 2006. Key projections underlying the Company’s guidance are that 1) net interest margins will remain stable and the balance of loans held for investment and carried at cost will continue to grow, 2) that loan production will range between $68 billion and $74 billion with higher production in the second and third quarters, and lower production in the first and fourth quarter, 3) that the Company’s gain on sale margin from loans sold will decline by approximately 12 basis points, in part due to continued high delinquency charges associated with the Company’s loans held for sale, and 4) that the Company will not experience significant losses net of hedges due to write-downs of its portfolio assets and / or its servicing assets. It is important to note that actual results, which are different than any one or more than one of the key projections, may prevent the Company from achieving its earnings guidance, and may instead result in losses. In addition, factors other than the key projections listed herein may cause the Company to fail to achieve its earnings guidance and may result in losses as more fully described under Risk Factors in the Company’s Annual Report filed on Form 10-K with the Securities and Exchange Commission. DIVIDEND POLICY Based on the Company’s projections for earnings and cash flow, its Board of Directors has raised the Company’s common stock dividend policy to $1.12 per share per quarter, or $4.48 per share on an annualized basis. 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. The new dividend policy of $1.12 per share per quarter is expected to commence beginning in April 2007. OTHER HIGHLIGHTS During the fourth quarter, the Company completed its acquisition of Flower Bank, fsb and consequently became a thrift holding company. As a result of its acquisition of Flower, a small portion of the Company’s liabilities are now deposits. The Company expects to grow Flower slowly at first, but over the long term believes Flower will become a significant contributor to the Company’s earnings. In connection with its acquisition of Flower, the Company has hired Lou Dunham to serve as Flower’s President. Mr. Dunham has over thirty-two years of banking experience, most recently as President of Ameribank, a Florida based federal thrift. Previously, Mr. Dunham was the Senior EVP and Chief Risk Officer at Republic Security Bank. The Company also elected Tom Wren to serve as an independent Director of Flower. Mr. Wren was recently the Treasurer of MBNA where he served ten years, and previously was a senior bank regulator in the Office of the Controller of the Currency where he served for eighteen years. 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, January 25, 2007, 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 February 8, 2007. 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 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. 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 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. * 2004 and 2005 As Adjusted. See the section titled “Adjusted Financial Measures” on page 5 of this release. 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 AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES OPERATING STATISTICS   As of and for the As of and for the Three Months Ended Year Ended Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2006  2005  2006  2005  (1)       As Adjusted Mortgage Holdings Segment: Investment Portfolio Performance (2): Average loans and mortgage-backed securities in portfolio ($ billions) 12.7  10.5  12.3  8.0  Interest income ($ millions) 193.7  138.0  725.5  377.8  Average portfolio yield 6.08% 5.27% 5.89% 4.75%   Interest expense ($ millions) 166.6  108.2  615.5  270.0  Average cost of funds and hedges 5.43% 4.36% 5.25% 3.65%   Net interest income ($ millions) 27.1  29.8  110.0  107.8  Net interest margin 0.85% 1.17% 0.89% 1.36%   Interest carry on free standing derivatives ($ millions) 6.3  1.0  23.5  -7.3  Net interest income plus interest carry on free standing derivatives ($ millions) 33.4  30.8  133.5  100.5  Net interest margin including interest carry on free standing derivatives 1.05% 1.21% 1.08% 1.26%   Reconciliation of Changes in Mortgage Holdings (3): Net change in mortgage-backed securities ($ billions) 0.3  1.4  -1.3  0.3  Additions to loans in portfolio ($ billions) 1.0  2.1  4.1  3.5  Principal repayments and other dispositions of loans in portfolio ($ billions) 0.5  0.0  1.3  0.0  Net additions to loans in portfolio ($ billions) 0.5  2.1  2.8  3.5  Loans and mortgage-backed securities held - end of period ($ billions) 15.6  14.1  15.6  14.1  Mortgage-backed securities period end duration gap (in years) 0.07  -0.03  0.07  -0.03    Loan Origination Segment: Loan originations ($ billions) (4) 15.5  13.6  58.9  45.3  Refinance 60% 51% 54% 47% ARM 51% 50% 53% 50%   Average mortgage loans, net ($ billions) (3) 10.0  8.6  9.1  5.2  Net interest income excluding trust preferred and other interest expense ($ millions) 26.8  26.4  111.5  96.8  Net interest margin excluding trust preferred and other interest expense 1.08% 1.28% 1.22% 1.85% Trust preferred and other interest expense ($ millions) 7.4  3.3  24.4  6.5  Net interest income ($ millions) 19.4  23.1  87.1  90.3  Loans securitized and held ($ billions) 0.0  0.0  0.0  2.9  Loans securitized and sold ($ billions) 0.0  0.0  0.0  10.3  Loans sold to third parties ($ billions) 14.3  11.0  56.0  28.5    Gain on sales of loans, net of hedge gains ($ millions) (5) 202.9  105.4  810.0  577.4  Excess of fair value over carrying value of loans added to investment portfolio ($ millions) 8.7  30.2  57.1  58.0  Total ($ millions) 211.6  135.6  867.1  635.4    Gain on sales of loans, net of hedge gains (% of principal) (5) 1.42% 0.96% 1.45% 1.42% Excess of fair value over carrying value of loans added to investment portfolio (% of principal) 0.82% 1.43% 1.36% 1.63% Total (% of principal) 1.38% 1.03% 1.44% 1.44% Applications accepted ($ billions) 23.1  17.8  89.4  67.8  Application pipeline ($ billions) 11.3  9.2  11.3  9.2    Loan Servicing Segment: Loan servicing portfolio - total with warehouse ($ billions) 46.3  30.7  Loan servicing portfolio - loans sold or securitized ($ billions) 38.5  25.0  Interest expense ($ millions) 4.5  2.6  15.3  7.3  Weighted average note rate 7.08% 5.79% Weighted average service fee 0.347% 0.330% Average age (in months) 15  15    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 for investment pending securitization. (3) Includes loans held for investment pending securitization. (4) Loan originations of $13.2 billion in the first quarter of 2006 exclude $559 million of loans purchased in the Waterfield acquisition. (5) Prior to the fourth quarter of 2005, includes gain on current period securitizations, net of hedge gains. AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES OPERATING STATISTICS   As of and for the Three Months Ended Dec. 31, Sept. 30, June 30, March 31, Dec. 31, 2006  2006  2006  2006  2005  Mortgage Holdings Segment: Investment Portfolio Performance (1): Average loans and mortgage-backed securities in portfolio ($ billions) 12.7  13.0  12.5  11.1  10.5  Interest income ($ millions) 193.7  195.6  181.3  154.9  138.0  Average portfolio yield 6.08% 6.03% 5.82% 5.60% 5.27%   Interest expense ($ millions) 166.6  167.2  153.2  128.5  108.2  Average cost of funds and hedges 5.43% 5.37% 5.19% 4.96% 4.36%   Net interest income ($ millions) 27.1  28.4  28.1  26.4  29.8  Net interest margin 0.85% 0.88% 0.90% 0.95% 1.17%   Interest carry on free standing derivatives ($ millions) 6.3  7.5  5.8  3.9  1.0  Net interest income plus interest carry on free standing derivatives ($ millions) 33.4  35.9  33.9  30.3  30.8  Net interest margin including interest carry on free standing derivatives 1.05% 1.11% 1.09% 1.09% 1.21%   Reconciliation of Changes in Mortgage Holdings (2): Net change in mortgage-backed securities ($ billions) 0.3  -0.3  -0.3  -1.0  1.4  Additions to loans in portfolio ($ billions) 1.0  0.9  1.2  1.0  2.1  Principal repayments and other dispositions of loans in portfolio ($ billions) 0.5  0.4  0.2  0.2  0.0  Net additions to loans in portfolio ($ billions) 0.5  0.5  1.0  0.8  2.1  Loans and mortgage-backed securities held - end of period ($ billions) 15.6  14.8  14.6  13.9  14.1  Mortgage-backed securities period end duration gap (in years) 0.07  -0.12  0.10  0.15  -0.03    Loan Origination Segment: Loan originations ($ billions) (3) 15.5  15.3  14.9  13.2  13.6  Refinance 60% 54% 51% 51% 51% ARM 51% 53% 55% 51% 50%   Average mortgage loans, net ($ billions) (2) 10.0  8.1  8.8  9.6  8.6  Net interest income excluding trust preferred and other interest expense ($ millions) 26.8  25.1  31.6  28.0  26.4  Net interest margin excluding trust preferred and other interest expense 1.08% 1.24% 1.44% 1.17% 1.28% Trust preferred and other interest expense ($ millions) 7.4  6.6  5.7  4.7  3.3  Net interest income ($ millions) 19.4  18.5  25.9  23.3  23.1  Loans securitized and held ($ billions) 0.0  0.0  0.0  0.0  0.0  Loans securitized and sold ($ billions) 0.0  0.0  0.0  0.0  0.0  Loans sold to third parties ($ billions) 14.3  14.3  13.9  13.5  11.0    Gain on sales of loans, net of hedge gains ($ millions) 202.9  210.6  224.6  171.9  105.4  Excess of fair value over carrying value of loans added to investment portfolio ($ millions) 8.7  15.6  18.8  14.0  30.2  Total ($ millions) 211.6  226.2  243.4  185.9  135.6    Gain on sales of loans, net of hedge gains (% of principal) 1.42% 1.47% 1.62% 1.27% 0.96% Excess of fair value over carrying value of loans added to investment portfolio (% of principal) 0.82% 1.71% 1.49% 1.44% 1.43% Total (% of principal) 1.38% 1.48% 1.61% 1.28% 1.03% Applications accepted ($ billions) 23.1  23.4  22.1  20.8  17.8  Application pipeline ($ billions) 11.3  12.3  12.1  11.8  9.2    Loan Servicing Segment: Loan servicing portfolio - total with warehouse ($ billions) 46.3  43.0  39.1  34.8  30.7  Loan servicing portfolio - loans sold or securitized ($ billions) 38.5  35.9  32.6  29.0  25.0  Interest expense ($ millions) 4.5  3.9  3.8  3.1  2.6  Weighted average note rate 7.08% 6.77% 6.38% 6.09% 5.79% Weighted average service fee 0.347% 0.339% 0.336% 0.329% 0.330% Average age (in months) 15  15  14  14  15    Notes: (1) Excludes loans held for investment pending securitization. (2) Includes loans held for investment 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. AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share amounts)     Three Months Ended Year Ended Dec. 31, Dec. 31, Dec. 31, Dec. 31,   2006    2005    2006    2005  (1) As Adjusted Net interest income: Interest income $ 364,810  $ 265,435  $ 1,328,494  $ 700,760  Interest expense   (322,134)   (215,057)   (1,146,039)   (509,887) Net interest income   42,676    50,378    182,455    190,873    Provision for loan losses (6,725) (2,142) (17,380) (2,142)         Net interest income after provision for loan losses   35,951    48,236    165,075    188,731    Non-interest income: Gain on sales of mortgage loans 202,884  98,777  810,006  335,065  Gain on sales of current period securitized mortgage loans -  -  -  168,998  Gain on sales of mortgage-backed securities and derivatives 3,305  38,068  12,257  49,536  Unrealized loss on mortgage-backed securities and derivatives (9,663) (44,778) (7,028) (45,799)   Loan servicing fees 47,300  26,715  145,429  78,947  Amortization and impairment of mortgage servicing rights -  (18,745) -  (60,657) Change in fair value of mortgage servicing rights: Due to realization of cash flows (28,940) -  (102,820) -  Due to changes in valuation assumptions, net of hedge gain (loss)   3,920    -    (5,289)   -  Net loan servicing fees   22,280    7,970    37,320    18,290    Other non-interest income   2,902    2,181    8,814    7,775  Non-interest income   221,708    102,218    861,369    533,865    Non-interest expenses: Salaries, commissions and benefits, net 105,908  95,237  414,008  359,949  Occupancy and equipment 20,396  16,459  77,357  58,855  Data processing and communications 6,346  6,402  25,905  24,788  Office supplies and expenses 4,324  4,612  19,147  19,722  Marketing and promotion 4,574  5,951  21,625  20,311  Travel and entertainment 8,966  6,982  31,310  21,007  Professional fees 7,902  3,586  24,322  14,232  Other   14,952    10,946    64,614    32,018  Non-interest expenses   173,368    150,175    678,288    550,882    Net income before income tax expense (benefit) 84,291  279  348,156  171,714    Income tax expense (benefit)   19,594    (16,419)   84,629    (17,721)   Net income $ 64,697  $ 16,698  $ 263,527  $ 189,435    Dividends on preferred stock 3,304  3,304  13,218  13,217          Net income available to common shareholders $ 61,393  $ 13,394  $ 250,309  $ 176,218    Per share data: Basic $ 1.22  $ 0.27  $ 5.00  $ 4.01  Diluted $ 1.21  $ 0.27  $ 4.96  $ 3.97    Weighted average number of shares - basic 50,192  49,605  50,030  43,897  Weighted average number of shares - diluted 50,602  49,998  50,421  44,375    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. AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share amounts)     Three Months Ended Dec. 31, Sept. 30, June 30, March 31, Dec. 31, 2006  2006  2006  2006  2005  Net interest income: Interest income $ 364,810  $ 332,875  $ 330,196  $ 300,613  $ 265,435  Interest expense (322,134) (289,878) (279,992) (254,035) (215,057) Net interest income 42,676  42,997  50,204  46,578  50,378    Provision for loan losses (6,725) (5,365) (3,979) (1,311) (2,142)           Net interest income after provision for loan losses 35,951  37,632  46,225  45,267  48,236    Non-interest income: Gain on sales of mortgage loans 202,884  210,621  224,594  171,907  98,777  Gain (loss) on sales of mortgage-backed securities and derivatives 3,305  9,849  (47) (850) 38,068  Unrealized (loss) gain on mortgage-backed securities and derivatives (9,663) 1,050  (7,730) 9,315  (44,778)   Loan servicing fees 47,300  43,379  30,417  24,333  26,715  Amortization and impairment of mortgage servicing rights -  -  -  -  (18,745) Change in fair value of mortgage servicing rights: Due to realization of cash flows (28,940) (28,839) (26,306) (18,735) -  Due to changes in valuation assumptions, net of hedge gain (loss) 3,920  (16,799) 7,476  114  -  Net loan servicing fees (loss) 22,280  (2,259) 11,587  5,712  7,970    Other non-interest income 2,902  2,018  2,125  1,769  2,181  Non-interest income 221,708  221,279  230,529  187,853  102,218    Non-interest expenses: Salaries, commissions and benefits, net 105,908  105,676  103,157  99,267  95,237  Occupancy and equipment 20,396  19,228  19,763  17,970  16,459  Data processing and communications 6,346  5,700  6,733  7,126  6,402  Office supplies and expenses 4,324  5,346  5,145  4,332  4,612  Marketing and promotion 4,574  4,868  6,383  5,800  5,951  Travel and entertainment 8,966  7,798  7,793  6,753  6,982  Professional fees 7,902  6,076  5,013  5,331  3,586  Other 14,952  16,588  17,192  15,882  10,946  Non-interest expenses 173,368  171,280  171,179  162,461  150,175    Net income before income tax expense (benefit) 84,291  87,631  105,575  70,659  279    Income tax expense (benefit) 19,594  15,611  33,224  16,200  (16,419)   Net income $ 64,697  $ 72,020  $ 72,351  $ 54,459  $ 16,698    Dividends on preferred stock 3,304  3,305  3,304  3,305  3,304            Net income available to common shareholders $ 61,393  $ 68,715  $ 69,047  $ 51,154  $ 13,394    Per share data: Basic $ 1.22  $ 1.37  $ 1.38  $ 1.03  $ 0.27  Diluted $ 1.21  $ 1.36  $ 1.37  $ 1.02  $ 0.27    Weighted average number of shares - basic 50,192  50,148  50,056  49,715  49,605  Weighted average number of shares - diluted 50,602  50,553  50,487  50,070  49,998  AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands)     December 31, September 30, June 30, March 31, December 31, 2006  2006  2006  2006  2005  Assets: Cash and cash equivalents $ 398,166  $ 298,079  $ 304,268  $ 572,591  $ 575,650  Accounts receivable and servicing advances 432,418  350,965  342,244  327,586  329,132  Securities 9,308,032  8,957,546  9,299,343  9,580,974  10,602,115  Mortgage loans held for sale, net 1,523,737  1,365,595  1,243,702  1,589,613  2,208,749  Loans held for investment, net 6,329,721  5,797,801  5,337,138  4,315,384  3,479,721  Derivative assets 32,142  26,323  139,397  102,267  44,594  Mortgage servicing rights, net 506,341  460,913  434,173  371,974  319,671  Premises and equipment, net 86,211  82,288  80,296  75,594  68,782  Goodwill 133,128  111,890  110,759  110,330  99,527  Other assets 79,089  52,927  34,279  30,697  26,804  Total assets $ 18,828,985  $ 17,504,327  $ 17,325,599  $ 17,077,010  $ 17,754,745    Liabilities and Stockholders' Equity: Liabilities: Warehouse lines of credit $ 1,304,541  $ 1,890,034  $ 1,476,958  $ 1,754,581  $ 3,474,191  Commercial paper 1,273,965  1,283,858  888,476  1,073,630  1,079,179  Reverse repurchase agreements 8,571,459  7,232,503  8,939,786  8,899,050  9,806,144  Deposits 24,016  -  -  -  -  Collateralized debt obligations 4,854,801  3,484,873  3,724,878  2,905,199  1,057,906  Payable for securities purchased 289,716  1,221,105  -  215,114  261,539  Derivative liabilities 12,644  40,170  3,280  7,512  16,773  Trust preferred securities 336,078  282,340  252,780  204,018  203,688  Accrued expenses and other liabilities 361,923  392,334  367,358  401,769  298,230  Notes payable 417,467  317,161  337,700  330,714  319,309  Income taxes payable 112,089  95,808  80,529  51,016  30,770  Total liabilities 17,558,699  16,240,186  16,071,745  15,842,603  16,547,729    Stockholders' Equity:   Preferred stock 134,040  134,040  134,040  134,040  134,040  Common stock 502  502  501  500  496  Additional paid-in capital 963,617  962,903  960,995  958,175  947,512  Retained earnings 257,283  245,473  227,450  206,512  203,778  Accumulated other comprehensive loss (85,156) (78,777) (69,132) (64,820) (78,810) Total stockholders’ equity 1,270,286  1,264,141  1,253,854  1,234,407  1,207,016    Total liabilities and stockholders' equity $ 18,828,985  $ 17,504,327  $ 17,325,599  $ 17,077,010  $ 17,754,745    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 50,195,499  50,182,257  50,107,214  50,004,965  49,639,646  AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) (In thousands)     Three Months Ended Year Ended Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31, Dec. 31, 2006  2006  2006  2006  2005  2006    Preferred stock Balance at end of period $ 134,040  $ 134,040  $ 134,040  $ 134,040  $ 134,040  $ 134,040    Common stock Balance at beginning of period $ 502  $ 501  $ 500  $ 496  $ 496  $ 496  Issuance of common stock - earnouts -  -  -  3  -  3  Issuance of common stock - Omnibus Stock Plan -  1  1  1  -  3  Balance at end of period $ 502  $ 502  $ 501  $ 500  $ 496  $ 502    Additional paid-in capital Balance at beginning of period $ 962,903  $ 960,995  $ 958,175  $ 947,512  $ 946,105  $ 947,512  Issuance of common stock - earnouts -  296  -  9,555  -  9,851  Issuance of common stock - Omnibus Stock Plan 211  1,067  1,126  651  857  3,055  Stock-based employee compensation expense 241  37  373  410  -  1,061  Tax benefit for stock options exercised 102  332  1,198  -  434  1,632  Restricted shares amortization 160  176  123  47  116  506  Balance at end of period $ 963,617  $ 962,903  $ 960,995  $ 958,175  $ 947,512  $ 963,617    Retained earnings Balance at beginning of period $ 245,473  $ 227,450  $ 206,512  $ 203,778  $ 235,556  $ 203,778  Cumulative-effect adjustment as of beginning of period (1) 3,635  -  -  (2,917) -  718  Net income 64,697  72,020  72,351  54,459  16,698  263,527  Dividends declared (56,522) (53,997) (51,413) (48,808) (48,476) (210,740) Balance at end of period $ 257,283  $ 245,473  $ 227,450  $ 206,512  $ 203,778  $ 257,283    Other comprehensive loss Balance at beginning of period $ (78,777) $ (69,132) $ (64,820) $ (78,810) $ (51,091) $ (78,810) Unrealized gain (loss) on securities 870  75,535  (44,510) (35,765) (7,730) (3,870) (Loss) gain on derivatives (7,249) (85,180) 40,198  49,755  (19,989) (2,476) Balance at end of period $ (85,156) $ (78,777) $ (69,132) $ (64,820) $ (78,810) $ (85,156)   Total stockholders' equity $ 1,270,286  $ 1,264,141  $ 1,253,854  $ 1,234,407  $ 1,207,016  $ 1,270,286    Note: (1) Effective January 1, 2006, the Company adopted SFAS 156 and elected the fair value option to subsequently measure its MSRs. AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)   Three Months Ended Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31, 2006  2006  2006  2006  2005  Cash flows from operating activities: Net income $ 64,697  $ 72,020  $ 72,351  $ 54,459  $ 16,698  Adjustments to reconcile net income to net cash (used in) provided by operating activities:   Depreciation and amortization 5,003  4,275  5,014  3,953  3,454  Provision for loan losses 6,725  5,365  3,979  1,311  2,142  Change in fair value of mortgage servicing rights 28,834  52,753  18,830  18,621  -  Amortization and impairment of mortgage servicing rights -  -  -  -  18,745  Accretion and amortization of mortgage-backed securities, net 4,845  4,696  2,006  2,331  1,509  Deferred cash flow hedge (loss) gain, net of amortization (14,292) 5,509  10,509  3,909  (346) (Gain) loss on sales of mortgage-backed securities and derivatives (930) (4,735) -  -  876  Unrealized loss (gain) on mortgage-backed securities 10,890  (1,588) 14,591  3,090  40,968  Unrealized (gain) loss on free standing derivatives (4,828) 20,629  (1,038) (4,765) 6,149  (Decrease) increase in forward delivery contracts (35,605) 42,315  (6,036) (24,041) 24,124  Capitalized mortgage servicing rights on sold loans (73,918) (79,493) (81,029) (69,768) (37,757) Decrease (increase) in interest rate lock commitments 12,586  (5,069) (4,447) 7,131  (10,508) (Increase) decrease in mortgage loan basis adjustments (4,917) (10,125) (2,156) 4,731  (32,201) Excess tax benefits from share-based payment arrangements (102) (332) (1,198) -  -  Other (1,450) (569) (633) (198) (645) (Increase) decrease in operating assets: Accounts receivable (58,738) 2,740  (13,506) 6,829  18,156  Servicing advances (22,038) (11,461) (1,152) (3,281) (11,552) Other assets 8,281  (18,648) (3,582) (1,451) 4,882  Increase (decrease) in operating liabilities: Accrued expenses and other liabilities (42,808) 25,988  (32,977) 93,876  31,696  Income taxes payable 20,018  15,611  30,711  16,173  (25,106)   Origination of mortgage loans held for sale (15,080,212) (14,664,704) (14,371,439) (12,203,014) (11,482,292) Principal received from sales of mortgage loans held for sale 14,371,049  14,241,440  14,013,921  13,372,574  11,179,015  Additions to mortgage-backed securities and derivatives -  -  -  -  (152,666) Principal proceeds from sales of self-originated mortgage-backed securities -  -  99,086  1,809,796  1,333,188  Cash received from residual assets in securitizations 14,710  16,785  20,947  27,353  26,958  Principal repayments of mortgage-backed securities 29,491  35,677  60,485  93,845  212,927  Net cash (used in) provided by operating activities (762,709) (250,921) (166,763) 3,213,464  1,168,414    Cash flows from investing activities: Purchases of premises and equipment (8,708) (6,267) (9,716) (10,765) (8,062) Origination of mortgage loans held for investment (450,263) (599,384) (560,003) (970,335) (2,084,025) Proceeds from repayments and dispositions of mortgage loans held for investment 464,332  446,199  240,403  137,545  75,613  Purchases of mortgage-backed securities (1,423,115) (1,666,650) (461,125) (1,389,336) (3,298,636) Principal proceeds from sales of purchased mortgage-backed securities 482,336  1,503,760  -  -  24,592  Principal repayments of purchased mortgage-backed securities 535,465  529,441  501,239  438,297  409,080  Net increase in investment in Federal Home Loan Bank stock, at cost -  (54) (108) -  -  Acquisition of business (14,108) -  -  (550,077) -  Net cash (used in) provided by investing activities (414,061) 207,045  (289,310) (2,344,671) (4,881,438)   Cash flows from financing activities: (Decrease) increase in warehouse lines of credit, net (585,493) 413,076  (277,623) (1,719,610) 1,309,037  Increase (decrease) in reverse repurchase agreements, net 1,338,956  (1,707,283) 40,736  (907,094) 1,764,565  Decrease in deposits (6,673) -  -  -  -  Increase (decrease) in collateralized debt obligations 1,369,928  (240,005) 819,679  1,847,293  1,057,906  (Decrease) increase in payable for securities purchased (931,389) 1,221,105  (215,114) (46,425) (293,178) (Decrease) increase in commercial paper, net (9,893) 395,382  (185,154) (5,549) (255,117) Increase (decrease) in drafts payable, net 4,063  (3,600) (4,028) (4,377) 1,991  Increase in trust preferred securities 53,738  29,560  48,762  330  106,724  Increase (decrease) in notes payable, net 97,306  (20,539) 6,986  11,405  13,543  Proceeds from issuance of common stock 211  1,068  1,127  652  857  Excess tax benefits from share-based payment arrangements 102  332  1,198  -  -  Dividends paid (53,999) (51,409) (48,819) (48,477) (42,078) Net cash provided by (used in) financing activities 1,276,857  37,687  187,750  (871,852) 3,664,250    Net increase (decrease) in cash and cash equivalents 100,087  (6,189) (268,323) (3,059) (48,774) Cash and cash equivalents, beginning of period 298,079  304,268  572,591  575,650  624,424  Cash and cash equivalents, end of period $ 398,166  $ 298,079  $ 304,268  $ 572,591  $ 575,650    Supplemental disclosure of non-cash investing activities: Net transfer of loans held for sale to loans held for investment $ 533,184  $ 307,431  $ 699,519  $ -  $ -  AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)   Year Ended December 31,   2006  Cash flows from operating activities: Net income $ 263,527  Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 18,245  Provision for loan losses 17,380  Change in fair value of mortgage servicing rights 119,038  Accretion and amortization of mortgage-backed securities, net 13,878  Deferred cash flow hedge gain, net of amortization 5,635  Gain on sales of mortgage-backed securities and derivatives (5,665) Unrealized loss on mortgage-backed securities 26,983  Unrealized loss on free standing derivatives 9,998  Decrease in forward delivery contracts (23,367) Capitalized mortgage servicing rights on sold loans (304,208) Decrease in interest rate lock commitments 10,201  Increase in mortgage loan basis adjustments (12,467) Excess tax benefits from share-based payment arrangements (1,632) Other (2,850) Increase in operating assets: Accounts receivable (62,675) Servicing advances (37,932) Other assets (15,400) Increase in operating liabilities: Accrued expenses and other liabilities 44,079  Income taxes payable 82,513    Origination of mortgage loans held for sale (56,319,369) Principal received from sales of mortgage loans held for sale 55,998,984  Principal proceeds from sales of self-originated mortgage-backed securities 1,908,882  Cash received from residual assets in securitizations 79,795  Principal repayments of mortgage-backed securities   219,498  Net cash provided by operating activities   2,033,071    Cash flows from investing activities: Purchases of premises and equipment (35,456) Origination of mortgage loans held for investment (2,579,985) Proceeds from repayments and dispositions of mortgage loans held for investment 1,288,479  Purchases of mortgage-backed securities (4,940,226) Principal proceeds from sales of purchased mortgage-backed securities 1,986,096  Principal repayments of purchased mortgage-backed securities 2,004,442  Net increase in investment in Federal Home Loan Bank stock, at cost (162) Acquisition of business   (564,185) Net cash used in investing activities   (2,840,997)   Cash flows from financing activities: Decrease in warehouse lines of credit, net (2,169,650) Decrease in reverse repurchase agreements, net (1,234,685) Decrease in deposits (6,673) Increase in collateralized debt obligations 3,796,895  Increase in payable for securities purchased 28,177  Increase in commercial paper, net 194,786  Decrease in drafts payable, net (7,942) Increase in trust preferred securities 132,390  Increase in notes payable, net 95,158  Proceeds from issuance of common stock 3,058  Excess tax benefits from share-based payment arrangements 1,632  Dividends paid   (202,704) Net cash provided by financing activities   630,442    Net decrease in cash and cash equivalents (177,484) Cash and cash equivalents, beginning of period   575,650  Cash and cash equivalents, end of period $ 398,166    Supplemental disclosure of non-cash investing activities: Net transfer of loans held for sale to loans held for investment $ 1,540,134  AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES FAIR VALUE OF FINANCIAL INSTRUMENTS (Unaudited) (In thousands)   December 31, 2006 Carrying Value Fair Value Fair Value in Excess of Carrying Value Assets: Cash and cash equivalents $ 398,166  $ 398,166  $ -  Accounts receivable and servicing advances 432,418  432,418  -  Securities 9,308,032  9,308,032  -  Mortgage loans held for sale, net 1,523,737  1,573,564  49,827  Loans held for investment, net 6,329,721  6,461,449  131,728  Mortgage servicing rights, net 506,341  506,341  -  Derivative assets (1) 32,142  130,091  97,949  $ 279,504      Carrying Value in Excess of (Lower Than) Fair Value Liabilities: Warehouse lines of credit $ 1,304,541  $ 1,304,541  $ -  Commercial paper 1,273,965  1,273,965  -  Reverse repurchase agreements 8,571,459  8,571,538  (79) Collateralized debt obligations 4,854,801  4,856,258  (1,457) Derivative liabilities 12,644  12,644  -  Trust preferred securities 336,078  336,078  -  Notes payable 417,467  417,467  -  $ (1,536)   Fair Value in Excess of Carrying Value $ 277,968    Note: (1) 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. AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES OPERATING STATISTICS   As of and for the Year Ended December 31, 2005 (1) GAAP Adjustments As Adjusted Mortgage Holdings Segment: Investment Portfolio Performance (2): Average loans and mortgage-backed securities in portfolio ($ billions) 7.6  0.4  8.0  Interest income ($ millions) 357.9  19.9  377.8  Average portfolio yield 4.73% 4.75%   Interest expense ($ millions) 262.3  7.7  270.0  Average cost of funds and hedges 3.71% 3.65%   Net interest income ($ millions) 95.6  12.2  107.8  Net interest margin 1.26% 1.36%   Interest carry on free standing derivatives ($ millions) -7.3  -7.3  Net interest income plus interest carry on free standing derivatives ($ millions) 88.3  12.2  100.5  Net interest margin including interest carry on free standing derivatives 1.17% 1.26%   Reconciliation of Changes in Mortgage Holdings (3): Net change in mortgage-backed securities ($ billions) 0.3  0.3  Additions to loans in portfolio ($ billions) 3.5  3.5  Principal repayments of loans in portfolio ($ billions) 0.0  0.0  Net additions to loans in portfolio ($ billions) 3.5  3.5  Loans and mortgage-backed securities held - end of period ($ billions) 14.1  14.1  Mortgage-backed securities period end duration gap (in years) -0.03  -0.03    Loan Origination Segment: Loan originations ($ billions) 45.3  45.3  Refinance 47% 47% ARM 50% 50%   Average mortgage loans, net ($ billions) (3) 6.1  -0.9  5.2  Net interest income excluding trust preferred and other interest expense ($ millions) 119.2  -22.4  96.8  Net interest margin excluding trust preferred and other interest expense 1.96% 1.85% Trust preferred and other interest expense ($ millions) 6.5  6.5  Net interest income ($ millions) 112.7  -22.4  90.3  Loans securitized and held ($ billions) 4.4  -1.5  2.9  Loans securitized and sold ($ billions) 12.3  -2.0  10.3  Loans sold to third parties ($ billions) 28.5  28.5    Gain on sales of loans, net of hedge gains ($ millions) (4) 620.9  -43.5  577.4  Excess of fair value over carrying value of loans added to investment portfolio ($ millions) 58.0    58.0  Total ($ millions) 678.9  -43.5  635.4    Gain on sales of loans, net of hedge gains (% of principal) (4) 1.53% 1.42% Excess of fair value over carrying value of loans added to investment portfolio (% of principal) 1.63% 1.63% Total (% of principal) 1.54% 1.44% Applications accepted ($ billions) 67.8  67.8  Application pipeline ($ billions) 9.2  9.2      Loan Servicing Segment: Loan servicing portfolio - total with warehouse ($ billions) 30.7  30.7  Loan servicing portfolio - loans sold or securitized ($ billions) 25.0  25.0  Interest expense ($ millions) 7.3  7.3  Weighted average note rate 5.79% 5.79% Weighted average service fee 0.330% 0.330% Average age (in months) 15  15    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 for investment pending securitization. (3) Includes loans held for investment pending securitization. (4) Prior to the fourth quarter of 2005, includes gain on current period securitizations, net of hedge gains. AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share amounts)     Year Ended December 31, 2005 (1) GAAP   Adjustments   As Adjusted Net interest income: Interest income $ 727,685  $ (26,925) $ 700,760  Interest expense (526,653)   16,766    (509,887) Net interest income 201,032    (10,159)   190,873    Provision for loan losses (2,142)   -    (2,142)   Net interest income after provision for loan losses 198,890    (10,159)   188,731    Non-interest income: Gain on sales of mortgage loans 335,065  -  335,065  Gain on sales of current period securitized mortgage loans 194,256  (25,258) 168,998  Gain on sales of mortgage-backed securities and derivatives 50,936  (1,400) 49,536  Unrealized loss on mortgage-backed securities and derivatives (8,536) (37,263) (45,799)   Loan servicing fees 76,096  2,851  78,947  Amortization and impairment of mortgage servicing rights (60,535) (122) (60,657) Change in fair value of mortgage servicing rights -    -    -  Net loan servicing fees 15,561    2,729    18,290    Other non-interest income 7,775    -    7,775  Non-interest income 595,057    (61,192)   533,865    Non-interest expenses: Salaries, commissions and benefits, net 359,949  -  359,949  Occupancy and equipment 58,855  -  58,855  Data processing and communications 24,788  -  24,788  Office supplies and expenses 19,722  -  19,722  Marketing and promotion 20,311  -  20,311  Travel and entertainment 21,007  -  21,007  Professional fees 14,232  -  14,232  Other 32,018    -    32,018  Non-interest expenses 550,882    -    550,882    Net income before income tax expense 243,065  (71,351) 171,714    Income tax benefit (17,721)   -    (17,721)   Net income $ 260,786    $ (71,351)   $ 189,435    Dividends on preferred stock 13,217  -  13,217    Net income available to common shareholders $ 247,569    $ (71,351)   $ 176,218    Per share data: Basic $ 5.64  $ (1.63) $ 4.01  Diluted $ 5.58  $ (1.61) $ 3.97    Weighted average number of shares - basic 43,897  43,897  43,897  Weighted average number of shares - diluted 44,375  44,375  44,375    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.

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