-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GXfPT42ndkuR6bCsoVbLXO3nTCAeQZYJC7PccGzxbPwYksMWYueMk2p+a+ZPOKKz bCZJMxHmnIO2Pxq06ytSjg== 0000914121-06-001188.txt : 20060426 0000914121-06-001188.hdr.sgml : 20060426 20060426102328 ACCESSION NUMBER: 0000914121-06-001188 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060426 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060426 DATE AS OF CHANGE: 20060426 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN HOME MORTGAGE INVESTMENT CORP CENTRAL INDEX KEY: 0001256536 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 200103914 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-31916 FILM NUMBER: 06779810 MAIL ADDRESS: STREET 1: 520 BROADHOLLOW ROAD CITY: MELVILLE STATE: NY ZIP: 11747 8-K 1 p727912-8k.txt CURRENT REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): April 26, 2006 American Home Mortgage Investment Corp. - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) Maryland 001-31916 20-0103914 - -------------------------------------------------------------------------------- (State or Other Jurisdiction (Commission (I.R.S. Employer of Incorporation) File Number) Identification No.) 538 Broadhollow Road, Melville, New York 11747 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (516) 396-7700 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition On April 26, 2006, American Home Mortgage Investment Corp. (the "Company") issued a press release reporting financial results for the quarter ended March 31, 2006. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. The information in this Current Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of such Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise expressly stated in such filing. Item 9.01 Financial Statements and Exhibits (d) Exhibits: 99.1 - Press Release, dated April 26, 2006. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: April 26, 2006 AMERICAN HOME MORTGAGE INVESTMENT CORP. By: /s/ Stephen A. Hozie ----------------------------------- Name: Stephen A. Hozie Title: Chief Financial Officer EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION 99.1 Press Release, dated April 26, 2006. EX-99.1 2 p727912-ex99_1.txt PRESS RELEASE Exhibit 99.1 AMERICAN HOME [LOGO] FOR IMMEDIATE RELEASE American Home Mortgage Announces First Quarter Results Earnings are $1.02 per diluted share Quarterly Loan Production is $13.2 Billion, Market Share Reaches Record 2.55% Company Increases Dividend Policy to $0.96 per share per quarter, or $3.84 per share on an annualized basis 2006 Earnings Guidance of $4.85 to $5.15 is Reaffirmed Other Comprehensive Income is $14.0 million Melville, NY (April 26, 2006) - American Home Mortgage Investment Corp. (NYSE: AHM) announced today results for the quarter ended March 31, 2006. FINANCIAL HIGHLIGHTS - -------------------- Comparison of the Three Months Ended March 31, 2006 and 2005 o Revenue for the first quarter of 2006 was $233.1 million, compared to adjusted revenue of $164.0 million for the first quarter of 2005, an increase of 42.2%. GAAP revenue for the first quarter of 2005 was $235.3 million. o Net earnings for the first quarter of 2006 were $54.5 million, compared to adjusted net earnings of $54.0 million for the first quarter of 2005, an increase of 0.8%. GAAP net earnings for the first quarter of 2005 was $125.4 million. o Earnings per diluted share for the first quarter of 2006 were $1.02, compared to adjusted earnings per diluted share of $1.24 for the first quarter of 2005, a decrease of 17.7%. GAAP earnings per diluted share for the first quarter of 2005 was $2.99. o Dividends per common share for the first quarter of 2006 were $0.91, compared to $0.71 for the first quarter of 2005, an increase of 28.2%. o Book value per common share was $22.01 at March 31, 2006, compared to book value per common share of $19.41 at March 31, 2005, an increase of 13.4%. Comparison of the Three Months Ended March 31, 2006 and December 31, 2005 o Revenue for the first quarter of 2006 was $233.1 million, compared to revenue of $150.5 million for the fourth quarter of 2005, an increase of 54.9%. o Net earnings for the first quarter of 2006 were $54.5 million, compared to net earnings of $16.7 million for the fourth quarter of 2005, an increase of 226.1%. o Earnings per diluted share for the first quarter of 2006 were $1.02, compared to earnings per diluted share of $0.27 for the fourth quarter of 2005, an increase of 277.8%. o Dividends per common share for the first quarter of 2006 and the fourth quarter of 2005 were $0.91. o Book value per common share was $22.01 at March 31, 2006, compared to book value per common share of $21.62 at December 31, 2005, an increase of 1.8%. Michael Strauss, American Home's Chief Executive Officer, commented, "During the first quarter of 2006 our company regained its financial footing, with revenues and income for the quarter coming in slightly better than anticipated. In particular, our company's first quarter gain on sale margin from loans sold to third parties returned to a more typical rate of 1.27%, resulting in revenue from loans sold to third parties of $171.9 million. By contrast, in the fourth quarter of 2005, our gain on sale margin was 0.96%, resulting in revenue from loans sold to third parties of $105.4 million. During the first quarter of 2006, our company's net interest income, including $3.9 million of carry earnings on free standing swaps, was $50.5 million, compared to $51.3 million, including $1.0 million of free standing swap carry earnings, in the fourth quarter of 2005. The $50.5 million of net interest income included $30.3 million of net interest income from our portfolio of securitized loans and mortgage securities, $9.4 million of net interest income from loans held for investment which are pending securitization, $18.6 million of net interest income on warehouse loans held for sale and $7.8 million of interest expense associated with trust preferred, servicing financing and other borrowings. By contrast, the $51.3 million of net interest income earned during the fourth quarter of 2005 consisted of $30.8 million of net interest income from our portfolio, $2.1 million of net interest income from investment loans pending securitization, $24.3 million of net interest income from warehouse loans held for sale, and $5.9 million of interest expense for trust preferred, servicing financing and other borrowings. During the first quarter of 2006, our company's loan production was $13.2 billion compared to $13.6 billion in the fourth quarter of 2005. While production was down slightly on a quarter-over-quarter basis, our company's market share, based on Freddie Mac's projection of the national market, reached a record 2.55% of US originations in the first quarter, up sharply from our 2.02% share in the fourth quarter of 2005. During the first quarter each of our retail, wholesale and correspondent channels gained share. Changes in the valuation of our assets had only a limited impact on our financial results in the first quarter. During the quarter our investment portfolio experienced a gain excluding carry earnings from free standing swaps, which increased income $4.5 million, and which resulted in other comprehensive income of $14.0 million. The gain was partially offset by write-downs and reserving associated with our servicing assets which reduced after-tax income by $4.5 million. During the first quarter of 2006, our company added $970.3 million principal amount of self-originated loans to its investment portfolio. These loans had a market value of $991.2 million, but were carried at their cost basis of $977.2 million. Our company anticipates that its future period net interest income will be enhanced by adding self-originated loans to its investment portfolio that are carried at their cost. We also anticipate that the volume of self-originated loans added to our portfolio will increase in the second quarter due to the positive impact of seasonality on our total loan production. Based upon our results and prospects, I am very pleased to announce that our Board of Directors has again voted to increase our dividend policy, increasing the quarterly policy to $0.96 per common share, or $3.84 per common share on an annualized basis. The increased dividend is expected to be effective for the dividends to be paid in July 2006. This is the twelfth increase in our quarterly dividends since our company began paying dividends in April 2001." 2 FIRST QUARTER RESULTS - --------------------- During the first quarter of 2006, American Home's mortgage loans and mortgage-backed securities in portfolio averaged $11.1 billion, and earned net interest income of $26.4 million equal to a net interest margin of 0.95%. In addition, during the quarter, the Company earned $3.9 million of positive carry on interest rate swaps which economically hedge the trading portion of the Company's portfolio. Under accounting rules these swaps are classified as free standing derivatives and consequently are not included in GAAP net interest income, but are instead included in unrealized gains and losses on mortgage backed securities and derivatives. For the first quarter, the combined net interest income and positive swap carry was $30.3 million, or 1.09% of average portfolio assets. By comparison, during the fourth quarter of 2005, the Company's mortgage loans and mortgage-backed securities portfolio averaged $10.5 billion and earned net interest income of $29.8 million equal to a net interest margin of 1.17%. During the fourth quarter, the Company had $1.0 million of positive carry on the interest rate swaps which economically hedge the trading portion of the Company's portfolio. Consequently, in the fourth quarter the combined net interest income and positive swap carry was $30.8 million, or 1.21% of average portfolio assets. During the first quarter of 2006, American Home's inventory of loans averaged $9.6 billion, earned a net interest margin of 1.16% and earned net interest income of $28.0 million. This compares with an average balance of $8.6 billion, a net interest margin of 1.28% and net interest income of $26.4 million in the fourth quarter of 2005. During the first quarter of 2006, the Company had interest expense on trust preferred, servicing financing and other obligations of $7.8 million compared to $5.9 million during the fourth quarter of 2005. At March 31, 2006, the composition of the Company's loans held for investment and MBS portfolio by type of loan was 60.5% 5/1 adjustable-rate mortgages ("ARMs"), 29.2% short reset ARMs, 3.1% 3/1 ARMs, 1.6% HELOC and closed end seconds and 5.6% other fixed and ARM types. The composition of the MBS portfolio by credit quality based on Standard & Poor's ratings was 93.5% Agency and AAA, 4.0% AA, A, BB and BBB and 2.5% unrated. On March 31, 2006, the MBS portfolio's duration, net of liabilities and hedges, was estimated to be 0.15 years and its projected average life was 2.60 years. During the first quarter of 2006, the Company's loan production was $13.2 billion. Of the $13.2 billion, 49% of loans were to homebuyers while 51% were for refinancing. During the first quarter of 2006, the Company estimates its national market share reached 2.55%, based on Freddie Mac's recent forecast of national market size, compared to 2.02% in the fourth quarter of 2005 and 1.17% during the first quarter of 2005. At March 31, 2006, the Company employed approximately 2,680 loan officers and account executives, including call center representatives, but excluding sales assistants, compared to approximately 2,373 on December 31, 2005. During the quarter, the Company continued to pursue its strategy of holding loans in its investment portfolio, which are carried at their cost, less any associated loan loss allowance. The amount of such loans placed into the investment portfolio during the quarter was $970.3 million. These loans had an excess of fair value over carrying value of $14.0 million, or 1.44% of principal. During the quarter, the Company sold $13.5 billion of non-securitized loans to third parties for a gain, net of hedges, fees and direct costs, of $171.9 million. During the quarter, the Company recognized realized and unrealized gains, net of hedges, on the value of its securities portfolio of $22.4 million, of which $8.4 million resulted in current period income, and $14.0 million resulted in other comprehensive income. During the quarter, income associated with the Company's servicing assets was $5.7 million. Effective at the beginning of the first quarter, the Company adopted the newly issued Statement of Financial Accounting Standards No. 156 - Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140 ("SFAS 156") and elected the fair value option to subsequently measure its mortgage servicing rights ("MSRs"). Under the fair 3 value option, all changes in the fair value of MSRs are reported in the income statement. The Company's results from servicing include $24.3 million of servicing fee revenue, $18.7 million of reduction in fair value due to servicing runoff and $0.1 million of gain due to higher interest rates reducing projected future runoff. In addition, the Company took a charge to retained earnings in the amount of $2.9 million as a result of its adoption of SFAS 156. At the end of the quarter, the principal amount of the loans being serviced including loans held for sale and loans held for investment was $34.8 billion, compared to $30.7 billion at the end of the fourth quarter. The Company's total revenues for the quarter were $233.1 million. Of these revenues, $46.6 million was from net interest income, $171.9 million was from sales of newly originated mortgage loans including origination fees and net of hedges, $24.3 million was from mortgage servicing fees, $8.4 million was from realized and unrealized gains on mortgage securities held, net of hedges, and $1.8 million was from other sources. Revenues were decreased by $18.6 million of change in fair value of servicing assets and $1.3 million of provision for loan losses. During the quarter, the Company's expenses were $162.4 million, and the Company's pre-tax income was $70.7 million. During the quarter, the Company's taxable subsidiary had pre-tax income of $38.9 million resulting in tax expense of $16.2 million. Consequently, net income for the quarter was $54.5 million while preferred dividends were $3.3 million and net income available to common stockholders was $51.2 million, resulting in earnings per diluted share of $1.02. Book value attributable to common stockholders on March 31, 2006 was $1.1 billion, or $22.01 per common share, compared to $1.1 billion, or $21.62 per common share, on December 31, 2005. EARNINGS GUIDANCE - ----------------- American Home is reaffirming its 2006 earnings guidance of $4.85 to $5.15 per diluted share. The Company expects the distribution of 2006 earnings among the year's quarters will be affected by seasonality in the Company's loan origination segment and by progressively increasing net interest income due to the Company's buildup of its investment portfolio. DIVIDEND POLICY - --------------- American Home's dividend policy is increasing to $0.96 per share per quarter or $3.84 per share on an annualized basis. The dividend policy is increasing due to the Company's strong quarter, and its projected earnings for the balance of 2006. Investors are advised that the Company's earnings projections are based on a number of assumptions, and if such assumptions do not materialize the Company may not be able to maintain its dividend policy. 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. OTHER COMPANY HIGHLIGHTS - ------------------------ During the quarter, the Company completed its acquisition of Waterfield Financial. The Waterfield acquisition was closely aligned with the Company's strategy of growing its origination capabilities through acquisitions of established franchises available for purchase at reasonable prices. In connection with its acquisition of Waterfield, the Company acquired Waterfield's closed loan inventory which consisted of $559 million of residential mortgage loans. 4 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, April 26, 2006, 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 May 10, 2006. 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 mortgage-backed securities and mortgage loans, and through its taxable subsidiaries, from originating and servicing mortgage loans for institutional investors. Mortgages are originated through a network of loan production offices as well as through mortgage brokers and correspondents 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 5 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. ### CONTACT: Mary M. Feder Vice President, Investor Relations American Home Mortgage Investment Corp. (631) 622-6469 Mary.feder@americanhm.com 6 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 7 AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES OPERATING STATISTICS
Three Months Ended ------------------------------------------------------------- March 31, Dec. 31, Sept. 30, June 30, March 31, 2006 2005 2005 2005 2005 --------- -------- --------- -------- ----------- (1) As Adjusted --------- -------- --------- -------- ----------- Mortgage Holdings Segment: - ---------------------------------------------------------------- Average loans and mortgage-backed securities in portfolio ($ billions) (2) 11.1 10.5 7.1 6.8 7.4 Interest income ($ millions) 154.9 138.0 84.5 77.1 78.2 Average portfolio yield 5.60% 5.27% 4.76% 4.53% 4.23% Interest expense ($ millions) 128.5 108.2 62.9 52.2 46.7 Average cost of funds and hedges 4.89% 4.36% 3.84% 3.29% 2.71% Net interest income ($ millions) 26.4 29.8 21.6 24.9 31.5 Net interest margin 0.95% 1.17% 1.24% 1.48% 1.70% Interest carry on free standing derivatives ($ millions) 3.9 1.0 -0.6 -2.7 -5.0 Net interest income including interest carry on free standing derivatives ($ millions) 30.3 30.8 21.0 22.2 26.5 Net interest margin including interest carry on free standing derivatives 1.09% 1.21% 1.21% 1.32% 1.43% Net change in mortgage-backed securities ($ billions) -1.0 1.4 1.2 -0.7 -1.6 Additions to loans in portfolio ($ billions) 1.0 2.1 1.3 0.1 0.0 Principal repayments of loans in portfolio ($ billions) 0.2 0.0 0.0 0.0 0.0 Net additions to loans in portfolio ($ billions) 0.8 2.1 1.3 0.1 0.0 Loans and mortgage-backed securities held - end of period ($ billions) 13.9 14.1 10.7 7.1 7.2 Mortgage-backed securities period end duration gap (in years) 0.15 -0.03 0.17 0.08 0.09 Loan Origination Segment: - ---------------------------------------------------------------- Loan originations ($ billions) (3) 13.2 13.6 13.7 10.8 7.2 Refinance 51% 51% 46% 41% 48% ARM 51% 50% 48% 50% 53% Average mortgage loans, net ($ billions) 9.6 8.6 5.7 3.9 2.8 Net interest income excluding trust preferred and other interest expense ($ millions) 28.0 26.4 28.5 23.0 18.9 Net interest margin excluding trust preferred and other interest expense 1.17% 1.28% 2.12% 3.86% 2.70% Trust preferred and other interest expense ($ millions) 4.7 3.3 2.0 0.8 0.4 Net interest income ($ millions) 23.3 23.1 26.5 22.2 18.5 Net interest margin 0.97% 1.12% 1.98% 2.34% 2.65% Loans securitized and held ($ billions) 0.0 0.0 1.2 0.4 1.3 Loans securitized and sold ($ billions) 0.0 0.0 1.3 5.4 2.5 Loans sold to third parties ($ billions) 13.5 11.0 9.9 4.5 3.1 Gain on sales of loans, net of hedge gains ($ millions) (4) 171.9 105.4 176.5 182.6 112.9 Excess of fair value over carrying value of loans added to investment portfolio ($ millions) 14.0 30.2 26.5 1.3 0.0 --------- -------- --------- -------- ----------- Total ($ millions) 185.9 135.6 203.0 183.9 112.9 --------- -------- --------- -------- ----------- Gain on sales of loans, net of hedge gains (% of principal) (4) 1.27% 0.96% 1.42% 1.78% 1.64% Excess of fair value over carrying value of loans added to investment portfolio (% of principal) 1.44% 1.43% 2.02% 0.95% 0.00% Total (% of principal) 1.28% 1.03% 1.48% 1.77% 1.64% Applications accepted ($ billions) 20.8 17.8 19.7 17.3 13.0 Application pipeline ($ billions) 11.8 9.2 11.6 10.7 8.4 March 31, Dec. 31, Sept. 30, June 30, March 31, 2006 2005 2005 2005 2005 --------- -------- --------- -------- ----------- Loan Servicing Segment: - ---------------------------------------------------------------- Loan servicing portfolio - total with warehouse ($ billions) 34.8 30.7 27.5 24.7 19.9 Loan servicing portfolio - loans sold or securitized ($ billions) 29.0 25.0 24.2 22.6 18.2 Interest expense ($ millions) 3.1 2.6 1.3 2.0 1.4 Weighted average note rate 6.09% 5.79% 5.73% 5.62% 5.21% Weighted average service fee 0.329% 0.330% 0.331% 0.336% 0.344% Average age (in months) 14 15 13 13 14
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 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. (4) Prior to the fourth quarter of 2005, includes gain on current period securitizations, net of hedge gains. 8 AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share amounts)
Three Months Ended --------- --------- --------- --------- --------- March 31, Dec. 31, Sept. 30, June 30, March 31, 2006 2005 2005 2005 2005 --------- --------- --------- --------- --------- (1) As Adjusted --------- --------- --------- --------- --------- Net interest income: Interest income $ 300,613 $ 265,435 $ 180,038 $ 135,318 $ 119,969 Interest expense (254,035) (215,057) (133,169) (90,336) (71,325) --------- --------- --------- --------- --------- Net interest income 46,578 50,378 46,869 44,982 48,644 --------- --------- --------- --------- --------- Provision for loan losses (1,311) (2,142) -- -- -- --------- --------- --------- --------- --------- Net interest income after provision for loan losses 45,267 48,236 46,869 44,982 48,644 --------- --------- --------- --------- --------- Non-interest income: Gain on sales of mortgage loans 171,907 98,777 123,658 77,377 35,253 Gain on sales of current period securitized mortgage loans -- -- 19,960 104,377 44,661 (Loss) gain on sales of mortgage-backed securities and derivatives (850) 38,068 6,116 620 4,732 Unrealized gain (loss) on mortgage-backed securities and derivatives 9,315 (44,778) (10,965) (10,292) 20,236 Loan servicing fees 24,333 26,715 21,099 16,970 14,163 Amortization and impairment of mortgage servicing rights -- (18,745) (3,478) (33,230) (5,204) Change in fair value of mortgage servicing rights (18,621) -- -- -- -- --------- --------- --------- --------- --------- Net loan servicing fees (loss) 5,712 7,970 17,621 (16,260) 8,959 --------- --------- --------- --------- --------- Other non-interest income 1,769 2,181 1,585 2,543 1,466 --------- --------- --------- --------- --------- Non-interest income 187,853 102,218 157,975 158,365 115,307 --------- --------- --------- --------- --------- Non-interest expenses: Salaries, commissions and benefits, net 99,267 95,237 101,378 94,859 68,475 Occupancy and equipment 17,970 16,459 15,328 14,397 12,671 Data processing and communications 7,126 6,402 6,479 5,957 5,950 Office supplies and expenses 4,332 4,612 5,024 5,657 4,429 Marketing and promotion 5,800 5,951 5,104 5,126 4,130 Travel and entertainment 6,753 6,982 4,670 5,427 3,928 Professional fees 5,331 3,586 3,744 3,432 3,470 Other 15,882 10,946 7,360 6,843 6,869 --------- --------- --------- --------- --------- Non-interest expenses 162,461 150,175 149,087 141,698 109,922 --------- --------- --------- --------- --------- Net income before income tax expense (benefit) 70,659 279 55,757 61,649 54,029 Income tax expense (benefit) 16,200 (16,419) 2,549 (3,851) -- --------- --------- --------- --------- --------- Net income $ 54,459 $ 16,698 $ 53,208 $ 65,500 $ 54,029 ========= ========= ========= ========= ========= Dividends on preferred stock 3,305 3,304 3,304 3,304 3,305 --------- --------- --------- --------- --------- Net income available to common shareholders $ 51,154 $ 13,394 $ 49,904 $ 62,196 $ 50,724 ========= ========= ========= ========= ========= Per share data: Basic $ 1.03 $ 0.27 $ 1.10 $ 1.54 $ 1.26 Diluted $ 1.02 $ 0.27 $ 1.09 $ 1.52 $ 1.24 Weighted average number of shares - basic 49,715 49,605 45,174 40,384 40,308 Weighted average number of shares - diluted 50,070 49,998 45,669 40,886 40,811
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. 9 AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands)
March 31, December 31, September 30, June 30, March 31, 2006 2005 2005 2005 2005 ------------ ------------ ------------- ------------ ------------ Assets: Cash and cash equivalents $ 572,591 $ 575,650 $ 624,424 $ 197,375 $ 162,762 Accounts receivable and servicing advances 327,586 329,132 335,736 116,835 103,295 Mortgage-backed securities 9,580,963 10,602,104 9,208,172 6,917,986 7,181,170 Mortgage loans held for sale, net 1,589,613 2,208,749 1,901,293 1,965,074 1,627,891 Mortgage loans held for investment, net 4,315,384 3,479,721 1,445,429 134,597 -- Derivative assets 102,267 44,594 67,185 35,756 73,383 Mortgage servicing rights, net 371,974 319,671 300,659 261,839 228,412 Premises and equipment, net 75,594 68,782 64,174 61,441 55,986 Goodwill 110,330 99,527 99,268 98,826 92,745 Other assets 30,708 26,815 31,697 21,185 49,332 ------------ ------------ ------------- ------------ ------------ Total assets $ 17,077,010 $ 17,754,745 $ 14,078,037 $ 9,810,914 $ 9,574,976 ============ ============ ============= ============ ============ Liabilities and Stockholders' Equity: Liabilities: Warehouse lines of credit $ 1,754,581 $ 3,474,191 $ 2,165,154 $ 665,697 $ 658,686 Drafts payable 16,377 20,754 18,763 26,538 28,391 Commercial paper 1,073,630 1,079,179 1,334,296 1,291,684 858,382 Reverse repurchase agreements 8,899,050 9,806,144 8,041,579 6,337,630 6,720,167 Collateralized debt obligations 2,905,199 1,057,906 -- -- -- Payable for securities purchased 215,114 261,539 554,717 -- -- Derivative liabilities 7,512 16,773 -- 6,195 1,945 Trust preferred securities 204,018 203,688 96,964 48,414 -- Accrued expenses and other liabilities 385,392 277,476 239,382 177,761 176,859 Notes payable 330,714 319,309 305,766 256,060 159,339 Income taxes payable 51,016 30,770 56,310 47,753 54,250 ------------ ------------ ------------- ------------ ------------ Total liabilities 15,842,603 16,547,729 12,812,931 8,857,732 8,658,019 ------------ ------------ ------------- ------------ ------------ Stockholders' Equity: Preferred stock 134,040 134,040 134,040 134,040 134,040 Common stock 500 496 496 405 403 Additional paid-in capital 958,175 947,512 946,105 638,595 632,828 Retained earnings 206,512 203,778 235,556 224,442 193,064 Accumulated other comprehensive loss (64,820) (78,810) (51,091) (44,300) (43,378) ------------ ------------ ------------- ------------ ------------ Total stockholders' equity 1,234,407 1,207,016 1,265,106 953,182 916,957 ------------ ------------ ------------- ------------ ------------ Total liabilities and stockholders' equity $ 17,077,010 $ 17,754,745 $ 14,078,037 $ 9,810,914 $ 9,574,976 ============ ============ ============= ============ ============ 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 50,004,965 49,639,646 49,590,821 40,538,479 40,335,255
10 AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) (In thousands)
Three Months Ended ------------------------------------------------------------------- Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 2006 2005 2005 2005 2005 ----------- ----------- ----------- --------- --------- Preferred stock Balance at end of period $ 134,040 $ 134,040 $ 134,040 $ 134,040 $ 134,040 ----------- ----------- ----------- --------- --------- Common stock Balance at beginning of period $ 496 $ 496 $ 405 $ 403 $ 403 Issuance of common stock - earnouts 3 -- -- 2 -- Issuance of common stock - Omnibus Stock Plan 1 -- 1 -- -- Issuance of common stock - offering -- -- 90 -- -- ----------- ----------- ----------- --------- --------- Balance at end of period $ 500 $ 496 $ 496 $ 405 $ 403 ----------- ----------- ----------- --------- --------- Additional paid-in capital Balance at beginning of period $ 947,512 $ 946,105 $ 638,595 $ 632,828 $ 631,530 Issuance of common stock - earnouts 9,555 -- 139 5,005 846 Issuance of common stock - Omnibus Stock Plan 651 857 488 588 311 Issuance of common stock - offering -- -- 304,033 -- -- Stock-based employee compensation expense 410 -- -- -- -- Tax benefit for stock options exercised -- 434 2,638 -- -- Restricted shares amortization 47 116 212 174 141 ----------- ----------- ----------- --------- --------- Balance at end of period $ 958,175 $ 947,512 $ 946,105 $ 638,595 $ 632,828 ----------- ----------- ----------- --------- --------- Retained earnings Balance at beginning of period $ 203,778 $ 235,556 $ 224,442 $ 193,064 $ 99,628 Cumulative-effect adjustment as of beginning of period (1) (2,917) -- -- -- -- Net income 54,459 16,698 53,208 65,500 125,380 Dividends declared (48,808) (48,476) (42,094) (34,122) (31,944) ----------- ----------- ----------- --------- --------- Balance at end of period $ 206,512 $ 203,778 $ 235,556 $ 224,442 $ 193,064 ----------- ----------- ----------- --------- --------- Other comprehensive loss Balance at beginning of period $ (78,810) $ (51,091) $ (44,300) $ (43,378) $ (39,339) Unrealized (loss) gain on mortgage-backed securities (35,765) (7,730) (15,918) 6,901 (24,435) Gain (loss) on cash flow hedges, net of amortization 49,755 (19,989) 9,127 (7,823) 20,396 ----------- ----------- ----------- --------- --------- Balance at end of period $ (64,820) $ (78,810) $ (51,091) $ (44,300) $ (43,378) ----------- ----------- ----------- --------- --------- Total stockholders' equity $ 1,234,407 $ 1,207,016 $ 1,265,106 $ 953,182 $ 916,957 =========== =========== =========== ========= =========
Note: (1) Effective January 1, 2006, the Company adopted SFAS 156 and elected the fair value option to subsequently measure its MSRs. 11 AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Three Months Ended --------------------------------------------------------------------------- Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 2006 2005 2005 2005 2005 ------------ ------------ ------------ ------------ ----------- Cash flows from operating activities: Net income $ 54,459 $ 16,698 $ 53,208 $ 65,500 $ 125,380 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 3,953 3,454 3,098 2,739 2,439 Provision for loan losses 1,311 2,142 -- -- -- Change in fair value of mortgage servicing rights 18,621 -- -- -- -- Amortization and impairment of mortgage servicing rights -- 18,745 3,478 33,230 5,082 Accretion and amortization of mortgage-backed securities, net 2,331 1,509 (2,571) (1,169) 4,593 Deferred cash flow hedge gain (loss), net of amortization 3,909 (346) 1,689 1,738 17,052 Loss on sales of mortgage-backed securities and derivatives -- 876 2,819 447 3,336 Unrealized loss (gain) on mortgage-backed securities 3,090 40,968 74,595 (4,533) 51,003 Unrealized (gain) loss on free standing derivatives (4,765) 6,149 (31,137) 25,903 (40,312) (Decrease) increase in forward delivery contracts (24,041) 24,124 (13,547) 13,930 (9,595) Capitalized mortgage servicing rights on securitized loans -- -- (27,536) (62,629) (79,711) Capitalized mortgage servicing rights on sold loans (69,768) (37,757) (14,762) (4,027) (2,347) Decrease (increase) in interest rate lock commitments 7,131 (10,508) 14,501 (6,264) 210 Decrease (increase) in mortgage loan basis adjustments 4,731 (32,201) (12,649) (10,584) 30,954 Other (198) (645) 2,196 (2,155) 1,177 (Increase) decrease in operating assets: Accounts receivable 6,829 18,156 (218,519) (14,401) 12,952 Servicing advances (3,281) (11,552) (382) 861 731 Income taxes receivable -- -- -- 25,797 -- Other assets (1,451) 4,882 (10,512) 2,350 7,714 Increase (decrease) in operating liabilities: Accrued expenses and other liabilities 93,876 31,696 53,657 (1,269) 21,432 Income taxes payable 16,173 (25,106) 8,557 (6,497) (92) Origination of mortgage loans held for sale (12,203,014) (11,482,292) (12,394,139) (10,647,029) (7,255,400) Principal received from sales of mortgage loans held for sale 13,372,574 11,179,015 9,448,293 4,457,519 3,080,795 Proceeds from securitizations of mortgage loans held for sale -- -- 2,993,315 5,855,914 7,336,612 Additions to mortgage-backed securities and derivatives -- (152,666) (1,191,209) (466,522) (2,840,259) Principal proceeds from sales of self-originated mortgage-backed securities 1,809,796 1,333,188 -- 1,104,227 -- Cash received from residual assets in securitizations 27,353 26,958 35,431 23,539 16,556 Principal repayments of mortgage-backed securities 93,845 212,927 274,035 172,172 108,403 ------------ ------------ ------------ ------------ ----------- Net cash provided by (used in) operating activities 3,213,464 1,168,414 (948,091) 558,787 598,705 ------------ ------------ ------------ ------------ ----------- Cash flows from investing activities: Purchases of premises and equipment (10,765) (8,062) (5,831) (8,194) (6,849) Origination of mortgage loans held for investment (970,335) (2,084,025) (1,301,364) (133,757) -- Proceeds from repayments of mortgage loans held for investment 137,545 75,613 5,108 -- -- Purchases of mortgage-backed securities (1,389,336) (3,298,636) (2,417,565) (933,929) -- Principal proceeds from sales of purchased mortgage-backed securities -- 24,592 518,517 20,962 1,133,989 Principal repayments of purchased mortgage-backed securities 438,297 409,080 414,667 361,049 368,671 Acquisition of business (550,077) -- -- -- -- ------------ ------------ ------------ ------------ ----------- Net cash (used in) provided by investing activities (2,344,671) (4,881,438) (2,786,468) (693,869) 1,495,811 ------------ ------------ ------------ ------------ ----------- Cash flows from financing activities: (Decrease) increase in warehouse lines of credit, net (1,719,610) 1,309,037 1,499,457 7,011 (77,097) (Decrease) increase in reverse repurchase agreements, net (907,094) 1,764,565 1,703,949 (382,537) (351,001) Increase (decrease) in collateralized debt obligations 1,847,293 1,057,906 -- -- (2,022,218) (Decrease) increase in payable for securities purchased (46,425) (293,178) 554,717 -- -- (Decrease) increase in commercial paper, net (5,549) (255,117) 42,612 433,302 328,592 (Decrease) increase in drafts payable, net (4,377) 1,991 (7,775) (1,853) 2,191 Increase in trust preferred securities 330 106,724 48,550 48,414 -- Increase in notes payable, net 11,405 13,543 49,706 96,721 23,578 Proceeds from issuance of common stock 652 857 304,522 587 311 Dividends paid (48,477) (42,078) (34,130) (31,950) (28,931) ------------ ------------ ------------ ------------ ----------- Net cash (used in) provided by financing activities (871,852) 3,664,250 4,161,608 169,695 (2,124,575) ------------ ------------ ------------ ------------ ----------- Net (decrease) increase in cash and cash equivalents (3,059) (48,774) 427,049 34,613 (30,059) Cash and cash equivalents, beginning of period 575,650 624,424 197,375 162,762 192,821 ------------ ------------ ------------ ------------ ----------- Cash and cash equivalents, end of period $ 572,591 $ 575,650 $ 624,424 $ 197,375 $ 162,762 ============ ============ ============ ============ ===========
12 AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES FAIR VALUE OF FINANCIAL INSTRUMENTS (Unaudited) (In thousands)
March 31, 2006 ------------------------------------------------- Fair Value in Excess of Carrying Value Fair Value Carrying Value --------------- ------------ ------------------ Assets: Cash and cash equivalents $ 572,591 $ 572,591 $ -- Accounts receivable and servicing advances 327,586 327,586 -- Mortgage-backed securities 9,580,963 9,580,963 -- Mortgage loans held for sale, net 1,589,613 1,607,056 17,443 Mortgage loans held for investment, net 4,315,384 4,386,173 70,789 Mortgage servicing rights, net 371,974 371,974 -- Derivative assets* 102,267 165,072 62,805 ------------------ $ 151,037 ------------------ Carrying Value in Excess of Fair Value ------------------ Liabilities: Warehouse lines of credit $ 1,754,581 $1,754,581 $ -- Drafts payable 16,377 16,377 -- Commercial paper 1,073,630 1,073,630 -- Reverse repurchase agreements 8,899,050 8,898,132 918 Collateralized debt obligations 2,905,199 2,905,199 -- Payable for securities purchased 215,114 215,114 -- Derivative liabilities 7,512 7,512 -- Trust preferred securities 204,018 204,018 -- Notes payable 330,714 330,714 -- ------------------ $ 918 ------------------ Fair Value in Excess of Carrying Value ------------------ $ 151,955 ==================
* 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. 13 AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES OPERATING STATISTICS
Three Months Ended -------------------------------------------- March 31, 2005 -------------------------------------------- (1) GAAP Adjustments As Adjusted -------------- ------------- ------------- Mortgage Holdings Segment: - ------------------------------------------------------------------ Average loans and mortgage-backed securities in portfolio ($ billions) (2) 5.9 1.5 7.4 Interest income ($ millions) 58.3 19.9 78.2 Average portfolio yield 3.98% 4.23% Interest expense ($ millions) 39.0 7.7 46.7 Average cost of funds and hedges 2.79% 2.71% Net interest income ($ millions) 19.3 12.2 31.5 Net interest margin 1.33% 1.70% Interest carry on free standing derivatives ($ millions) -5.0 -5.0 Net interest income including interest carry on free standing derivatives ($ millions) 14.3 12.2 26.5 Net interest margin including interest carry on free standing derivatives 0.98% 1.43% Net change in mortgage-backed securities ($ billions) -1.6 -1.6 Additions to loans in portfolio ($ billions) 0.0 0.0 Principal repayments of loans in portfolio ($ billions) 0.0 0.0 Net additions to loans in portfolio ($ billions) 0.0 0.0 Loans and mortgage-backed securities held - end of period ($ billions) 7.2 7.2 Mortgage-backed securities period end duration gap (in years) 0.09 0.09 Loan Origination Segment: - ------------------------------------------------------------------ Loan originations ($ billions) 7.2 7.2 Refinance 48% 48% ARM 53% 53% Average mortgage loans, net ($ billions) 6.2 -3.4 2.8 Net interest income excluding trust preferred and other interest expense ($ millions) 41.3 -22.4 18.9 Net interest margin excluding trust preferred and other interest expense 2.64% 2.70% Trust preferred and other interest expense ($ millions) 0.4 0.4 Net interest income ($ millions) 40.9 -22.4 18.5 Net interest margin 2.62% 2.65% Loans securitized and held ($ billions) 2.8 -1.5 1.3 Loans securitized and sold ($ billions) 4.5 -2.0 2.5 Loans sold to third parties ($ billions) 3.1 3.1 Gain on sales of loans, net of hedge gains ($ millions) (3) 156.4 -43.5 112.9 Excess of fair value over carrying value of loans added to investment portfolio ($ millions) 0.0 0.0 -------------- ------------ ------------ Total ($ millions) 156.4 -43.5 112.9 -------------- ------------ ------------ Gain on sales of loans, net of hedge gains (% of principal) (3) 2.26% 1.64% Excess of fair value over carrying value of loans added to investment portfolio (% of principal) 0.00% 0.00% Total (% of principal) 2.26% 1.64% Applications accepted ($ billions) 13.0 13.0 Application pipeline ($ billions) 8.4 8.4 March 31, 2005 -------------------------------------------- Loan Servicing Segment: - ------------------------------------------------------------------ Loan servicing portfolio - total with warehouse ($ billions) 19.9 19.9 Loan servicing portfolio - loans sold or securitized ($ billions) 18.2 18.2 Interest expense ($ millions) 1.4 1.4 Weighted average note rate 5.21% 5.21% Weighted average service fee 0.344% 0.344% Average age (in months) 14 14
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 pending securitization. (3) Prior to the fourth quarter of 2005, includes gain on current period securitizations, net of hedge gains. A-1 AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share amounts)
Three Months Ended --------------------------------------- March 31, 2005 --------------------------------------- (1) GAAP Adjustments As Adjusted --------- ----------- ----------- Net interest income: Interest income $ 146,894 $ (26,925) $ 119,969 Interest expense (88,091) 16,766 (71,325) --------- ----------- ----------- Net interest income 58,803 (10,159) 48,644 --------- ----------- ----------- Non-interest income: Gain on sales of mortgage loans 35,253 -- 35,253 Gain on sales of current period securitized mortgage loans 69,919 (25,258) 44,661 Gain on sales of mortgage-backed securities and derivatives 6,132 (1,400) 4,732 Unrealized gain (loss) on mortgage-backed securities and derivatives 57,499 (37,263) 20,236 Loan servicing fees 11,312 2,851 14,163 Amortization and impairment of mortgage servicing rights (5,082) (122) (5,204) Change in fair value of mortgage servicing rights -- -- -- --------- ----------- ----------- Net loan servicing fees (loss) 6,230 2,729 8,959 --------- ----------- ----------- Other non-interest income 1,466 -- 1,466 --------- ----------- ----------- Non-interest income 176,499 (61,192) 115,307 --------- ----------- ----------- Non-interest expenses: Salaries, commissions and benefits, net 68,475 -- 68,475 Occupancy and equipment 12,671 -- 12,671 Data processing and communications 5,950 -- 5,950 Office supplies and expenses 4,429 -- 4,429 Marketing and promotion 4,130 -- 4,130 Travel and entertainment 3,928 -- 3,928 Professional fees 3,470 -- 3,470 Other 6,869 -- 6,869 --------- ----------- ----------- Non-interest expenses 109,922 -- 109,922 --------- ----------- ----------- Net income before income tax expense 125,380 (71,351) 54,029 Income tax expense -- -- -- --------- ----------- ----------- Net income $ 125,380 $ (71,351) $ 54,029 ========= =========== =========== Dividends on preferred stock 3,305 -- 3,305 --------- ----------- ----------- Net income available to common shareholders $ 122,075 $ (71,351) $ 50,724 ========= =========== =========== Per share data: Basic $ 3.03 $ (1.77) $ 1.26 Diluted $ 2.99 $ (1.75) $ 1.24 Weighted average number of shares - basic 40,308 40,308 40,308 Weighted average number of shares - diluted 40,811 40,811 40,811
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. A-2 -----END PRIVACY-ENHANCED MESSAGE-----