JHM MORTGAGE SECURITIES L.P. ANNOUNCES YEAR END RESULTS
The 1994 loss is comprised primarily of (i) writedowns and hedging losses on CMO bonds and residual interests of approximately $6.1 million, including a cumulative effect of a change in accounting principle of approximately $2.7 million recognized in the first quarter, (ii) writedowns of purchased mortgage servicing of approximately $1.6 million, (iii) losses from production operations of approximately $826 thousand, (iv) losses associated with mortgage certificates of approximately $188 thousand, (v) transaction fees associated with the acquisition of Platte Valley of approximately $1.5 million, and (vi) a contingency accrual for settlement of class action litigation of approximately $538 thousand. Approximately $6.1 million of the above loss was recorded during the fourth quarter of 1994, $3.2 million from the writedowns on the Partnerships investments in CMO bonds and residual interests. The writedowns of the mortgage servicing portfolios occurred primarily as a result of high prepayments during the first six months of 1994. The losses from production operations resulted primarily from a decrease in loan originations and costs associated with the liquidation of a mortgage production affiliate.
"The Partnership is looking forward to capitalizing on the benefits of the Platte Valley and TMC acquisitions and anticipates being profitable in 1995," reported Jack Schakett, Chief Executive Officer of the Partnership. Platte Valley's investments and operations are predominately in mortgage banking which significantly reduces the Partnership's concentration in mortgage related financial instruments such as CMO bonds and residual interests.
The Platte Valley and TMC transactions have caused the Partnership's mortgage servicing portfolio to quadruple, providing the benefits of economies of scale and dramatically increasing the level of cash flows derived from the servicing segment of the Partnerships business. The Partnership's asset base has also significantly increased as a result of the Platte Valley and TMC transactions which should make future financing and capital raising activity by the Partnership more feasible and better support the administrative cost of managing the business of the Partnership.
The Platte Valley transaction will be accounted for as a reverse acquisition, whereby the post-acquisition financial statements will represent the assets and liabilities of Platte Valley recorded at historical amounts and the Partnership's assets and liabilities will be recorded at fair value to the extent acquired by Platte Valley (approximately 78%, prior to the TMC transaction) and the remaining amount (approximately 22%, prior to the TMC transaction) will be the carry-over basis of the Partnership. Accordingly, 78% of the unrealized losses on the Partnership's assets at the time of the consummation of the transaction will be accounted for in recording the book value of those assets immediately following the consummation as part of such purchase accounting. Thus, potential writedowns in future years related to these assets should be reduced.
The Partnership, directly and through its subsidiaries Platte Valley and TMC, is engaged in the origination, sale and servicing of mortgage loans and investments in other mortgage assets. The Partnership currently services and subservices in excess of $5 billion of mortgage loans.
/CONTACT: Jack Schakett, chief executive officer, or Rick Skogg, president and chief operating officer, of JHM Mortgage Securities, 703-821-0875/
CO: JHM Mortgage Securities L.P. ST: Virginia IN: FIN SU: ERN
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