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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.