EX-99.1
2
am093005-ex99_1.txt
PRESS RELEASE, DATED OCTOBER 26, 2005

                                                                    Exhibit 99.1

[LOGO] FOR IMMEDIATE RELEASE
       ---------------------

             American Home Mortgage Announces Third Quarter Results

                 Quarterly earnings are $1.09 per diluted share

  Dividend policy increased $0.05 per quarter to $0.91 per share, or $3.64 per
                                 share annually

            Quarterly loan production reaches a record $13.7 billion

      Company embarks on strategy of holding selected loans for investment

                   2005 and 2006 earnings guidance reaffirmed

Melville, NY (October 26, 2005) - American Home Mortgage Investment Corp. (NYSE:
AHM) announced today results for the quarter ended September 30, 2005.

FINANCIAL HIGHLIGHTS
--------------------

Comparison of the Three Months Ended September 30, 2005 and 2004

o     Revenue for the third quarter of 2005 was $204.8 million compared to
      revenue of $111.3 million for the third quarter of 2004, an increase of
      84.1%.

o     Net earnings for the third quarter of 2005 were $53.2 million compared to
      net earnings of $42.9 million for the third quarter of 2004, an increase
      of 23.9%.

o     Earnings per diluted share for the third quarter of 2005 were $1.09
      compared to earnings per diluted share of $1.02 for the third quarter of
      2004, an increase of 6.9%.

o     Dividends per common share for the third quarter of 2005 were $0.86,
      compared to $0.61 for the third quarter of 2004, an increase of 41.0%.

o     Book value per common share was $22.81 at September 30, 2005, compared to
      $18.42 per share at September 30, 2004, an increase of 23.8%.

Comparison of the Three Months Ended September 30, 2005 and June 30, 2005

o     Revenue for the third quarter of 2005 was $204.8 million compared to
      revenue of $203.3 million for the second quarter of 2005, an increase of
      0.7%.

o     Net earnings for the third quarter of 2005 were $53.2 million compared to
      net earnings of $65.5 million for the second quarter of 2005, a decrease
      of 18.8%.

o     Earnings per diluted share for the third quarter of 2005 were $1.09
      compared to earnings per diluted share of $1.52 for the second quarter of
      2005, a decrease of 28.3%.

o     Dividends per common share for the third quarter of 2005 were $0.86,
      compared to $0.76 for the second quarter of 2005, an increase of 13.2%.

o     Book value per common share was $22.81 at September 30, 2005, compared to
      book value per common share of $20.21 at June 30, 2005, an increase of
      12.9%.



Comparison of the Nine Months Ended September 30, 2005 and 2004

o     Adjusted revenue for the nine months ended September 30, 2005 was $572.1
      million compared to revenue of $284.6 million for the nine months ended
      September 30, 2004, an increase of 101.0%. GAAP revenue for the nine
      months ended September 30, 2005 totaled $643.5 million.

o     Adjusted net earnings for the nine months ended September 30, 2005 were
      $172.7 million compared to net earnings of $97.6 million for the nine
      months ended September 30, 2004, an increase of 76.9%. GAAP net earnings
      for the nine months ended September 30, 2005 totaled $244.1 million.

o     Adjusted earnings per diluted share for the nine months ended September
      30, 2005 were $3.83 compared to earnings per diluted share of $2.58 for
      the nine months ended September 30, 2004, an increase of 48.4%. GAAP
      earnings per diluted share for the nine months ended September 30, 2005
      were $5.51.

o     Dividends per common share for the nine months ended September 30, 2005
      were $2.33, compared to $1.77 for the nine months ended September 30,
      2004, an increase of 31.6%.

Michael Strauss, American Home's Chief Executive Officer, commented, "I am
pleased by our company's overall results for the third quarter. During the
quarter, our diluted earnings per share were $1.09, slightly higher than
expected. Earnings were driven by record high loan production of $13.7 billion
due to a record market share of 1.81% of national originations based on Freddie
Mac estimates. As a result, our company's revenues from loan sales and warehouse
interest income reached all time highs. Also, during the quarter, our company
successfully embarked on the strategic shifts described during our second
quarter earnings release. Specifically, we retained only a selected portion of
the ARM loans we originated, while selling the balance of our ARM loan
production. The $1.3 billion of ARM loans we kept during the quarter, we
believe, offer relatively high returns and less exposure to changes in
prepayment speeds. The ARM loans we kept were accounted for as loans held for
investment, and are carried at their cost basis rather than their market value.
As a result, we expect ongoing enhanced net interest income from these loans. In
the future, we expect that all of the loans we retain will be accounted for as
loans held for investment, and will be carried at their cost basis.

Our company's third quarter results would have been much stronger if not for a
$34 million write-down, net of associated hedges, of the value of residual
assets we hold from our prior period securitizations. This write-down, which was
charged to current period income, primarily reflects changes in prepayment speed
assumptions used by residual asset buyers. We have written these assets down in
previous quarters and our earnings model allows for limited write-downs of these
assets, but the third quarter write-down was disproportionately large. Our most
recent data shows prepayment speeds on our prior period securitizations slowing.
If this trend continues, I would expect that any future write-downs of these
assets would be much more limited. I believe our positive financial results,
even given the impact of the write-down, demonstrates the resiliency of our
business model.

Our third quarter net interest income reached $46.9 million, a slight increase
over the second quarter of 2005. Mortgage loan net interest income increased by
$4.4 million to $26.9 million, however, portfolio net interest income decreased
by $3.3 million to $21.6 million. Portfolio net interest income was reduced by
sharp movements in interest rates. I believe net interest income will materially
increase in the coming quarters as a result of our company holding
self-originated loans for investment, carried at their cost. I also believe net
interest income will increase because a growing portion of our assets will be
financed through the permanent issuance of mortgage-backed securities, which
will largely reduce the impact of sharp movements in interest rates on our net
interest income. Finally, our net interest income should be enhanced as we
invest and reap the benefit of the proceeds from our recent common stock
offering.

As I consider our company's outlook for the fourth quarter and 2006, I caution
investors against taking our company's third quarter results and adding back the
write-down of our residual assets. I believe our company's net interest income
and servicing results are likely to improve in coming quarters, but I also
expect our loan production


                                       2


will decline in response to rising interest rates and our tax expense will
increase due to greater profitability in our taxable REIT subsidiaries. Based on
our prospects taken as a whole, our company is reaffirming our 2005 adjusted
earnings guidance of $4.60 to $4.80 per share and our 2006 earnings guidance of
$4.85 to $5.15 per share.

Based on our results and prospects, I am very pleased to announce that our Board
of Directors has increased our company's dividend policy by $0.05 per quarter,
to $0.91 per quarter or $3.64 on an annualized basis. This is the eleventh
increase in our quarterly dividend since we began paying dividends in April
2001. The increased dividend rate is expected to be effective for dividends paid
in January 2006."

THIRD QUARTER RESULTS
---------------------

During the third quarter, American Home's mortgage-backed securities ("MBS")
portfolio averaged $7.1 billion, and earned a net interest margin of 1.24%,
resulting in net interest income of $21.6 million. By comparison, during the
second quarter of 2005, the MBS portfolio averaged $6.8 billion and earned a net
interest margin of 1.48%, resulting in net interest income of $24.9 million. Net
interest income is projected to increase in coming quarters due to a growing
portion of the portfolio's make-up being self-originated whole loans financed by
MBS, due to an anticipated normalization of interest rate volatility, and as a
result of fully investing the proceeds from the Company's recent stock offering.
During the third quarter, American Home purchased a number of securities for its
investment portfolio which settled at or near the end of September and has since
purchased additional securities as it seeks to fully deploy the capital raised
from its third quarter common stock offering.

During the third quarter, American Home's inventory of loans averaged $5.7
billion, earned a net interest margin of 2.06% and earned net interest income of
$26.9 million. This compares with an average balance of $3.9 billion, a net
interest margin of 2.37% and net interest income of $22.5 million in the second
quarter of 2005. During the third quarter, the Company had interest expense on
servicing financing and other obligations of $1.7 million compared to $2.4
million during the second quarter of 2005.

At September 30, 2005, the composition of the Company's portfolio by type of
loan, including loans held for investment and securitized loans was 78.6% 5/1
adjustable-rate mortgages ("ARMs"), 15.8% short reset ARMs, and 5.6% 3/1 ARMs.
The composition of the MBS portfolio by credit quality based on Standard &
Poor's ratings was 92.7% Agency and AAA, 4.6% AA, A, and BBB and 2.7% unrated.
On September 30, 2005, the MBS portfolio's duration, net of liabilities and
hedges, was estimated to be 0.17 years and its projected average life was 2.46
years.

During the third quarter, the Company's loan production was $13.7 billion. Of
the $13.7 billion, 54% of loans were to homebuyers while 46% were for
refinancing. During the quarter, the Company estimates its national market share
reached 1.81% based on Freddie Mac's recent forecast of national market size,
compared to 1.47% in the second quarter of 2005 and 0.77% during the third
quarter of 2004. At September 30, 2005, the Company employed approximately 2,377
loan officers and account executives, including call center representatives, but
excluding sales assistants, compared to approximately 2,334 on June 30, 2005.

During the quarter, the Company embarked on its strategy of holding loans in its
investment portfolio, which are carried at cost, less any associated loan loss
allowance. The amount of loans placed into the investment portfolio during the
quarter was $1.3 billion. At September 30, 2005, the $1.3 billion of loans added
to the investment portfolio were carried at an average cost of 101.10% of par,
or $14.3 million above their par value. These loans had a fair value of 103.15%
of par, or $40.8 million above their par value.

During the quarter, the Company sold $9.9 billion of non-securitized loans to
third parties for a net gain of $123.7 million including net mortgage
origination fees. Also during the quarter, the Company completed what it
anticipates will be its last securitizations structured to be accounted for as
sales under FAS 140. These securitizations totaled $2.5 billion. Of the
securities created, $1.3 billion were sold for a gain of $20.0 million,


                                       3


while $1.2 billion were retained and carried at their market value, resulting in
an unrealized gain of $22.6 million. In addition, during the quarter, the
Company's origination segment had interest rate swap hedge gains of $10.3
million.

During the quarter, the Company recognized realized and unrealized losses, net
of hedges, on the value of its securities portfolio of $44.6 million, of which
$37.8 million was charged to current period income, and $6.8 million resulted in
other comprehensive loss.

During the quarter, revenue associated with the Company's servicing assets was
$17.6 million, including $21.1 million of servicing fee revenue, $15.1 million
of amortization expense, and $11.6 million of impairment reserve recovery. 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 $27.5 billion
compared to $24.7 billion at the end of the second quarter.

The Company's total revenues for the quarter were $204.8 million. Of these
revenues, $46.9 million was from net interest income, $176.5 million was from
gains on newly originated mortgage loans including origination fees and net of
hedges, $21.1 million was from mortgage servicing fees, and $1.6 million was
from other sources. Revenues were decreased by $37.8 million of realized and
unrealized losses on MBS, net of hedges, and by $3.5 million of servicing
amortization, net of recovery. During the quarter, the Company's expenses were
$149.1 million, and the Company's pre-tax income was $55.7 million. During the
quarter, the Company's taxable subsidiary had pre-tax income of $5.8 million
resulting in tax expense of $2.5 million. Consequently, net income for the
quarter was $53.2 million while preferred dividends were $3.3 million and net
income available to common stockholders was $49.9 million, resulting in earnings
per diluted share of $1.09. Book value attributable to common stockholders on
September 30, 2005 was $1.1 billion, or $22.81 per common share, compared to
$819.1 million, or $20.21 per common share, on June 30, 2005.

DIVIDEND POLICY INCREASE
------------------------

Based on the Company's projections for earnings and cash flow, the Company's
Board of Directors has changed the Company's dividend policy to increase the
quarterly dividend on its common stock to $0.91 per share, or $3.64 per share on
an annualized basis. It is expected that the first dividend of $0.91 per common
share will be payable in January 2006. 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.

EARNINGS GUIDANCE
-----------------

American Home is reaffirming its 2005 adjusted earnings guidance of $4.60 to
$4.80 per diluted share and its 2006 earnings guidance of $4.85 to $5.15. It is
expected that 2006 earnings will be affected by seasonality in the Company's
production segment with earnings being higher in the second and third quarters
compared to the first and fourth quarters.

OTHER THIRD QUARTER HIGHLIGHTS
------------------------------

During the quarter, the Company issued 9 million shares of common stock at a
price of $35.50 per share. The offering, which closed on August 15, resulted in
proceeds to the Company of $319.5 million before underwriting discounts and
other expenses.

During the quarter, the Company privately placed $50 million of trust preferred
stock at a yield of LIBOR +300. The trust preferred is callable by the Company
after 5 years, and matures after 30 years.


                                       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, 2005 adjusted earnings guidance 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
through A-5 of this release.

CONFERENCE CALL TODAY
---------------------

American Home will hold an investor conference call today, October 26, 2005, 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 November 9, 2005.

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 MBS,
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


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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 Pages


                                       7


            AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
                              OPERATING STATISTICS

Three Months Ended Nine Months Ended ---------------------- ------------------------ Sept. 30, Sept. 30, Sept. 30, Sept. 30, 2005 2004 2005 2004 --------- --------- ----------- --------- (1) As Adjusted --------- --------- ----------- --------- Mortgage-Backed Securities Holdings Segment:* ----------------------------------------------------------------- Average mortgage-backed securities held ($ billions) 7.1 7.2 7.1 4.7 Interest income ($ millions) 84.5 66.7 239.8 123.1 Average portfolio yield 4.76% 3.72% 4.50% 3.53% Interest expense ($ millions) 62.9 42.1 161.8 82.0 Average cost of funds and hedges 3.84% 2.47% 3.29% 2.51% Net interest income ($ millions) 21.6 24.6 78.0 41.1 Net interest margin 1.24% 1.39% 1.46% 1.18% Mortgage-backed securities held - end of period ($ billions) 9.2 7.3 9.2 7.3 Period end duration gap (in years) 0.17 (0.002) 0.17 (0.002) * - Excludes loans held pending securitization Loan Origination Segment: ----------------------------------------------------------------- Loan originations ($ billions) 13.7 5.3 31.7 16.3 Refinance 46% 36% 45% 47% ARM 48% 56% 50% 47% Average mortgage loans, net ($ billions) 5.7 2.4 4.1 2.0 Net interest income ($ millions) 26.9 9.7 68.3 28.6 Net interest margin 2.06% 1.60% 2.26% 1.89% Loans securitized and held ($ billions) 1.2 1.4 2.9 3.8 Loans securitized and sold ($ billions) 1.3 1.3 10.3 2.0 Loans sold to third parties ($ billions) 9.9 2.9 17.5 10.8 Additions to loans held for investment ($ billions) 1.3 -- 1.4 -- Gain on sales of loans and current period securitizations net of hedge gains ($ millions) 176.5 81.2 472.0 198.5 Excess of fair value over carrying value of loans added to investment portfolio ($ millions) 26.5 -- 27.8 -- --------- --------- ----------- --------- Total ($ millions) 203.0 81.2 499.8 198.5 --------- --------- ----------- --------- Gain on sales of loans and current period securitizations net of hedge gains (% of principal) 1.42% 1.45% 1.60% 1.20% Excess of fair value over carrying value of loans added to investment portfolio (% of principal) 2.02% -- 1.92% -- Total (% of principal) 1.48% 1.45% 1.61% 1.20% Applications accepted ($ billions) 19.7 8.7 50.0 26.6 Application pipeline ($ billions) 11.6 6.5 11.6 6.5 Sept. 30, Sept. 30, Loan Servicing Segment: 2005 2004 ----------------------------------------------------------------- --------- --------- Loan servicing portfolio - total with warehouse ($ billions) 27.5 13.6 Loan servicing portfolio - loans sold or securitized ($ billions) 24.2 12.5 Weighted average note rate 5.73% 5.41% Weighted average service fee 0.331% 0.354% Average age (in months) 13 18
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 through A-5. 8 AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES OPERATING STATISTICS
Three Months Ended ---------------------------------------------------------------- Sept. 30, June 30, March 31, Dec. 31, Sept. 30, 2005 2005 2005 2004 2004 --------- -------- ----------- ----------- --------- (1) (1) As Adjusted As Adjusted --------- -------- ----------- ----------- --------- Mortgage-Backed Securities Holdings Segment:* ----------------------------------------------------------------- Average mortgage-backed securities held ($ billions) 7.1 6.8 7.4 7.3 7.2 Interest income ($ millions) 84.5 77.1 78.2 70.6 66.7 Average portfolio yield 4.76% 4.53% 4.23% 3.89% 3.72% Interest expense ($ millions) 62.9 52.2 46.7 42.6 42.1 Average cost of funds and hedges 3.84% 3.29% 2.71% 2.48% 2.47% Net interest income ($ millions) 21.6 24.9 31.5 28.0 24.6 Net interest margin 1.24% 1.48% 1.70% 1.57% 1.39% Mortgage-backed securities held - end of period ($ billions) 9.2 6.9 7.2 7.6 7.3 Period end duration gap (in years) 0.17 0.08 0.09 0.07 (0.002) * - Excludes loans held pending securitization Loan Origination Segment: ----------------------------------------------------------------- Loan originations ($ billions) 13.7 10.8 7.2 6.7 5.3 Refinance 46% 41% 48% 46% 36% ARM 48% 50% 53% 55% 56% Average mortgage loans, net ($ billions) 5.7 3.9 2.8 2.7 2.4 Net interest income ($ millions) 26.9 22.5 18.9 20.2 9.7 Net interest margin 2.06% 2.37% 2.70% 2.97% 1.60% Loans securitized and held ($ billions) 1.2 0.4 1.3 1.5 1.4 Loans securitized and sold ($ billions) 1.3 5.4 2.5 2.0 1.3 Loans sold to third parties ($ billions) 9.9 4.5 3.1 2.9 2.9 Additions to loans held for investment ($ billions) 1.3 0.1 -- -- -- Gain on sales of loans and current period securitizations net of hedge gains ($ millions) 176.5 182.6 112.9 109.4 81.2 Excess of fair value over carrying value of loans added to investment portfolio ($ millions) 26.5 1.3 -- -- -- --------- -------- ----------- ----------- --------- Total ($ millions) 203.0 183.9 112.9 109.4 81.2 --------- -------- ----------- ----------- --------- Gain on sales of loans and current period securitizations net of hedge gains (% of principal) 1.42% 1.78% 1.64% 1.69% 1.45% Excess of fair value over carrying value of loans added to investment portfolio (% of principal) 2.02% 0.95% -- -- -- Total (% of principal) 1.48% 1.77% 1.64% 1.69% 1.45% Applications accepted ($ billions) 19.7 17.3 13.0 9.9 8.7 Application pipeline ($ billions) 11.6 10.7 8.4 6.2 6.5 Sept. 30, June 30, March 31, Dec. 31, Sept. 30, 2005 2005 2005 2004 2004 --------- -------- ----------- ----------- --------- Loan Servicing Segment: ----------------------------------------------------------------- Loan servicing portfolio - total with warehouse ($ billions) 27.5 24.7 19.9 16.8 13.6 Loan servicing portfolio - loans sold or securitized ($ billions) 24.2 22.6 18.2 15.5 12.5 Weighted average note rate 5.73% 5.62% 5.21% 5.45% 5.41% Weighted average service fee 0.331% 0.336% 0.344% 0.345% 0.354% Average age (in months) 13 13 14 16 18
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 through A-5. 9 AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share amounts)
Three Months Ended Nine Months Ended ---------------------- ---------------------- Sept. 30, Sept. 30, Sept. 30, Sept. 30, 2005 2004 2005 2004 --------- --------- --------- --------- (1) As Adjusted --------- --------- --------- --------- Net interest income: Interest income $ 180,038 $ 94,298 $ 435,325 $ 198,347 Interest expense (133,169) (61,405) (294,830) (132,596) --------- --------- --------- --------- Net interest income 46,869 32,893 140,495 65,751 --------- --------- --------- --------- Non-interest income: Gain on sales of mortgage loans 123,658 28,373 236,288 98,095 Gain on sales of current period securitized mortgage loans 19,960 30,460 168,998 40,119 Gain (loss) on sales of mortgage-backed securities and derivatives 6,116 (8,120) 11,468 (2,810) Unrealized (loss) gain on mortgage-backed securities and derivatives (10,965) 27,069 (1,021) 82,041 Loan servicing fees 21,099 9,822 52,232 28,870 Amortization (15,055) (7,755) (38,558) (22,865) Impairment reserve recovery (provision) 11,577 (4,807) (3,354) (10,139) --------- --------- --------- --------- Net loan servicing fees (loss) 17,621 (2,740) 10,320 (4,134) --------- --------- --------- --------- Other non-interest income 1,585 3,350 5,594 5,554 --------- --------- --------- --------- Non-interest income 157,975 78,392 431,647 218,865 --------- --------- --------- --------- Non-interest expenses: Salaries, commissions and benefits, net 101,378 46,482 264,712 128,805 Occupancy and equipment 15,328 9,984 42,396 26,086 Data processing and communications 6,479 3,745 18,386 10,296 Office supplies and expenses 5,024 3,012 15,110 9,345 Marketing and promotion 5,104 2,610 14,360 7,018 Travel and entertainment 4,670 3,620 14,025 9,084 Professional fees 3,744 2,524 10,646 6,781 Other 7,360 6,363 21,072 15,883 --------- --------- --------- --------- Non-interest expenses 149,087 78,340 400,707 213,298 --------- --------- --------- --------- Net income before income tax expense (benefit) 55,757 32,945 171,435 71,318 Income tax expense (benefit) 2,549 (9,998) (1,302) (26,330) --------- --------- --------- --------- Net income $ 53,208 $ 42,943 $ 172,737 $ 97,648 ========= ========= ========= ========= Dividends on preferred stock 3,304 1,648 9,913 1,648 --------- --------- --------- --------- Net income available to common shareholders $ 49,904 $ 41,295 $ 162,824 $ 96,000 ========= ========= ========= ========= Per share data: Basic $ 1.10 $ 1.03 $ 3.88 $ 2.61 Diluted $ 1.09 $ 1.02 $ 3.83 $ 2.58 Weighted average number of shares - basic 45,174 40,145 41,973 36,737 Weighted average number of shares - diluted 45,669 40,605 42,471 37,198
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 through A-5. 10 AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share amounts)
Three Months Ended --------------------------------------------------------- Sept. 30, June 30, March 31, Dec. 31, Sept. 30, 2005 2005 2005 2004 2004 --------- --------- --------- --------- --------- (1) (1) As As Adjusted Adjusted --------- --------- --------- --------- --------- Net interest income: Interest income $ 180,038 $ 135,318 $ 119,969 $ 113,785 $ 94,298 Interest expense (133,169) (90,336) (71,325) (67,002) (61,405) --------- --------- --------- --------- --------- Net interest income 46,869 44,982 48,644 46,783 32,893 --------- --------- --------- --------- --------- Non-interest income: Gain on sales of mortgage loans 123,658 77,377 35,253 36,004 28,373 Gain on sales of current period securitized mortgage loans 19,960 104,377 44,661 40,674 30,460 Gain (loss) on sales of mortgage-backed securities and derivatives 6,116 620 4,732 2,873 (8,120) Unrealized (loss) gain on mortgage-backed securities and derivatives (10,965) (10,292) 20,236 27,224 27,069 Loan servicing fees 21,099 16,970 14,163 11,701 9,822 Amortization (15,055) (12,832) (10,671) (9,750) (7,755) Impairment reserve recovery (provision) 11,577 (20,398) 5,467 (5,013) (4,807) --------- --------- --------- --------- --------- Net loan servicing fees (loss) 17,621 (16,260) 8,959 (3,062) (2,740) --------- --------- --------- --------- --------- Other non-interest income 1,585 2,543 1,466 1,480 3,350 --------- --------- --------- --------- --------- Non-interest income 157,975 158,365 115,307 105,193 78,392 --------- --------- --------- --------- --------- Non-interest expenses: Salaries, commissions and benefits, net 101,378 94,859 68,475 60,588 46,482 Occupancy and equipment 15,328 14,397 12,671 11,556 9,984 Data processing and communications 6,479 5,957 5,950 5,869 3,745 Office supplies and expenses 5,024 5,657 4,429 4,385 3,012 Marketing and promotion 5,104 5,126 4,130 3,391 2,610 Travel and entertainment 4,670 5,427 3,928 5,106 3,620 Professional fees 3,744 3,432 3,470 5,378 2,524 Other 7,360 6,843 6,869 6,333 6,363 --------- --------- --------- --------- --------- Non-interest expenses 149,087 141,698 109,922 102,606 78,340 --------- --------- --------- --------- --------- Net income before income tax expense (benefit) 55,757 61,649 54,029 49,370 32,945 Income tax expense (benefit) 2,549 (3,851) -- 755 (9,998) --------- --------- --------- --------- --------- Net income $ 53,208 $ 65,500 $ 54,029 $ 48,615 $ 42,943 ========= ========= ========= ========= ========= Dividends on preferred stock 3,304 3,304 3,305 2,340 1,648 --------- --------- --------- --------- --------- Net income available to common shareholders $ 49,904 $ 62,196 $ 50,724 $ 46,275 $ 41,295 ========= ========= ========= ========= ========= Per share data: Basic $ 1.10 $ 1.54 $ 1.26 $ 1.15 $ 1.03 Diluted $ 1.09 $ 1.52 $ 1.24 $ 1.14 $ 1.02 Weighted average number of shares - basic 45,174 40,384 40,308 40,216 40,145 Weighted average number of shares - diluted 45,669 40,886 40,811 40,737 40,605
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 through A-5. 11 AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands)
September 30, June 30, March 31, December 31, September 30, 2005 2005 2005 2004 2004 ------------ ------------ ------------ ------------ ------------ (1) Assets: As Adjusted ------------ ------------ ------------ ------------ ------------ Cash and cash equivalents $ 624,424 $ 197,375 $ 162,762 $ 192,821 $ 186,480 Accounts receivable and servicing advances 335,736 116,835 103,295 105,338 101,105 Mortgage-backed securities 9,208,172 6,917,986 7,181,170 7,601,793 7,331,888 Mortgage loans held for sale, net 1,901,293 1,965,074 1,627,891 1,316,609 1,131,661 Mortgage loans held for investment, net 1,445,429 134,597 -- -- -- Derivative assets 67,185 35,756 73,383 23,344 11,630 Mortgage servicing rights, net 300,659 261,839 228,412 189,229 160,435 Premises and equipment, net 64,174 61,441 55,986 51,576 47,955 Goodwill 99,268 98,826 92,745 90,877 89,196 Other assets 31,697 21,185 49,332 46,556 16,645 ------------ ------------ ------------ ------------ ------------ Total assets $ 14,078,037 $ 9,810,914 $ 9,574,976 $ 9,618,143 $ 9,076,995 ============ ============ ============ ============ ============ Liabilities and Stockholders' Equity: Liabilities: Warehouse lines of credit $ 2,165,154 $ 665,697 $ 658,686 $ 735,783 $ 547,584 Drafts payable 18,763 26,538 28,391 26,200 45,526 Commercial paper 1,334,296 1,291,684 858,382 529,790 462,712 Reverse repurchase agreements 8,041,579 6,337,630 6,720,167 7,071,168 6,899,024 Payable for securities purchased 554,717 -- -- -- -- Derivative liabilities -- 6,195 1,945 1,860 18,237 Trust preferred securities 96,964 48,414 -- -- -- Accrued expenses and other liabilities 239,382 177,761 176,859 165,626 154,339 Notes payable 305,766 256,060 159,339 135,761 128,448 Income taxes payable 56,310 47,753 54,250 54,342 30,133 ------------ ------------ ------------ ------------ ------------ Total liabilities 12,812,931 8,857,732 8,658,019 8,720,530 8,286,003 ------------ ------------ ------------ ------------ ------------ Stockholders' Equity: Preferred stock 134,040 134,040 134,040 134,040 50,857 Common stock 496 405 403 403 402 Additional paid-in capital 946,105 638,595 632,828 631,530 629,807 Retained earnings 235,556 224,442 193,064 170,979 151,297 Accumulated other comprehensive loss (51,091) (44,300) (43,378) (39,339) (41,371) ------------ ------------ ------------ ------------ ------------ Total stockholders' equity 1,265,106 953,182 916,957 897,613 790,992 ------------ ------------ ------------ ------------ ------------ Total liabilities and stockholders' equity $ 14,078,037 $ 9,810,914 $ 9,574,976 $ 9,618,143 $ 9,076,995 ============ ============ ============ ============ ============ Number of shares outstanding - preferred 5,600,000 5,600,000 5,600,000 5,600,000 2,150,000 Number of shares outstanding - common 49,590,821 40,538,479 40,335,255 40,288,077 40,184,333
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 through A-5. 12 AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) (In thousands)
Nine Months Three Months Ended Ended ----------------------------------------------------------- ----------- Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30, Sept. 30, 2005 2005 2005 2004 2004 2005 ----------- --------- --------- --------- --------- ----------- Preferred stock Balance at beginning of period $ 134,040 $ 134,040 $ 134,040 $ 50,857 $ -- $ 134,040 Issuance of preferred stock - offering -- -- -- 83,183 50,857 -- ----------- --------- --------- --------- --------- ----------- Balance at end of period $ 134,040 $ 134,040 $ 134,040 $ 134,040 $ 50,857 $ 134,040 ----------- --------- --------- --------- --------- ----------- Common stock Balance at beginning of period $ 405 $ 403 $ 403 $ 402 $ 401 $ 403 Issuance of common stock - earnouts -- 2 -- -- -- 2 Issuance of common stock - Omnibus Stock Plan 1 -- -- 1 1 1 Issuance of common stock - offering 90 -- -- -- -- 90 ----------- --------- --------- --------- --------- ----------- Balance at end of period $ 496 $ 405 $ 403 $ 403 $ 402 $ 496 ----------- --------- --------- --------- --------- ----------- Additional paid-in capital Balance at beginning of period $ 638,595 $ 632,828 $ 631,530 $ 629,807 $ 629,203 $ 631,530 Issuance of common stock - earnouts 139 5,005 846 734 151 5,990 Issuance of common stock - Omnibus Stock Plan 488 588 311 823 374 1,387 Issuance of common stock - offering 304,033 -- -- -- -- 304,033 Tax benefit for stock options exercised 2,638 -- -- -- -- 2,638 Restricted shares amortization 212 174 141 166 79 527 ----------- --------- --------- --------- --------- ----------- Balance at end of period $ 946,105 $ 638,595 $ 632,828 $ 631,530 $ 629,807 $ 946,105 ----------- --------- --------- --------- --------- ----------- Retained earnings Balance at beginning of period $ 224,442 $ 193,064 $ 99,628 $ 151,297 $ 134,515 $ 99,628 Net income 53,208 65,500 125,380 (22,736) 42,943 244,088 Dividends declared (42,094) (34,122) (31,944) (28,933) (26,161) (108,160) ----------- --------- --------- --------- --------- ----------- Balance at end of period $ 235,556 $ 224,442 $ 193,064 $ 99,628 $ 151,297 $ 235,556 ----------- --------- --------- --------- --------- ----------- Other comprehensive loss Balance at beginning of period $ (44,300) $ (43,378) $ (39,339) $ (41,371) $ (50,553) $ (39,339) Unrealized (loss) gain on mortgage-backed securities (15,918) 6,901 (24,435) (12,491) 52,945 (33,452) Gain (loss) on cash flow hedges, net of amortization 9,127 (7,823) 20,396 14,523 (43,763) 21,700 ----------- --------- --------- --------- --------- ----------- Balance at end of period $ (51,091) $ (44,300) $ (43,378) $ (39,339) $ (41,371) $ (51,091) ----------- --------- --------- --------- --------- ----------- Total stockholders' equity $ 1,265,106 $ 953,182 $ 916,957 $ 826,262 $ 790,992 $ 1,265,106 =========== ========= ========= ========= ========= =========== Adjustment (1) -- -- -- 71,351 -- -- ----------- --------- --------- --------- --------- ----------- Adjusted total stockholders' equity (1) $ 1,265,106 $ 953,182 $ 916,957 $ 897,613 $ 790,992 $ 1,265,106 =========== ========= ========= ========= ========= ===========
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 through A-5. 13 AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Three Months Ended ---------------------------------------------------------------------------- Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30, 2005 2005 2005 2004 2004 ------------ ------------ ------------ ------------ ------------ Cash flows from operating activities: Net income $ 53,208 $ 65,500 $ 125,380 $ (22,736) $ 42,943 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization 3,098 2,739 2,439 2,288 2,151 Amortization and impairment of mortgage servicing rights 3,478 33,230 5,082 12,034 12,562 Accretion and amortization of mortgage-backed securities, net (2,571) (1,169) 4,593 7,700 9,455 Amortization of deferred cash flow hedge gain (loss) 1,689 1,738 17,052 515 (7,019) Loss on sales of mortgage-backed securities and derivatives 2,819 447 3,336 390 6,998 Unrealized loss (gain) on mortgage-backed securities 74,595 (4,533) 51,003 15,850 (33,525) Unrealized (gain) loss on free standing derivatives (31,137) 25,903 (40,312) (14,482) 14,856 (Decrease) increase in forward delivery contracts (12,820) 13,930 (9,595) 766 (9,004) Capitalized mortgage servicing rights on securitized loans (27,536) (62,629) (79,711) (123) (27,203) Capitalized mortgage servicing rights on sold loans (14,762) (4,027) (2,347) (2,912) (3,976) Decrease (increase) in interest rate lock commitments 14,501 (6,264) 210 (395) 7,358 (Increase) decrease in mortgage loan basis adjustments (12,649) (10,584) 30,954 (27,113) (1,817) Other 1,469 (2,155) 1,177 (3,720) 2,611 (Increase) decrease in operating assets: Accounts receivable (218,519) (14,401) 12,952 (10,569) (124) Servicing advances (382) 861 731 (5,304) (492) Income taxes receivable -- 25,797 -- -- -- Other assets (10,512) 2,350 7,714 (40,401) (2,857) Increase (decrease) in operating liabilities: Accrued expenses and other liabilities 53,657 (1,269) 21,432 (4,695) 32,761 Income taxes payable 8,557 (6,497) (92) 24,209 (10,995) Origination of mortgage loans held for sale (12,394,139) (10,647,029) (7,255,400) (6,744,078) (5,292,191) Principal received from sales of mortgage loans held for sale 9,448,293 4,457,519 3,080,795 2,974,379 2,806,070 Proceeds from securitizations of mortgage loans held for sale 2,993,315 5,855,914 7,336,612 75,209 2,765,737 Additions to mortgage-backed securities and derivatives (1,191,209) (466,522) (2,840,259) (15,112) (1,435,334) Principal proceeds from sales of self-originated mortgage-backed securities -- 1,104,227 -- 852,283 1,023,037 Cash received from residual assets in securitizations 35,431 23,539 16,556 14,709 7,186 Principal repayments of mortgage-backed securities 274,035 172,172 108,403 132,510 93,120 ------------ ------------ ------------ ------------ ------------ Net cash (used in) provided by operating activities (948,091) 558,787 598,705 (2,778,798) 2,308 ------------ ------------ ------------ ------------ ------------ Cash flows from investing activities: Purchases of premises and equipment (5,831) (8,194) (6,849) (5,909) (5,565) Origination of mortgage loans held for investment (1,301,364) (133,757) -- -- -- Proceeds from repayments of mortgage loans held for investment 5,108 -- -- -- -- Purchases of mortgage-backed securities (2,417,565) (933,929) -- (107,009) (535,056) Principal proceeds from sales of purchased mortgage-backed securities 518,517 20,962 1,133,989 50,710 633,036 Principal repayments of purchased mortgage-backed securities 414,667 361,049 368,671 351,687 296,974 ------------ ------------ ------------ ------------ ------------ Net cash (used in) provided by investing activities (2,786,468) (693,869) 1,495,811 289,479 389,389 ------------ ------------ ------------ ------------ ------------ Cash flows from financing activities: Increase (decrease) in warehouse lines of credit, net 1,499,457 7,011 (77,097) 188,199 (124,872) Increase (decrease) in reverse repurchase agreements, net 1,703,949 (382,537) (351,001) 172,144 485,518 (Decrease) increase in collateralized debt obligations -- -- (2,022,218) 2,022,218 -- Increase (decrease) in payable for securities purchased 554,717 -- -- -- (423,909) Increase (decrease) in commercial paper, net 42,612 433,302 328,592 67,078 (584,324) (Decrease) increase in drafts payable, net (7,775) (1,853) 2,191 (19,326) (40,774) Increase in trust preferred securities 48,550 48,414 -- -- -- Increase in notes payable, net 49,706 96,721 23,578 7,313 21,211 Proceeds from issuance of preferred stock -- -- -- 83,425 52,057 Proceeds from issuance of common stock 304,522 587 311 776 426 Dividends paid (34,130) (31,950) (28,931) (26,167) (24,468) ------------ ------------ ------------ ------------ ------------ Net cash provided by (used in) financing activities 4,161,608 169,695 (2,124,575) 2,495,660 (639,135) ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in cash and cash equivalents 427,049 34,613 (30,059) 6,341 (247,438) Cash and cash equivalents, beginning of period 197,375 162,762 192,821 186,480 433,918 ------------ ------------ ------------ ------------ ------------ Cash and cash equivalents, end of period $ 624,424 $ 197,375 $ 162,762 $ 192,821 $ 186,480 ============ ============ ============ ============ ============
14 AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Nine Months Ended ------------- September 30, 2005 ------------- Cash flows from operating activities: Net income $ 244,088 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 8,276 Amortization and impairment of mortgage servicing rights 41,790 Accretion and amortization of mortgage-backed securities, net 853 Amortization of deferred cash flow hedge gain 20,479 Loss on sales of mortgage-backed securities and derivatives 6,602 Unrealized loss on mortgage-backed securities 121,065 Unrealized gain on free standing derivatives (45,546) Decrease in forward delivery contracts (8,485) Capitalized mortgage servicing rights on securitized loans (169,876) Capitalized mortgage servicing rights on sold loans (21,136) Decrease in interest rate lock commitments 8,447 Decrease in mortgage loans basis adjustments 7,721 Other 491 (Increase) decrease in operating assets: Accounts receivable (219,968) Servicing advances 1,210 Income taxes receivable 25,797 Other assets (448) Increase (decrease) in operating liabilities: Accrued expenses and other liabilities 73,820 Income taxes payable 1,968 Origination of mortgage loans held for sale (30,296,568) Principal received from sales of mortgage loans held for sale 16,986,607 Proceeds from securitizations of mortgage loans held for sale 16,185,841 Additions to mortgage-backed securities and derivatives (4,497,990) Principal proceeds from sales of self-originated mortgage-backed securities 1,104,227 Cash received from residual assets in securitizations 75,526 Principal repayments of mortgage-backed securities 554,610 ------------- Net cash provided by operating activities 209,401 ------------- Cash flows from investing activities: Purchases of premises and equipment (20,874) Origination of mortgage loans held for investment (1,435,121) Proceeds from repayments of mortgage loans held for investment 5,108 Purchases of mortgage-backed securities (3,351,494) Principal proceeds from sales of purchased mortgage-backed securities 1,673,468 Principal repayments of purchased mortgage-backed securities 1,144,387 ------------- Net cash used in investing activities (1,984,526) ------------- Cash flows from financing activities: Increase in warehouse lines of credit, net 1,429,371 Increase in reverse repurchase agreements, net 970,411 Decrease in collateralized debt obligations (2,022,218) Increase in payable for securities purchased 554,717 Increase in commercial paper, net 804,506 Decrease in drafts payable, net (7,437) Increase in trust preferred securities 96,964 Increase in notes payable, net 170,005 Proceeds from issuance of common stock 305,420 Dividends paid (95,011) ------------- Net cash provided by financing activities 2,206,728 ------------- Net increase in cash and cash equivalents 431,603 Cash and cash equivalents, beginning of period 192,821 ------------- Cash and cash equivalents, end of period $ 624,424 =============
15 AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES FAIR VALUE OF FINANCIAL INSTRUMENTS (Unaudited) (In thousands)
September 30, 2005 --------------------------------------------- Fair Value in Excess of Carrying Value Fair Value Carrying Value -------------- ---------- --------------- Assets: Cash and cash equivalents $ 624,424 $ 624,424 $ -- Accounts receivable and servicing advances 335,736 335,736 -- Mortgage-backed securities 9,208,172 9,208,172 -- Mortgage loans held for sale, net 1,901,293 1,909,533 8,240 Mortgage loans held for investment, net 1,445,429 1,473,965 28,536 Mortgage servicing rights, net 300,659 300,772 113 Derivative assets* 67,185 75,556 8,371 --------------- $ 45,260 --------------- Carrying Value in Excess of Fair Value --------------- Liabilities: Warehouse lines of credit $ 2,165,154 $2,165,154 $ -- Drafts payable 18,763 18,763 -- Commercial paper 1,334,296 1,334,296 -- Reverse repurchase agreements 8,041,579 8,041,313 266 Trust preferred securities 96,964 96,964 -- Notes payable 305,766 305,766 -- --------------- $ 266 --------------- Fair Value in Excess of Carrying Value --------------- $ 45,526 ===============
* 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. 16 AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES OPERATING STATISTICS
Three Months Ended --------------------------------------------------------------------------- March 31, 2005 December 31, 2004 ------------------------------------ ----------------------------------- (1) (1) GAAP Adjustments As Adjusted GAAP Adjustments As Adjusted ------- ----------- ----------- ------ ----------- ----------- Mortgage-Backed Securities Holdings Segment:* ------------------------------------------------- Average mortgage-backed securities held ($billions) 5.9 1.5 7.4 7.1 0.2 7.3 Interest income ($millions) 58.3 19.9 78.2 68.4 2.2 70.6 Average portfolio yield 3.98% 4.23% 3.86% 3.89% Interest expense ($millions) 39.0 7.7 46.7 42.4 0.2 42.6 Average cost of funds and hedges 2.79% 2.71% 2.52% 2.48% Net interest income ($millions) 19.3 12.2 31.5 26.0 2.0 28.0 Net interest margin 1.33% 1.70% 1.49% 1.57% Mortgage-backed securities held - end of period ($billions) 7.2 7.2 6.0 1.6 7.6 Period end duration gap (in years) 0.09 0.09 0.07 0.07 * - Excludes loans held pending securitization Loan Origination Segment: ------------------------------------------------- Loan originations ($billions) 7.2 7.2 6.7 6.7 Refinance 48% 48% 46% 46% ARM 53% 53% 55% 55% Average mortgage loans, net ($billions) 6.2 -3.4 2.8 3.1 -0.4 2.7 Net interest income ($millions) 41.3 -22.4 18.9 22.6 -2.4 20.2 Net interest margin 2.64% 2.70% 2.93% 2.97% Loans securitized and held ($billions) 2.8 -1.5 1.3 -- 1.5 1.5 Loans securitized and sold ($billions) 4.5 -2.0 2.5 -- 2.0 2.0 Loans sold to third parties ($billions) 3.1 3.1 2.9 2.9 Gain on sales of loans and current period securitizations net of hedge gains ($millions) 156.4 -43.5 112.9 36.0 73.4 109.4 Excess of fair value over carrying value of loans added to investment portfolio ($millions) -- -- -- -- -- -- ------- ----------- ----------- ------ ----------- ----------- Total ($millions) 156.4 -43.5 112.9 36.0 73.4 109.4 ------- ----------- ----------- ------ ----------- ----------- Gain on sales of loans and current period securitizations net of hedge gains (% of principal) 2.26% 1.64% 0.56% 1.69% Excess of fair value over carrying value of loans added to investment portfolio (% of principal) -- -- -- -- Total (% of principal) 2.26% 1.64% 0.56% 1.69% Applications accepted ($billions) 13.0 13.0 9.9 9.9 Application pipeline ($billions) 8.4 8.4 6.2 6.2 March 31, 2005 December 31, 2004 ------------------------------------ ----------------------------------- Loan Servicing Segment: ------------------------------------------------- Loan servicing portfolio - total with warehouse ($billions) 19.9 19.9 16.8 16.8 Loan servicing portfolio - loans sold or securitized ($billions) 18.2 18.2 12.0 3.5 15.5 Weighted average note rate 5.21% 5.21% 5.48% 5.45% Weighted average service fee 0.344% 0.344% 0.348% 0.345% Average age (in months) 14 14 20 16
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-1 AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES OPERATING STATISTICS
Nine Months Ended ------------------------------------ September 30, 2005 ------------------------------------ (1) GAAP Adjustments As Adjusted ------- ----------- ----------- Mortgage-Backed Securities Holdings Segment:* ---------------------------------------------------------------- Average mortgage-backed securities held ($billions) 6.6 0.5 7.1 Interest income ($millions) 219.9 19.9 239.8 Average portfolio yield 4.45% 4.50% Interest expense ($millions) 154.1 7.7 161.8 Average cost of funds and hedges 3.34% 3.29% Net interest income ($millions) 65.8 12.2 78.0 Net interest margin 1.33% 1.46% Mortgage-backed securities held - end of period ($billions) 9.2 9.2 Period end duration gap (in years) 0.17 0.17 * - Excludes loans held pending securitization Loan Origination Segment: ---------------------------------------------------------------- Loan originations ($billions) 31.7 31.7 Refinance 45% 45% ARM 50% 50% Average mortgage loans, net ($billions) 5.3 -1.2 4.1 Net interest income ($millions) 90.7 -22.4 68.3 Net interest margin 2.34% 2.26% Loans securitized and held ($billions) 4.4 -1.5 2.9 Loans securitized and sold ($billions) 12.3 -2.0 10.3 Loans sold to third parties ($billions) 17.5 17.5 Additions to loans held for investment ($billions) 1.4 1.4 Gain on sales of loans and current period securitizations net of hedge gains ($millions) 515.5 -43.5 472.0 Excess of fair value over carrying value of loans added to investment portfolio ($millions) 27.8 27.8 ------- ----------- Total ($millions) 543.3 499.8 ------- ----------- Gain on sales of loans and current period securitizations net of hedge gains (% of principal) 1.74% 1.60% Excess of fair value over carrying value of loans added to investment portfolio (% of principal) 1.92% 1.92% Total (% of principal) 1.75% 1.61% Applications accepted ($billions) 50.0 50.0 Application pipeline ($billions) 11.6 11.6 September 30, 2005 ------------------------------------ Loan Servicing Segment: ---------------------------------------------------------------- Loan servicing portfolio - total with warehouse ($billions) 27.5 27.5 Loan servicing portfolio - loans sold or securitized ($billions) 24.2 24.2 Weighted average note rate 5.73% 5.73% Weighted average service fee 0.331% 0.331% Average age (in months) 13 13
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 AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share amounts)
Three Months Ended ---------------------------------------------------------------------------------- March 31, 2005 December 31, 2004 --------------------------------------- --------------------------------------- (1) (1) GAAP Adjustments As Adjusted GAAP Adjustments As Adjusted --------- ----------- ----------- --------- ----------- ----------- Net interest income: Interest income $ 146,894 $ (26,925) $ 119,969 $ 115,957 $ (2,172) $ 113,785 Interest expense (88,091) 16,766 (71,325) (68,777) 1,775 (67,002) --------- ----------- ----------- --------- ----------- ----------- Net interest income 58,803 (10,159) 48,644 47,180 (397) 46,783 --------- ----------- ----------- --------- ----------- ----------- Non-interest income: Gain on sales of mortgage loans 35,253 -- 35,253 36,004 -- 36,004 Gain on sales of current period securitized mortgage loans 69,919 (25,258) 44,661 -- 40,674 40,674 Gain on sales of mortgage-backed securities and derivatives 6,132 (1,400) 4,732 2,873 -- 2,873 Unrealized gain (loss) on mortgage- backed securities and derivatives 57,499 (37,263) 20,236 (6,579) 33,803 27,224 Loan servicing fees 11,312 2,851 14,163 11,701 -- 11,701 Amortization (8,501) (2,170) (10,671) (9,750) -- (9,750) Impairment reserve recovery (provision) 3,419 2,048 5,467 (2,284) (2,729) (5,013) --------- ----------- ----------- --------- ----------- ----------- Net loan servicing fees (loss) 6,230 2,729 8,959 (333) (2,729) (3,062) --------- ----------- ----------- --------- ----------- ----------- Other non-interest income 1,466 -- 1,466 1,480 -- 1,480 --------- ----------- ----------- --------- ----------- ----------- Non-interest income 176,499 (61,192) 115,307 33,445 71,748 105,193 --------- ----------- ----------- --------- ----------- ----------- Non-interest expenses: Salaries, commissions and benefits, net 68,475 -- 68,475 60,588 -- 60,588 Occupancy and equipment 12,671 -- 12,671 11,556 -- 11,556 Data processing and communications 5,950 -- 5,950 5,869 -- 5,869 Office supplies and expenses 4,429 -- 4,429 4,385 -- 4,385 Marketing and promotion 4,130 -- 4,130 3,391 -- 3,391 Travel and entertainment 3,928 -- 3,928 5,106 -- 5,106 Professional fees 3,470 -- 3,470 5,378 -- 5,378 Other 6,869 -- 6,869 6,333 -- 6,333 --------- ----------- ----------- --------- ----------- ----------- Non-interest expenses 109,922 -- 109,922 102,606 -- 102,606 --------- ----------- ----------- --------- ----------- ----------- Net income before income tax expense 125,380 (71,351) 54,029 (21,981) 71,351 49,370 Income tax expense -- -- -- 755 -- 755 --------- ----------- ----------- --------- ----------- ----------- Net income $ 125,380 $ (71,351) $ 54,029 $ (22,736) $ 71,351 $ 48,615 ========= =========== =========== ========= =========== =========== Dividends on preferred stock 3,305 -- 3,305 2,340 -- 2,340 --------- ----------- ----------- --------- ----------- ----------- Net income available to common shareholders $ 122,075 $ (71,351) $ 50,724 $ (25,076) $ 71,351 $ 46,275 ========= =========== =========== ========= =========== =========== Per share data: Basic $ 3.03 $ (1.77) $ 1.26 $ (0.62) $ 1.77 $ 1.15 Diluted $ 2.99 $ (1.75) $ 1.24 $ (0.62) $ 1.75 $ 1.14 Weighted average number of shares - basic 40,308 40,308 40,308 40,216 40,216 40,216 Weighted average number of shares - diluted 40,811 40,811 40,811 40,737 40,737 40,737
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-3 AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share amounts)
Nine Months Ended --------------------------------------- September 30, 2005 --------------------------------------- (1) GAAP Adjustments As Adjusted --------- ----------- ----------- Net interest income: Interest income $ 462,250 $ (26,925) $ 435,325 Interest expense (311,596) 16,766 (294,830) --------- ----------- ----------- Net interest income 150,654 (10,159) 140,495 --------- ----------- ----------- Non-interest income: Gain on sales of mortgage loans 236,288 -- 236,288 Gain on sales of current period securitized mortgage loans 194,256 (25,258) 168,998 Gain on sales of mortgage-backed securities and derivatives 12,868 (1,400) 11,468 Unrealized gain (loss) on mortgage-backed securities and derivatives 36,242 (37,263) (1,021) Loan servicing fees 49,381 2,851 52,232 Amortization (36,388) (2,170) (38,558) Impairment reserve provision (5,402) 2,048 (3,354) --------- ----------- ----------- Net loan servicing fees 7,591 2,729 10,320 --------- ----------- ----------- Other non-interest income 5,594 -- 5,594 --------- ----------- ----------- Non-interest income 492,839 (61,192) 431,647 --------- ----------- ----------- Non-interest expenses: Salaries, commissions and benefits, net 264,712 -- 264,712 Occupancy and equipment 42,396 -- 42,396 Data processing and communications 18,386 -- 18,386 Office supplies and expenses 15,110 -- 15,110 Marketing and promotion 14,360 -- 14,360 Travel and entertainment 14,025 -- 14,025 Professional fees 10,646 -- 10,646 Other 21,072 -- 21,072 --------- ----------- ----------- Non-interest expenses 400,707 -- 400,707 --------- ----------- ----------- Net income before income tax benefit 242,786 (71,351) 171,435 Income tax benefit (1,302) -- (1,302) --------- ----------- ----------- Net income $ 244,088 $ (71,351) $ 172,737 ========= =========== =========== Dividends on preferred stock 9,913 -- 9,913 --------- ----------- ----------- Net income available to common shareholders $ 234,175 $ (71,351) $ 162,824 ========= =========== =========== Per share data: Basic $ 5.58 $ (1.70) $ 3.88 Diluted $ 5.51 $ (1.68) $ 3.83 Weighted average number of shares - basic 41,973 41,973 41,973 Weighted average number of shares - diluted 42,471 42,471 42,471
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-4 AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands)
December 31, 2004 -------------------------------------------- (1) Assets: GAAP Adjustments As Adjusted ------------ ------------ ------------ Cash and cash equivalents $ 192,821 $ -- $ 192,821 Accounts receivable and servicing advances 116,978 (11,640) 105,338 Mortgage-backed securities 6,016,866 1,584,927 7,601,793 Mortgage loans held for sale, net 4,853,394 (3,536,785) 1,316,609 Derivative assets 24,803 (1,459) 23,344 Mortgage servicing rights, net 151,436 37,793 189,229 Premises and equipment, net 51,576 -- 51,576 Goodwill 90,877 -- 90,877 Other assets 57,046 (10,490) 46,556 ------------ ------------ ------------ Total assets $ 11,555,797 $ (1,937,654) $ 9,618,143 ============ ============ ============ Liabilities and Stockholders' Equity: Liabilities: Warehouse lines of credit $ 735,783 $ -- $ 735,783 Drafts payable 26,200 -- 26,200 Commercial paper 529,790 -- 529,790 Reverse repurchase agreements 7,071,168 -- 7,071,168 Collateralized debt obligations 2,022,218 (2,022,218) -- Derivative liabilities 1,860 -- 1,860 Accrued expenses and other liabilities 152,413 13,213 165,626 Notes payable 135,761 -- 135,761 Income taxes payable 54,342 -- 54,342 ------------ ------------ ------------ Total liabilities 10,729,535 (2,009,005) 8,720,530 ------------ ------------ ------------ Stockholders' Equity: Preferred stock 134,040 -- 134,040 Common stock 403 -- 403 Additional paid-in capital 631,530 -- 631,530 Retained earnings 99,628 71,351 170,979 Accumulated other comprehensive loss (39,339) -- (39,339) ------------ ------------ ------------ Total stockholders' equity 826,262 71,351 897,613 ------------ ------------ ------------ Total liabilities and stockholders' equity $ 11,555,797 $ (1,937,654) $ 9,618,143 ============ ============ ============ Number of shares outstanding - preferred 5,600,000 5,600,000 5,600,000 Number of shares outstanding - common 40,288,077 40,288,077 40,288,077
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-5

The following information was filed by American Home Mortgage Investment Corp on Wednesday, October 26, 2005 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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