EX-99.1 2 am698790-ex99_1.txt MATERIALS EXHIBIT 99.1 [AHM LOGO] Lehman Brothers Financial Services Conference September 13, 2004 -------------------------------------------------------------------------------- American Home Mortgage Investment Corp. -------------------------------------------------------------------------------- Corporate Profile -------------------------------------------------------------------------------- o American Home Mortgage Investment (NYSE: AHM) o Hybrid Mortgage REIT o Self-Originates and Holds Mortgage Securities o Focuses on High Credit Quality Assets o Offers Strong Dividend with Opportunity for Rapid Growth o Operates 20th Largest Prime Mortgage Originator in the United States 2 [AHM LOGO] Business Model -------------------------------------------------------------------------------- o Focus on Building our Portfolio's - Value - Yield o Value and Yield Building is Accomplished by Originating Loans, Creating Structured Securities and Investing in Higher Yielding Securities o Mortgage Origination Business Enables Portfolio to Grow In Value and Yield o Risk-Averse Portfolio Management Strategy 3 [AHM LOGO] Growing Portfolio Value and Yield through Structured Securitizations -------------------------------------------------------------------------------- o Securitization Process Converts Value Created by the Mortgage Origination Business into increased Portfolio Value and Higher Yield o Securitization Structure Designed to Create High Yielding Securities which are Retained while Lower Yielding Securities are Sold o Increases Portfolio Value and Yield with Limited Capital Commitment 4 [AHM LOGO] Expected Yields on Existing Portfolio v. Self-Originated and Retained Securities -------------------------------------------------------------------------------- o Expected Yield from Portfolio in place on June 30, 2004 Assuming No Change in Interest Rates 18.4% o Expected Yield on Retained Securities Created in Q3, 2004 Assuming No Change in Interest Rates 26.6% 5 [AHM LOGO] American Home Aims to be a Strong Dividend and High Growth Investment -------------------------------------------------------------------------------- o Dividend Generated by Portfolio o Origination Business Increases the Value and Yield of the Portfolio Over Time o Goal is to Accelerate Growth in Portfolio Value and Yield by Growing the Mortgage Origination Business o Greater Portfolio Value and Yield Should Lead to Higher Dividends 6 [AHM LOGO] Both Investment and Origination Businesses are Benefited by our Tax Status -------------------------------------------------------------------------------- o Net Interest Income from the Portfolio is Untaxed Provided it is Paid Out as Dividends o Much of the Value Created by the Mortgage Origination Business is Untaxed - Value is realized as an addition to portfolio value, and not through an asset sale. o Tax Structure Provides a Significant Advantage Over Taxable Mortgage Asset Holders and Taxable Mortgage Originators 7 [AHM LOGO] Portfolio Strategy -------------------------------------------------------------------------------- o Yield and Yield Growth Driven by Self-Origination Capability o Consequently a Defensive Portfolio Management Strategy is Possible o Key Components of Defensive Strategy - Duration Neutral - High Credit Quality - Low Exposure to Extension and Prepayment due to short resetting ARM Assets 8 [AHM LOGO] Portfolio Strategy -------------------------------------------------------------------------------- o Return Not Benefited by the Slope of the Yield Curve o Agnostic About Direction of Interest Rates - Return Not Dependent on Finding Value or Other Portfolio Management Strategies 9 [AHM LOGO] Projected Yield and Yield Variance (Portfolio Income Before Expenses) -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ROEs for Instantaneous Interest Rate Changes ------------- --------------------------------------------------------------------------------
================================================================================================================================= -100 bp -50 bp 0 bp +50 bp +100 bp Flattener Steepner -------------------------------------------------------------------------------- Portfolio as of 6/30/2004 13.5% 17.6% 18.4% 17.7% 14.3% 15.5% 22.0% Projected Q3 Securitization ($825 Million*) 20.3% 25.6% 26.6% 25.7% 21.4% 22.9% 31.0%
* $2.1 billion securitization, $1.275 billion sold for cash, $825 million retained for portfolio Flattener and Steepner represent 2-10 yr. 50 bp interest rate shocks. Assumes 12:1 leverage. Based on company projections and are to be used as a representative model only. Actual results may vary 10 [AHM LOGO] Portfolio Characteristics -------------------------------------------------------------------------------- ------------------------- ------------------------- ------------------------- Portfolio Size Loan Types Credit Quality ------------------------- ------------------------- ------------------------- [GRAPHIC PIE CHART] [GRAPHIC PIE CHART] [GRAPHIC PIE CHART] Self Originated 54% 5/1 ARMs 56% AAA and Agency 97% Market Bought 46% 3/1 ARMs 22% Other 2% Short Reset (less than 1 year) 22% -------------------------------------------------------------------------------- Portfolio Statistics -------------------------------------------------------------------------------- Leverage Statistic 10.9 Times Equity Average Life 3.78 Years Net Duration Statistic -0.1 Years Average Mark 100.26 of par Convexity -.53 Price/Yield Spread Duration 3.17 years As of 06/30/04 11 [AHM LOGO] Risk Mitigation Strategies -------------------------------------------------------------------------------- o Ongoing hedging to Maintain Duration Neutral Position o Key Rate Management o Concentration on Short Reset ARMs - Reduced Extension / Prepayment Exposure - Reduced Spread Volatility o BlackRock Tools and Consultation o Concentration on High Credit Quality Assets 12 [AHM LOGO] Mortgage Origination Business -------------------------------------------------------------------------------- o Origination Business Drives Growth in the Value and Yield of the Mortgage Portfolio o Company Aims to Aggressively Grow the Origination Business to Speed Portfolio Value and Yield Growth 13 [AHM LOGO] Mortgage Origination Business - Overview --------------------------------------------------------------------------------
Top Mortgage Originators in 2004 (For 3 months - Dollars in Billions) 2004 o Trend in origination volume: Rank Lender Volume ---- ----------------------------------------------------------- ---------- - 2000 $ 3.0 Billion 1 Countrywide Financial Corp., CA $ 99.66 2 Wells Fargo Home Mortgage, CA $ 96.08 - 2001 $ 7.8 Billion 3 Washington Mutual, WA $ 76.36 4 Chase Home Finance, NJ $ 56.87 - 2002 $ 12.2 Billion 5 CitiMortgage, Inc., MO / Principal Residential Mortgage, IA $ 40.13 6 Bank of America, NC $ 28.46 - 2003 $ 21.7 Billion 7 GMAC Residential Holdings, PA $ 24.44 8 ABN Amro Mortgage, MI $ 19.43 - Q104 $ 4.4 Billion 9 National City Mortgage, OH $ 18.73 10 Cendant Mortgage (2), NJ $ 17.63 - Q204 $ 6.6 Billion 11 Homecomings, MN $ 13.73 12 HSBC Mortgage Corp. USA, NY $ 12.63 13 Golden West Financial Corp./World, CA $ 12.40 14 Aurora Loan Services, Inc., CO $ 11.26 o Average national market share: 15 GreenPoint Mortgage Funding, CA $ 11.17 16 First Horizon Home Loans, TX $ 10.38 - 2000 0.29 % 17 IndyMac Bancorp, Inc., CA $ 9.42 18 Flagstar Bank, FSB, MI $ 9.00 - 2001 0.38 % 19 SunTrust Mortgage, Inc., VA $ 8.81 ------------------------------------------------------------------------------ - 2002 0.47 % 20 American Home Mtg. Investment, NY $ 6.62 ------------------------------------------------------------------------------ - 2003 0.60 % 21 RBC Mortgage, IL $ 5.90 22 Impac Funding Corporation, CA $ 5.50 - Q104 0.75 % 23 Branch Banking & Trust Co., NC $ 5.46 24 U.S. Bank Home Mortgage, MN $ 5.22 - Q204 0.83 % 25 Wachovia/First Union Mtg., NC $ 5.05 26 Ohio Savings Bank, F.S.B. (E), OH $ 4.50 27 First Magnus Financial Corp., AZ $ 4.09 28 Netbank, SC $ 3.90 29 CTX Mortgage, TX $ 3.50 30 E*Trade, VA $ 3.39 Source: Inside Mortgage Finance, Copyright 2004 Source: National Mortgage News, Copyright 2004
14 [AHM LOGO] Benefits of Scale -------------------------------------------------------------------------------- o Lower Per Loan Production Costs o Better Terms of Business with Counterparties - Fannie Mae / Freddie Mac - Liquidity Providers - Service Providers o Enhanced Ability to Improve Production Platform - Technology - Marketing Innovations 15 [AHM LOGO] Origination Business Growth Drivers -------------------------------------------------------------------------------- o Inexpensive Acquisitions - Origination Franchise being Built at Less than Replacement Cost - Recent Acquisition from Washington Mutual o Rapid Organic Growth 16 [AHM LOGO] Nationwide Branch Network -------------------------------------------------------------------------------- > American Home Mortgage originates mortgages through approximately 303 branches in 38 states > Approximately 3900 Employees [GRAPHIC MAP OF UNITED STATES OF AMERICA] 17 [AHM LOGO] Production Characteristics (Second Quarter 2004) -------------------------------------------------------------------------------- --------------------------------------- --------------------------------------- Credit Quality Retail vs. Wholesale --------------------------------------- --------------------------------------- [GRAPHIC PIE CHART] [GRAPHIC PIE CHART] Agency Eligible 63% Wholesale 54% High Credit Quality Jumbo Loans 21% Retail 46% Alt A 10% Home Equity & Second Mortgages 3% Non-Prime 3% --------------------------------------- --------------------------------------- Largest States Fixed vs. ARMs --------------------------------------- --------------------------------------- [GRAPHIC PIE CHART] [GRAPHIC PIE CHART] All Other 42% Fixed 51% CA 24% ARMs 49% IL 18% MD 6% AZ 5% VA 5% 18 [AHM LOGO] Strong Access to Liquidity -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Commercial Paper Program -------------------------------------------------------------------------------- o $2.0 Billion Lehman Sponsored Asset-Backed CP Guaranteed by Bank of America, Caylon and ABN Amro -------------------------------------------------------------------------------- Warehouse and Loan Gestation -------------------------------------------------------------------------------- UBS $1.2 billion Bank of America Syndication 600 million RBS Greenwich Capital 500 million CDC IXIS 450 million Morgan Stanley 350 million Caylon 200 million -------------------------------------------------------------------------------- Securities Repurchase Facilities -------------------------------------------------------------------------------- Bank of America Bear Stearns Citigroup Credit Suisse Deutsche Bank Goldman Sachs Lehman Brothers Merrill Lynch UBS Morgan Stanley Nomura Greenwich Capital 19 [AHM LOGO] Outstanding Financial Results -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- American Home Mortgage's Results For Four Full Years Since Initial Public Offering -------------------------------------------------------------------------------- AHM Loan Originations Revenues -------------------------------------------------------------------------------- [GRAPHIC BAR CHART] [GRAPHIC BAR CHART] 92% CAGR 95% CAGR Billions Millions 2000 $3.0 2000 $58.3 2001 $7.8 2001 $126.1 2002 $12.2 2002 $232.8 2003 $21.7 2003 $432.1 Net Income Earnings Per Share -------------------------------------------------------------------------------- [GRAPHIC BAR CHART] [GRAPHIC BAR CHART] 139% CAGR 70% CAGR Millions Dollars 2000 $5.4 2000 $.83 2001 $25.5 2001 $2.14 2002 $39.5 2002 $2.65 2003 $73.8 2003 $4.07 20 [AHM LOGO] Condensed Income Forecast -------------------------------------------------------------------------------- 2nd Half 2004 Dollars in Millions Net Interest Income 64.8 Reduction in Trading Portfolio Value (14.9) Portfolio Expenses (4.4) ----------- Portfolio Income 45.4 Gain on Sale of Loans and Securitizations 156.8 Loan Origination Expenses (124.0) ----------- Loan Origination Income 32.8 Servicing and Other Income (Expenses) (2.6) Preferred Dividends (2.5) ----------- Net Income Available For Common 73.1 Average Diluted Common Shares 40.3 EPS 1.81 21 [AHM LOGO] Condensed Cash Flow Forecast -------------------------------------------------------------------------------- 2nd Half 2004 Dollars in Millions Net Interest Income (Excludes premium amortization) 75.2 Sales of Loans and Newly Created Securities 121.7 Servicing and Other Income * 21.9 Increase in MBS Value ** 25.4 Increase in Servicing Value *** 17.8 Additional Borrowings Given Constant Leverage 35.9 ----------- Total Cash Generated 254.7 Loan Origination and Servicing Expenses 179.5 Preferred Dividends 2.5 Common Dividends at Current Pay Rate 48.6 ----------- Total Cash Usage 230.6 ----------- Excess Cash Available to Reduce Leverage, Grow Portfolio or Increase Common Dividend 24.1 * Excludes servicing amortization and impairment ** Net of principal paydowns and convexity losses *** Net of portfolio runoff and market value declines 22 [AHM LOGO] 2nd Half Guidance -------------------------------------------------------------------------------- Six Months Ended Full Year December 31 2004 Earnings Per Diluted Share 1.81 3.40 Common Dividends Per Share 1.22 2.32 December 31, 2004 Book Value Per Share 18.41 23 [AHM LOGO]