American Residential Reports Record Fourth Quarter Net Income of $4.7 Million and Earnings of $0.59 Per Share; Issues Revised Earnings Guidance for 2003.Business Editors SAN DIEGO--(BUSINESS WIRE)--Feb. 14, 2003 American Residential Investment Trust, Inc. (Amex(R): INV INV abbr. in vitro fertilization ) today reported fourth quarter results and 2003 earnings guidance, which included: -- Consolidated fourth quarter net income of $4.7 million, or $0.59 per diluted share. -- Home loan production of $1.9 billion from American Mortgage Network (AmNet), American Residential's mortgage banking subsidiary. -- Expansion of regional center network on East Coast. -- Warehouse funding facilities increased to $710 million. -- Projected net earnings of between $1.10 and $1.40 per share in 2003 on a consolidated, after tax basis. Consolidated Results American Residential reported consolidated net income of $4.7 million, or $0.59 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, for the fourth quarter of 2002, compared to a net loss of $3.5 million, or $ 0.45 per diluted share, for the third quarter of 2002. Inclusive of inclusive of prep. Taking into consideration or account; including. start-up costs associated with the formation of its mortgage banking subsidiary, the Company had consolidated net income of $1.6 million, or $0.20 per diluted share, for the year ended December 31, 2002. John M. Robbins, Jr., Chief Executive Officer, said, "Over the past twelve months, we have fundamentally changed the revenue base of the Company and improved our long-term earnings prospects. 2002 represented a crucial turning point as we transformed our business from a mortgage REIT Mortgage REIT An REIT that invests in loans secured by real estate which derive income from mortgage interest and fees. mortgage REIT to a mortgage banking company. AmNet's operational accomplishments during its first year have been truly remarkable. Just ten months after its start-up, AmNet posted four consecutive months of profitability." The Company's diluted book value per share was $7.49 at December 31, 2002. The Company now reports its results in two segments -- mortgage banking (AmNet) and mortgage asset portfolio investments (AMREIT). Mortgage Banking Business -- American Mortgage Network (AmNet) AmNet funded $1.9 billion in home loans during the fourth quarter, a 54% increase over the third quarter of 2002. For the year ended December 31, 2002, AmNet funded $4.2 billion in home loans, compared to $43 million in 2001. AmNet began originating loans in November 2001 and operates exclusively in the wholesale channel, underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. and funding loans from strategically placed regional centers. AmNet sells the loans it funds on a servicing-released basis to investors who include major correspondent servicers and Wall Street dealers. AmNet is now approved to do business in 45 states either by license or exemption and had over 320 full-time employees at year end. AmNet Operating Results For the fourth quarter of 2002, AmNet reported operating net income of $5.1 million. Gain on the sale of loans and other fee income totaled $13.2 million or 68 basis points, net of derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. losses totaling $8.2 million. AmNet continued to utilize Mortgage Capital Management's advisory services advisory services advisory services provided to the public, in their capacity as owners and managers of animals, are an important part of veterinary science. They may be provided by government bureaux, by commercial companies who deal in pharmaceuticals or animals or animal for loan pipeline exposure analysis as well as daily hedging recommendations. Despite volatility in the prices of mortgages during the quarter, margins have been maintained. Gross interest income was $6.9 million and was offset by interest expense of $3.6 million, resulting in net interest spread on loans held for sale during the fourth quarter of $3.3 million. AmNet operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , excluding interest, totaled $11.5 million during the fourth quarter, or 59 basis points on total loan fundings. These expenses included an estimated $5.2 million in sales commissions and other variable expenses, representing approximately 46% of total operating expenses. In commenting on fourth quarter mortgage banking results, Robbins said, "AmNet exceeded its strategic targets in 2002 and has established a platform for continued market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" in 2003. We have extended our presence on the East Coast through a new regional center in Providence, Rhode Island  “Providence” redirects here. For other uses, see Providence (disambiguation). Providence is the capital and the most populous city of the U.S. . The Cherry Hill Cherry Hill, township (1990 pop. 69,319), Camden co., W central N.J.; name was changed from Delaware township to Cherry Hill in 1961. Largely residential, Cherry Hill has been marked by great development and housing growth, especially since the 1970s. , New Jersey center, which handles mortgage loans from brokers in Delaware, New Jersey Delaware, New Jersey could refer to:
During the fourth quarter of 2002, AmNet's warehouse loan funding capacity grew from $660 million to $710 million. AmNet has lending partnerships with Countrywide coun·try·wide adv. & adj. Throughout a whole country; nationwide: launched a fundraising campaign countrywide; a countrywide search. Adj. 1. Warehouse Lending, JPMorgan Chase JPMorgan Chase (NYSE: JPM TYO: 8634 ) is one of the oldest financial services firms in the world. The company, headquartered in New York City, is one of the leaders in investment banking, financial services, asset and wealth management and private equity. With assets of $1. Bank and UBS UBS Union Bank of Switzerland UBS United Bible Societies UBS United Blood Services UBS United Buying Service UBS Used Bookstore UBS University Business Services UBS Universal Building Society (UK) UBS Ulaanbaatar Broadcasting System Warburg Real Estate Securities Inc. Mortgage Asset Portfolio Investments (AMREIT) The Company's total mortgage assets held for portfolio investment were $269 million at December 31, 2002, compared to $461 million at December 31, 2001. During the past three years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time dollar value of the Company's portfolio of mortgage assets has declined due to the decision to cease loan portfolio acquisitions, build cash reserves Cash reserves See: Cash investments cash reserves Investment funds that are held in short-term assets such as Treasury bills and certificates of deposit until more permanent investment opportunities are available. and re-deploy capital into the Company's mortgage banking business. In the fourth quarter of 2002, the Company had net losses attributable to its mortgage asset portfolio investments of $0.4 million, or $0.05 per share, compared to a loss of $11.2 million, or $1.41 per share, for the same period in 2001, inclusive of expenses associated with the purchase of its management contract, totaling $10.0 million, or $1.26 per share. In the fourth quarter of 2002, net interest spread on the mortgage asset portfolio was $2.5 million, or approximately 3.77% of portfolio assets on an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. basis. Non-cash loan premium amortization expense totaled $1.4 million for the period. At year end 2002, remaining unamortized premiums were $7.3 million, down from $16.5 million at December 31, 2001. 2003 Guidance The Mortgage Bankers Mortgage Banker A company, individual or institution that originates, sells and services mortgage loans. Notes: Don't confuse a mortgage banker with a mortgage broker. Association of America (MBAA MBAA Master Brewers' Association of the Americas MBAA Mortgage Bankers Association of America MBAA Medical Billing Advocates of America MBAA Melty Blood Actress Again (game) MBAA Mississippi Bail Agents Association ) expects overall market size to be approximately $1.8 trillion One thousand times one billion, which is 1, followed by 12 zeros, or 10 to the 12th power. See space/time. (mathematics) trillion - In Britain, France, and Germany, 10^18 or a million cubed. In the USA and Canada, 10^12. for 2003, down 28% from an estimated $2.5 trillion in 2002. Furthermore, the MBAA predicts that overall originations will decline by approximately 50% from the fourth quarter of 2002 to the fourth quarter of 2003. Mortgage refinances are anticipated to represent less than 50% of overall residential loan activity in 2003 compared to an estimated 60% in 2002. Relative to mortgage interest rates, the MBAA anticipates that the 30 Year Fixed Contract Rate will increase to 6.8% by the fourth quarter of 2003 from 6.1% at the end of 2002. The Company's earnings guidance is based on the MBAA estimates of market size. Despite an expected market contraction contraction, in physics contraction, in physics: see expansion. contraction, in grammar contraction, in writing: see abbreviation. contraction - reduction , the Company anticipates that it will grow its year-over-year loan production and increase its mix of home purchase loans. Specifically, the Company expects to increase its market share throughout the year due to product expansion, continued market penetration in existing locations, and the opening of new regional centers in key demographic areas. The Company's consolidated, after tax net income for the three months ended March 31, 2003 is expected to be between $3.6 million and $4.8 million, or $0.45 and $0.60 per diluted share. The Company's consolidated after tax net income for 2003 is expected to be between $8.7 million and $11.1 million, or $1.10 to $1.40 per diluted share. The effective combined federal and state income tax rate for AmNet in 2003 is expected to be approximately 25%, due to the utilization of tax loss carry-forwards from previous years. The Company expects to fund mortgages in the range of $1.5 billion to $1.9 billion through AmNet in the quarter ending March 31, 2003 and in the range of $7 billion to $8 billion in 2003. As the overall mortgage market contracts, AmNet's net margins and earnings per share are expected to decline, primarily driven by an increase in costs per loan due to expenses associated with expansion and market share growth. "We are a young company whose potential continues to be enhanced by the disciplined execution of our strategic plan," Robbins stated. "Our 2003 guidance reflects the expectation of a mortgage market contraction over the next 12 months and the assumption that we will experience some compression in our margins. We believe that our goals will be achieved through continued market penetration in existing regions and by careful, well balanced expansion into new major metropolitan areas that match our criteria for growth: a robust housing market and the availability of experienced regional manager candidates who have existing relationships with mortgage brokers. Areas such as Chicago, Illinois, Phoenix, Arizona Phoenix /ˈfiːˌnɪks/ (English: Phoenix, Navajo: Hoozdo, lit. "the place is hot", Western Apache: Fiinigis) is the capital and the most populous city of the U.S. , Las Vegas Las Vegas (läs vā`gəs), city (1990 pop. 258,295), seat of Clark co., S Nev.; inc. 1911. It is the largest city in Nevada and the center of one of the fastest-growing urban areas in the United States. , Nevada and Houston, Texas “Houston” redirects here. For other uses, see Houston (disambiguation). Houston (pronounced /'hjuːstən/) is the largest city in the state of Texas and the are of near-term interest." "Our earnings will be a function of loan volume, revenue margins and expense per loan. AmNet's entire team of experienced mortgage banking professionals is focused on our growth initiatives and operating tactics designed to help meet the Company's financial goals as interest rates eventually rise and the mortgage market returns to more traditional levels." The AMREIT mortgage asset portfolio business, while continuing to be cash flow positive, is expected to have a net loss of $0.15 to $0.20 per share in 2003. Based on 2003 earnings guidance, the Company expects basic book value per share to be between $8.00 and $8.15 at March 31, 2003 and between $8.75 and $9.05 at December 31, 2003. About American Mortgage Network Headquartered in San Diego, California “San Diego” redirects here. For other uses, see San Diego (disambiguation). San Diego is a coastal Southern California city located in the southwestern corner of the continental United States. As of 2006, the city has a population of 1,256,951. , American Mortgage Network is a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of American Residential Investment Trust, Inc. AmNet underwrites and funds loans for the mortgage broker community through its national network of regional centers. AmNet has regional centers in Mission Viejo, California “Mission Viejo” redirects here. For other uses, see Mission Viejo (disambiguation). Mission Viejo (anglicized pronunciation IPA: /ˈmɪʃənviːˈeɪhoʊ/ ; Ontario, California Ontario is a city located in San Bernardino County, California, United States. As of the 2000 Census, the city had a total population of 170,373. It is the home of LA/Ontario International Airport and the huge Ontario Mills shopping mall (the largest in Southern California and one ; Sacramento, California “Sacramento” redirects here. For other uses, see Sacramento (disambiguation). Sacramento is the capital of the State of California and the county seat of Sacramento County. ; San Diego, California; Denver, Colorado; New Haven New Haven, city (1990 pop. 130,474), New Haven co., S Conn., a port of entry where the Quinnipiac and other small rivers enter Long Island Sound; inc. 1784. Firearms and ammunition, clocks and watches, tools, rubber and paper products, and textiles are among the many , Connecticut; Atlanta, Georgia; Minneapolis, Minnesota “Minneapolis” redirects here. For other uses, see Minneapolis (disambiguation). Minneapolis (pronounced IPA: /ˌmɪniˈæpəlɪs/) is the largest city in the U.S. ; Cherry Hill, New Jersey; Portland, Oregon; and Providence, Rhode Island as well as offices in Tampa, Florida “Tampa” redirects here. For other uses, see Tampa (disambiguation). Tampa is a United States city in Hillsborough County, on the west coast of Florida. It serves as the county seat for Hillsborough County.GR6. , Philadelphia, Pennsylvania and Kirkland, Washington Kirkland is a city in King County, Washington, United States. It is a suburb of Seattle located on the Eastside (of Lake Washington). As of April 1, 2005, the city had an estimated population of 45,740, making Kirkland the eighth largest city in King County and the eighteenth . For more information, please visit www.amnetmortgage.com. About American Residential Investment Trust American Residential Investment Trust, Inc. is a real estate investment trust (REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). ) that has, in the past, invested in subprime residential mortgage assets. The Company began trading on the American Stock Exchange American Stock Exchange (AMEX) Stock exchange in the U.S. Originally known as “the Curb,” it began as an outdoor marketplace in New York City c. 1850. It moved indoors to its present location in the Wall Street area in 1921. (Amex(R): INV) on January 31, 2003. American Residential is now in the process of terminating its status as a mortgage REIT. For more information, please visit www.amerreit.com. Certain matters discussed in this press release may constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of federal securities laws. Forward-looking statements include statements regarding the MBAA estimates of market size, anticipated loan volumes, increases in market share, after tax net income and tax rates, projected margins and earnings per share, achievement of financial targets, including profitability, operational expansion, AMREIT continuing to be cash flow positive, AMREIT projected net losses per share, anticipated book values per share and anticipated timing of terminating American Residential's status as a REIT. Actual results and the timing of certain events could differ materially from those projected in or contemplated by these forward-looking statements due to a number of factors, including but not limited to: the level of interest rates generally, economic conditions generally, uncertainty as to the percentage of the pipeline that will result in mortgage loan fundings; fluctuation Fluctuation A price or interest rate change. in the margins, net of hedging, of loans in the Company's pipeline; the predictability of the Company's expenses; the future correlation of volatility in forward mortgage sale instruments to the Company's loan lock commitments; interest rate volatility; the availability of financing for the funding of mortgage loans; the Company's liquidity position; the effects of terminating the Company's REIT status; and other risk factors outlined in American Residential Investment Trust's SEC reports.
AMERICAN RESIDENTIAL INVESTMENT TRUST, INC.
----------------------------------------------------------------------
Three Three Twelve Twelve
Months Months Months Months
Ended Ended Ended Ended
---------------------- ----------------------
12/31/2002 12/31/2001 12/31/2002 12/31/2001
---------------------- ----------------------
Income Statement
----------------
Mortgage Banking Segment:
Revenues
Gain on sales of loans,
net $21,413 $(9) $46,668 $(9)
---------------------- ----------------------
Derivative financial
instruments:
Treasury futures and
options and related
commissions and fees (48) (355) (18,171) (355)
Forward sales of
mortgage backed
securities (MBS) and
options on MBS (6,470) - (16,262) -
Market adjustment on
loan commitment
pipeline (1,648) 302 2,663 302
---------------------- ----------------------
Total derivative
financial instruments (8,166) (53) (31,770) (53)
---------------------- ----------------------
Interest on mortgage
assets 6,857 92 14,908 92
Other income 1 12 9 24
---------------------- ----------------------
Total revenue,
net of derivative
financial instruments 20,105 42 29,815 54
---------------------- ----------------------
Expenses
Interest expense 3,557 38 7,790 38
Operating expenses 11,476 2,056 29,427 2,074
---------------------- ----------------------
Total expenses 15,033 2,094 37,217 2,112
---------------------- ----------------------
Income (loss) before
income taxes -- Mortgage
Banking Segment $5,072 $(2,052) $(7,402) $(2,058)
Spread Lending Segment:
Revenues
Interest on mortgage
assets $4,512 $10,696 $25,862 $55,345
Litigation settlement
income - - 10,281 -
Other income 253 693 1,326 3,896
---------------------- ----------------------
Total revenue 4,765 11,389 37,469 59,241
---------------------- ----------------------
Expenses
Interest expense 1,972 4,399 10,430 34,717
Premium amortization and
write down of retained
interest in
securitizations 1,402 4,048 9,232 16,420
Provision for loan losses 835 1,705 5,454 6,301
(Gains) Loss on sale of
real estate owned, net (31) (9) 121 255
Management fees - 316 - 2,308
Operating expenses 982 12,123 3,263 14,328
SFAS 133 accounting
change - cap agreement
cost mark to market - - - 1,106
---------------------- ----------------------
Total expenses 5,160 22,582 28,500 75,435
---------------------- ----------------------
Income (loss) before
income taxes - Spread
Lending Segment $(395) $(11,193) $8,969 $(16,194)
Consolidated income
(loss)- Combined
Segments $4,677 $(13,245) $1,567 $(18,252)
Income taxes - - 7 3
Consolidated
net income (loss) $4,677 $(13,245) $1,560 $(18,255)
Per Share Data
--------------
Weighted average common
shares outstanding 7,862,490 7,959,900 7,884,983 7,962,423
Consolidated income
(loss) per share basic $0.59 $(1.66) $0.20 $(2.29)
Consolidated income
(loss) per share diluted $0.59 $(1.66) $0.20 $(2.29)
Loan Origination Data
---------------------
Total mortgage loans
funded in period
($ millions) $1,943 $43 $4,159 $43
Number of loans funded 10,968 289 23,553 289
Balance Sheet Data
------------------
Cash and cash equivalents $13,568 $10,945
Restricted cash 3,547 -
Bond collateral mortgage
loans and real estate
owned, net of reserves 269,378 461,378
Mortgage loans held for
sale, net 390,125 38,095
Total assets 687,480 519,724
Short-term debt 378,553 35,265
Long-term debt, net 237,456 422,349
Total stockholders'
equity $59,503 $58,627
Book value per share
basic $7.57 $7.37
Book value per share
diluted $7.49 $7.37
Debt to equity ratio 10.4:1 7.8:1
----------------------------------------------------------------------
($ in thousands, except per share data and as noted)
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion