IRVINE, Calif., July 28, 2016 /PRNewswire/ -- Impac Mortgage
Holdings, Inc. (NYSE MKT: IMH) announces the financial results for
the quarter ended June 30,
2016. For the second quarter of 2016, operating income,
excluding the changes in contingent consideration, increased to
$18.5 million as compared to
$8.4 million in the second quarter of
2015, and $7.0 million in the first
quarter of 2016. For the second quarter of 2016,
the Company reported net earnings of $12.3
million or $0.92 per diluted
common share, as compared to net earnings of $16.8 million or $1.33 per diluted common share for the second
quarter of 2015, and $981 thousand or
$0.08 per diluted common share for
the first quarter of 2016.
Results of
Operations
|
For the
Three Months Ended
|
For the Six
Months Ended
|
(in thousands, except
share data) (unaudited)
|
June 30,
2016
|
March 31,
2016
|
June 30,
2015
|
June 30,
2016
|
June 30,
2015
|
Revenues:
|
|
|
|
|
|
Gain on sale of
loans, net
|
$
78,822
|
$
53,869
|
$
48,346
|
$
132,691
|
$
85,744
|
Real estate services
fees, net
|
1,995
|
2,100
|
2,355
|
4,095
|
5,097
|
Servicing income,
net
|
2,803
|
2,088
|
1,017
|
4,891
|
1,652
|
Loss on mortgage
servicing rights
|
(14,482)
|
(10,910)
|
(2,790)
|
(25,392)
|
(9,358)
|
Other
|
75
|
152
|
156
|
227
|
293
|
Total
revenues
|
69,213
|
47,299
|
49,084
|
116,512
|
83,428
|
Expenses:
|
|
|
|
|
|
Personnel
expense
|
30,592
|
23,965
|
24,078
|
54,557
|
35,568
|
Business
promotion
|
11,286
|
9,191
|
8,679
|
20,478
|
8,894
|
General,
administrative and other
|
8,842
|
7,162
|
7,943
|
16,004
|
13,378
|
Accretion of
contingent consideration
|
1,759
|
1,895
|
3,046
|
3,653
|
3,046
|
Change in fair value
of contingent consideration
|
8,412
|
2,942
|
(11,326)
|
11,354
|
(11,326)
|
Total
expenses
|
60,891
|
45,155
|
32,420
|
106,046
|
49,560
|
Operating
income:
|
8,322
|
2,144
|
16,664
|
10,466
|
33,868
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
Net interest
(expense) income
|
833
|
(101)
|
959
|
732
|
2,016
|
Change in fair value
of long-term debt
|
1,354
|
-
|
(1,544)
|
1,354
|
(8,661)
|
Change in fair value
of net trust assets
|
2,165
|
(627)
|
802
|
1,538
|
(74)
|
Total other income
(expense)
|
4,352
|
(728)
|
217
|
3,624
|
(6,719)
|
Net earnings before
income taxes
|
12,674
|
1,416
|
16,881
|
14,090
|
27,149
|
Income tax expense (benefit)
|
423
|
435
|
71
|
858
|
(23,633)
|
Net
earnings
|
$
12,251
|
$
981
|
$
16,810
|
$
13,232
|
$
50,782
|
|
|
|
|
|
|
Diluted earnings per share
|
$
0.92
|
$
0.08
|
$
1.33
|
$
1.08
|
$
4.17
|
Net earnings includes fair value adjustments for changes in the
contingent consideration, long-term debt and net trust
assets. The contingent consideration is related to the
CashCall Mortgage ("CCM") acquisition transaction, while the other
fair value adjustments are related to our legacy portfolio.
These fair value adjustments are non-cash items and are not related
to current operating results. Although we are required by
GAAP to record a change in fair value and accretion of the
contingent consideration, management believes operating income
excluding contingent consideration changes and the related
accretion is more useful to discuss the ongoing and future
operations of the Company. The table below shows
operating income excluding these items:
Operating income
(loss)
|
For the
Three Months Ended
|
For the Six
Months Ended
|
(in
thousands)
|
June 30,
2016
|
March 31,
2016
|
June 30,
2015
|
June 30,
2016
|
June 30,
2015
|
|
|
|
|
|
|
Operating income
(loss):
|
$
8,322
|
$
2,144
|
$
16,664
|
$
10,466
|
$
33,868
|
Accretion of
contingent consideration
|
1,759
|
1,895
|
3,046
|
3,653
|
3,046
|
Change in fair value
of contingent consideration
|
8,412
|
2,942
|
(11,326)
|
11,354
|
(11,326)
|
Operating income
excluding changes in contingent consideration
|
$
18,493
|
$
6,981
|
$
8,384
|
$
25,473
|
$
25,588
|
Operating income, excluding the changes in contingent
consideration, increased to $18.5
million for the second quarter of 2016 as compared to
$8.4 million in the second quarter of
2015, and $7.0 million in the first
quarter of 2016. The increase was primarily due to an
increase in gain on sale of loans from a 38% increase in volume (as
discussed below) combined with a 14 basis point "bps" increase in
gain on sale margins to 243 bps in the quarter compared to the
first quarter of 2016 and compared to 186 bps in the second quarter
of 2015. This increase in gain on sale of loans was
offset primarily by an increase in loss on mortgage servicing
rights ("MSR"), in the second quarter. The loss on
mortgage servicing rights was primarily due to prepayments in the
portfolio and a mark-to-market loss associated with a decrease in
prevailing mortgage rates in June of 2016. Counterbalancing the
higher prepayments in the Company's MSR portfolio during the second
quarter, were MSR retention rates greater than 80%. In future
periods, if interest rates increase there would likely be an
increase in the estimated fair value of MSRs. In addition,
operating expenses increased about 26% to support the 38% increase
in mortgage volume.
Selected
Operational Data
|
|
|
|
|
|
(in
millions)
|
|
|
|
|
|
|
Q2
2016
|
Q1
2016
|
%
Change
|
Q2
2015
|
%
Change
|
Retail
Originations
|
$2,493.0
|
$1,653.0
|
51%
|
$1,547.6
|
61%
|
Correspondent
Originations
|
$419.9
|
$376.9
|
11%
|
$640.2
|
-34%
|
Wholesale
Originations
|
$334.5
|
$319.3
|
5%
|
$416.5
|
-20%
|
Total
Originations
|
$3,247.4
|
$2,349.2
|
38%
|
$2,604.3
|
25%
|
During the second quarter of 2016, total originations increased
38% to $3.2 billion as compared to
$2.3 billion in the first quarter of
2016. In the second quarter of 2016, retail originations
continued to be the main driver of total originations representing
approximately 77% or $2.5 billion in
total originations.
Summary Balance
Sheet
|
June
30,
|
December
31,
|
(in
thousands)
|
2016
|
2015
|
ASSETS
|
(Unaudited)
|
|
Cash
|
$
19,736
|
$
32,409
|
Mortgage loans
held-for-sale
|
683,687
|
310,191
|
Finance
receivables
|
56,388
|
36,368
|
Mortgage servicing
rights
|
54,747
|
36,425
|
Securitized mortgage
trust assets
|
4,305,071
|
4,594,534
|
Goodwill and
intangibles
|
132,814
|
134,913
|
Deferred tax
asset
|
24,420
|
24,420
|
Other
assets
|
50,044
|
41,592
|
Total
assets
|
$
5,326,907
|
$
5,210,852
|
|
|
|
LIABILITIES &
EQUITY
|
|
|
Warehouse
borrowings
|
$
699,377
|
$
325,616
|
Debt
|
85,707
|
106,433
|
Securitized mortgage
trust liabilities
|
4,288,939
|
4,580,326
|
Contingent
consideration
|
49,986
|
48,079
|
Other
liabilities
|
49,434
|
35,908
|
Total
liabilities
|
5,173,443
|
5,096,362
|
Total
equity
|
153,464
|
114,490
|
Total liabilities
and stockholders' equity
|
$
5,326,907
|
$
5,210,852
|
Selected
Operational Data
|
|
|
|
(in
millions)
|
|
|
|
|
|
6/30/2016
|
3/31/2016
|
%
Change
|
6/30/2015
|
%
Change
|
Mortgage Servicing
Portfolio
|
$6,641.5
|
$5,161.0
|
29%
|
$3,570.7
|
86%
|
As of June 30, 2016, the Company's
mortgage servicing portfolio increased to $6.6 billion, a 29% increase from March 31, 2016, which increased our retained MSRs
to $54.7 million at June 30, 2016 as compared to $44.3 million at March
31, 2016.
The contingent consideration liability represents the estimated
fair value of the expected future earn-out payments to be paid to
the seller of the CCM operations which were acquired in the first
quarter of 2015. In the second quarter of 2016, we updated
assumptions based on current market conditions, resulting in an
increase in projected volumes of CCM and in turn a higher estimated
value of the contingent consideration to the seller of CCM. As a
result, we recorded a change in the fair value of the contingent
consideration in the second quarter increasing the contingent
consideration liability by $8.4
million over the remaining earn-out period of six
quarters. Even though this projected increase in mortgage
volume for CCM is a favorable development, as required by GAAP, it
resulted in a corresponding charge to earnings of $8.4 million in the second quarter of 2016.
Mr. Joseph Tomkinson, Chairman
and CEO of Impac Mortgage Holdings, Inc., commented, "The Company
is pleased that it has executed another successful quarter.
If interest rates stay low, growing volumes and increasing margins
should enable the Company to deliver very strong operating income
for the third quarter."
Conference Call
The Company will hold a conference call on July 29, 2016, at 9:00
a.m. Pacific Time (12:00 p.m. Eastern
Time), to discuss the Company's financial results and
business outlook and to answer investor questions. After the
Company's prepared remarks, management will host a live Q&A
session to answer questions submitted via email. Please email your
questions to Justin.Moisio@ImpacMail.com. Investors may
participate in the conference call by dialing (888) 529-7789,
conference ID number 56351224, or access the web cast via our web
site at http://ir.impaccompanies.com. To participate in the
conference call, dial in 15 minutes prior to the scheduled start
time. The conference call will be archived on the Company's web
site at http://ir.impaccompanies.com.
Non-GAAP Financial Measures
This release contains a financial measure, operating income
excluding contingent consideration changes and the related
accretion, that is a non-GAAP measure. We have provided a
reconciliation within this release of the non-GAAP financial
measure to the most directly comparable GAAP financial measure.
Management believes operating income excluding contingent
consideration changes and the related accretion is more useful to
discuss the ongoing and future operations. This non-GAAP
financial measure should be considered in addition to, but not as a
substitute for, measures for financial performance prepared in
accordance with GAAP that are presented in this release, and
the reconciliation to the closest corresponding GAAP measure should
be reviewed carefully.
Forward-Looking Statements
This press release contains certain forward looking statements
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward looking
statements, some of which are based on various assumptions and
events that are beyond our control, may be identified by reference
to a future period or periods or by the use of forward looking
terminology, such as "may," "capable," "will," "intends,"
"believe," "expect," "likely," "potentially" "appear,"
"should," "could," "seem to," "anticipate," "expectations," "plan,"
"ensure," or similar terms or variations on those terms or the
negative of those terms. The forward looking statements are based
on current management expectations. Actual results may differ
materially as a result of several factors, including, but not
limited to the following: failure to achieve the benefits
expected from the acquisition of the CCM operations, including an
increase in origination volume generally, increase in each of our
origination channels and ability to successfully use the marketing
platform to expand volumes of our other loan products; successful
development, marketing, sale and financing of new and existing
financial products, including expansion of non-Qualified Mortgage
originations and conventional and government loan programs; ability
to successfully diversify our mortgage products; volatility in the
mortgage industry; unexpected interest rate fluctuations and margin
compression; our ability to manage personnel expenses in relation
to mortgage production levels; our ability to successfully use
warehousing capacity; increased competition in the mortgage lending
industry by larger or more efficient companies; issues and system
risks related to our technology; ability to successfully create
cost and product efficiencies through new technology; more than
expected increases in default rates or loss severities and mortgage
related losses; ability to obtain additional financing through
lending and repurchase facilities, debt or equity funding,
strategic relationships or otherwise; the terms of any
financing, whether debt or equity, that we do obtain and our
expected use of proceeds from any financing; increase in loan
repurchase requests and ability to adequately settle repurchase
obligations; failure to create brand awareness; the outcome,
including any settlements, of litigation or regulatory actions
pending against us or other legal contingencies; and our compliance
with applicable local, state and federal laws and regulations and
other general market and economic conditions.
For a discussion of these and other risks and uncertainties that
could cause actual results to differ from those contained in the
forward looking statements, see the annual and quarterly reports we
file with the Securities and Exchange Commission. This document
speaks only as of its date and we do not undertake, and
specifically disclaim any obligation, to release publicly the
results of any revisions that may be made to any forward looking
statements to reflect the occurrence of anticipated or
unanticipated events or circumstances after the date of such
statements.
About the Company
Impac Mortgage Holdings, Inc. (IMH or Impac) provides innovative
mortgage lending and warehouse lending solutions, as well as real
estate solutions that address the challenges of today's economic
environment. Impac's operations include mortgage and
warehouse lending, servicing, portfolio loss mitigation and real
estate services as well as the management of the securitized
long-term mortgage portfolio, which includes the residual interests
in securitizations.
For additional information, questions or comments, please call
Justin Moisio, VP Investor Relations
at (949) 475-3988 or email Justin.Moisio@ImpacMail.com. Web site:
http://ir.impaccompanies.com or www.impaccompanies.com
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SOURCE Impac Mortgage Holdings, Inc.