- Earns adjusted net income of $0.36 per diluted share, or $0.30 on
GAAP basis NEW YORK, Nov. 7 /PRNewswire-FirstCall/ -- MortgageIT
Holdings, Inc. (NYSE:MHL), a residential mortgage company organized
as a real estate investment trust ("REIT"), today announced
operating and financial results for the third quarter ended
September 30, 2005. The Company reported GAAP net income for the
third quarter of 2005 of $8.7 million, or $0.30 per diluted share.
For the nine months ended September 30, 2005, GAAP net income was
$32.8 million, or $1.44 per diluted share. Adjusted net income for
the third quarter of 2005 was $10.2 million, or $0.36 per diluted
share. For the nine months ended September 30, 2005, adjusted net
income was $27.0 million, or $1.19 per diluted share. Net income
and adjusted net income per diluted share are based upon weighted
average outstanding shares of 28.4 million for the third quarter
and 22.8 million for the nine- month period. Additional operating
information is included in the "Operating Statistics Table"
provided later in this press release. Doug Naidus, Chairman and
Chief Executive Officer, commented, "We are pleased to report that
the Company is performing well in a challenging environment. We
continue to include only carefully selected, high credit quality
assets in our 100% self-originated portfolio, as indicated by our
recent announcement that we are slowing the further growth of our
loan portfolio. Our mortgage bank continues to achieve record
results, paced by the 100% plus year-over-year growth in our
mortgage funding volume. We believe that the Company ranked among
the top 20 lenders nationally in loan originations for the third
quarter." Mr. Naidus continued, "Despite overall growth of 45%
quarter over quarter, we did not surpass our third quarter
sub-prime loan origination guidance due to the extraordinary
pressure on the gain on sale margins during the third quarter.
Given our commitment to continuing to operate our sub-prime
business unit profitably, we have guided to flat to lower sub prime
volume in the fourth quarter as we expect these conditions will
persist." Mortgage Banking Financial and Operating Highlights: --
For the third quarter ended September 30, 2005, MortgageIT, Inc.,
the Company's mortgage banking subsidiary, had pre-tax income of
$16.0 million. After-tax income, prior to eliminations, totaled
$8.9 million. Net of tax and the elimination of the gain on sale
relating to $977 million of loans transferred to the REIT
portfolio, the mortgage bank earned $1.6 million or $0.06 per
share. -- Third quarter sub-prime volume was $1.3 billion, within
the Company's prior guidance of $1.1 billion to $1.3 billion. --
Gain on sale margin for loans sold to third parties during the
quarter ended September 30, 2005 was approximately 93 basis points
(Bps). A breakdown between prime and sub-prime margins can be found
in the "Operating Statistics Table" provided later in this press
release. Portfolio Financial and Operating Highlights: -- During
the third quarter of 2005, the Company transferred $977 million of
self-originated ARM loans to its investment portfolio. As of
September 30, 2005, the Company had an investment portfolio of $4.7
billion, of which $4.1 billion was securitized. The portfolio had
an average balance of $4.2 billion during the third quarter. On
October 25, 2005, the Company closed a $905 million securitization,
bringing the securitized portfolio to approximately $5.0 billion.
The portfolio continues to consist entirely of 6 month traditional
ARMs and hybrid 3 year and 5 year ARMs which do not carry a
negative amortization feature. -- Adjusted net interest margin on
the loan portfolio was 122 Bps during the third quarter, down from
145 Bps in the second quarter. Adjusted return on assets ("ROA") on
the portfolio was 79 Bps in the third quarter, down from 92 Bps in
the second quarter. Third quarter adjusted net interest margin and
ROA were negatively impacted by increased loan basis amortization
due to faster prepayment speeds. -- The portfolio earned $8.6
million, or $0.30 per share in adjusted earnings. Outlook and
Guidance -- As previously disclosed, the Company expects to
maintain the size of its investment portfolio at approximately $5.0
billion during the fourth quarter. -- As previously announced, the
Company expects to pay a fourth quarter dividend of $0.48 per
share, unchanged from dividends paid for the first three quarters
of 2005. -- The Company expects to report loan funding volume of
approximately $8.5 to $9.0 billion in the fourth quarter of 2005,
which would represent an increase of 94% to 105% over the fourth
quarter of 2004. -- The Company expects to report sub-prime loan
funding volume of approximately $900 million to $1.2 billion in the
fourth quarter. -- The Company has fully assessed the impact of
Hurricane Katrina on the Company's assets and, given its minimal
exposure in the affected areas, it anticipates no material
financial effect on the Company's business. Adjusted Financial
Measures Adjusted net income, adjusted net interest margin,
adjusted return on assets, and adjusted earnings per share
(diluted) are non-GAAP financial measures which are reported by the
Company in addition to net income and earnings per share (diluted)
as prepared in accordance with GAAP. As indicated in its first
quarter 2005 release, during the first quarter of 2005, the Company
did not qualify under the Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and
Hedging Activities" ("FAS 133") with respect to certain hedging
activities. The non-GAAP financial measures reported by the Company
are presented as if the Company qualified under FAS 133 in all
periods. If the Company qualified under FAS 133, gains and losses
on derivative hedges would have been deferred and amortized over
the hedge period. Since the Company did not qualify under FAS 133,
both realized and unrealized gains and losses were recognized in
GAAP earnings in prior periods. Management believes that by
adjusting net income in this manner, the non-GAAP measures provide
a useful gauge of the Company's operating performance because
adjusted net income highlights that portion of the Company's
reported earnings that is more likely to be ongoing in nature.
Conference Call Information MortgageIT Holdings, Inc. will hold an
investor conference call to discuss its third quarter financial
performance at 10:00 a.m. Eastern Time on Tuesday, November 8,
2005. Interested parties may listen to the live call by dialing
800-865-4415 (U.S.) or 973-935-2402 (International) and referencing
the conference ID #6569111, or by visiting the MortgageIT Holdings
corporate website, http://www.mortgageitholdings.com/, to listen to
a live conference call webcast. A replay of the conference call
will be available through Tuesday, November 15, 2005, at midnight
ET. The replay can be accessed by dialing 877-519-4471 (U.S.), and
973-341-3080 (International). The pass code for the replay is
6569111. An archived replay of the webcast will also be available
on the Company's corporate website. About MortgageIT Holdings, Inc.
MortgageIT Holdings, Inc. (NYSE:MHL) is a self-administered
mortgage real estate investment trust ("REIT") focused on the
residential lending market. The Company self-originates its
investment portfolio of high quality adjustable rate mortgage
("ARM") loans through MortgageIT, Inc., its wholly owned
residential mortgage banking subsidiary. MortgageIT, Inc. is a
full- service residential mortgage banking company that is licensed
to originate loans throughout the United States. MortgageIT
Holdings is organized and conducts its operations to qualify as a
REIT for federal income tax purposes. MortgageIT is organized and
operates as MortgageIT Holdings' taxable REIT subsidiary. For more
information, please visit http://www.mortgageitholdings.com/.
Forward-Looking Statements In this press release, 2005 results are
unaudited. Also, this press release contains certain
"forward-looking statements," which are statements that relate to
future, not past, events. In this context, forward-looking
statements often address our expected future business and financial
performance, and often contain words such as "expects,"
"anticipates," "intends," "plans," "believes," "will" or other
similar words or expressions. Forward-looking statements, by their
nature, address matters that are, to different degrees, uncertain
and include statements relating to our ability to fund a
fully-leveraged, self-originated loan portfolio, our anticipated
loan funding volume and our ability to pay dividends. These
statements are based on management's current expectations and
beliefs and are subject to a number of trends and uncertainties
that could cause actual results to differ materially from those
described in the forward-looking statements. MortgageIT Holdings
can give no assurance that its expectations will be attained.
Factors that could cause actual results to differ materially from
MortgageIT Holdings' expectations include, but are not limited to,
MortgageIT's continued ability to originate new loans, including
loans that we deem suitable for our securitization portfolio;
changes in the capital markets, including changes in interest rates
and/or credit spreads; and other risks detailed in MortgageIT
Holdings' Annual Report on Form 10-K that was filed with the
Securities and Exchange Commission ("SEC") on March 31, 2005 and
from time to time in MortgageIT Holdings' other SEC reports. Such
forward-looking statements speak only as of the date of this press
release. MortgageIT Holdings expressly disclaims any obligation to
release publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in the Company's
expectations with regard thereto or change in events, conditions or
circumstances on which any statement is based. MortgageIT Holdings,
Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS (Dollars in
thousands) September 30, December 31, 2005 2004 (Unaudited) ASSETS
Cash and cash equivalents $58,999 $70,224 Restricted cash 1,691
1,679 Marketable securities held to maturity 3,684 7,546 Portfolio
ARM Loans ARM loans collateralizing debt obligations, net 4,083,127
1,432,692 ARM loans held for securitization, net 588,252 1,166,961
Total Portfolio ARM Loans 4,671,379 2,599,653 Mortgage loans held
for sale 3,293,729 784,592 Hedging instruments 48,644 19,526
Accounts receivable, net of allowance 114,515 28,731 Prepaids and
other assets 19,920 11,693 Goodwill 11,639 11,639 Property and
equipment, net 8,490 5,567 Total assets $8,232,690 $3,540,850
LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Collateralized
debt obligations $3,899,237 $1,331,986 Warehouse lines payable
3,673,365 1,869,385 Repurchase agreements 75,897 67,674 Hedging
instruments 4,340 1,145 Junior subordinated debentures 77,324 -
Notes payable and other debt 15,000 15,000 Accounts payable,
accrued expenses and other liabilities 130,088 63,993 Total
liabilities 7,875,251 3,349,183 STOCKHOLDERS' EQUITY: Common stock,
$.01 par value: 125,000,000 shares authorized; 28,884,868 and
19,405,473 issued and outstanding 289 194 Additional paid-in
capital 393,038 238,405 Unearned compensation - restricted stock
(6,657) (6,196) Accumulated other comprehensive income (loss)
10,556 (387) Accumulated deficit (39,787) (40,349) Total
stockholders' equity 357,439 191,667 Total liabilities and
stockholders' equity $8,232,690 $3,540,850 CONSOLIDATED STATEMENTS
OF OPERATIONS (Unaudited) (Dollars and shares in thousands, except
per share data) Three months ended Nine months ended September 30,
September 30, 2005 2004 2005 2004 (As restated) (As restated)
Revenues: Gain on sale of mortgage loans $61,612 $14,405 $140,704
$49,634 Brokerage revenues 7,506 8,955 20,179 29,544 Interest
income 90,384 15,804 212,036 27,412 Interest expense (75,741)
(6,925) (156,482) (11,926) Net interest income 14,643 8,879 55,554
15,486 Realized and unrealized gain on hedging instruments -
(9,856) 9,742 (9,856) Other 209 248 715 272 Total revenues 83,970
22,631 226,894 85,080 Operating expenses: Compensation and employee
benefits 39,037 20,492 99,051 56,922 Processing expenses 16,014
7,165 40,064 16,952 General and administrative expenses 6,112 2,811
19,117 7,614 Rent 2,700 1,990 7,257 5,662 Marketing, loan
acquisition and business development 1,206 902 3,126 3,127
Professional fees 2,411 792 7,238 1,851 Depreciation and
amortization 984 686 2,621 1,956 Total operating expenses 68,464
34,838 178,474 94,084 Income (loss) before income taxes 15,506
(12,207) 48,420 (9,004) Income taxes 6,841 (242) 15,607 1,204 Net
income (loss) 8,665 (11,965) 32,813 (10,208) Dividends on
convertible redeemable preferred stock - 587 - 3,947 Net income
(loss) attributable to common stockholders $8,665 $(12,552) $32,813
$(14,155) Per share data: Basic $0.31 $(0.93) $1.47 $(2.91) Diluted
$0.30 $(0.93) $1.44 $(2.91) Weighted average number of shares -
basic 28,077 13,451 22,381 4,861 Weighted average number of shares
- diluted 28,427 13,451 22,788 4,861 Segment Financial Results for
the Third Quarter of 2005 ($ thousands - except EPS) Mortgage
Banking Portfolio Consolidated Amount EPS Amount EPS Amount EPS
After tax GAAP earnings prior to elimination 8,872 0.31 4,837 0.17
13,709 0.48 Elimination (1) (7,310) (0.26) 2,266 0.08 (5,044)
(0.18) After tax GAAP earnings net of elimination 1,562 0.06 7,103
0.25 8,665 0.30 Adjustment for after tax impact relating to FAS133
(2) 0 0.00 1,511 0.06 1,511 0.06 Adjusted Earnings 1,562 0.06 8,614
0.30 10,176 0.36 Segment Financial Results for the Nine Months
ended September 30th of 2005 ($ thousands - except EPS) Mortgage
Banking Portfolio Consolidated Amount EPS Amount EPS Amount EPS
After tax GAAP earnings prior to elimination 20,489 0.90 25,678
1.13 46,167 2.03 Elimination (1) (17,898) (0.79) 4,544 0.20
(13,354) (0.59) After tax GAAP earnings net of elimination 2,591
0.11 30,222 1.33 32,813 1.44 Adjustment for after tax impact
relating to FAS133 (2) (629) (0.03) (5,140) (0.23) (5,769) (0.25)
Adjusted Earnings 1,962 0.09 25,082 1.10 27,044 1.19 (1) Eliminates
the economic impact of inter-company loan sales from the mortgage
bank to the portfolio. (2) Adjusts previous gains and losses on
derivative hedges reported by the Company (as a result of not
qualifying under FAS 133) and the corresponding amortization
associated with those gains and losses. Operating Statistics Table
Quarter Ended 2005 March 31 June 30 September 30 Mortgage Banking
Metrics Loan volume ($ millions) $4,340 $6,389 $9,249 % Purchase
51% 56% 48% % Refinance 49% 44% 52% % Funded in MortgageIT name
(banked) 92% 93% 95% Held for sale warehouse balance (avg) ($
millions) $1,500 $2,139 $3,655 Warehouse weighted average coupon
6.33% 5.87% 5.24% Warehouse borrowing cost 3.33% 3.74% 4.36%
Warehouse net interest margin 3.00% 2.13% 0.88% Number of
production branches 51 53 58 Gain on sale on total loans sold to
third parties (Bps) 105 114 93 Gain on sale prime loans sold to
third parties (Bps) 97 93 80 Gain on sale sub-prime loans sold to
third parties (Bps) 186 227 175 Gain on sale on loans transferred
to portfolio (Bps) 87 70 78 Margin on loans brokered (Bps) 133 116
128 Loan Portfolio Metrics Average loan assets in portfolio ($
millions) $2,786 $3,404 $4,197 Weighted average coupon of loans
5.12% 5.17% 5.37% Scheduled loan basis amortization 0.21% 0.22%
0.28% Incremental loan basis amortization due to higher prepayment
rates --% 0.05% 0.08% Net weighted average coupon 4.91% 4.90% 5.01%
Interest expense (net of hedging) 3.07% 3.62% 3.93% FAS133
adjustment --% -0.17% -0.14% Adjusted net interest margin 1.84%
1.45% 1.22% General and administrative (includes servicing expense)
0.41% 0.44% 0.34% Credit provision 0.09% 0.09% 0.09% Adjusted loan
portfolio return on assets 1.34% 0.92% 0.79% Adjusted loan
portfolio return on assets prior to increased prepayments 1.34%
0.97% 0.87% Credit Reserve for HFI Portfolio Credit reserve balance
0.05% 0.06% 0.07% 60 to 89 days past due 0.06% 0.11% 0.26% Over 90
days past due --% --% 0.04% Foreclosure 0.04% 0.17% 0.13% Total
past due and foreclosure 0.10% 0.28% 0.43% DATASOURCE: MortgageIT
Holdings, Inc. CONTACT: Investors - Sean McGrath of MortgageIT
Holdings, Inc., +1-212-651-4637, or Media - Ted Stacer of
MortgageIT Holdings, Inc., +1-212-651-7653, or Joe LoBello of
Brainerd Communicators, Inc., +1-212-986-6667, for MortgageIT
Holdings, Inc. Web site: http://www.mortgageitholdings.com/
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