EX-99.1
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am012606-ex99_1.txt
PRESS RELEASE, DATED JANUARY 26, 2006

                                                                    Exhibit 99.1

[GRAPHIC - AHM LOGO]FOR IMMEDIATE RELEASE
                    ---------------------

             American Home Mortgage Announces Fourth Quarter Results

             Earnings Adversely Affected by Low Gain on Sale Margins
                    and Write-downs of Asset Carrying Values

        Earnings of $0.27 per diluted share, primarily due to Tax Benefit

 Quarterly Loan Production is $13.6 Billion, Market Share Reaches Record 1.92%

   Company Maintains Dividend Policy of $0.91 per share per quarter, or $3.64
                        per share on an annualized basis

               2006 Earnings Guidance of $4.85 to $5.15 Reaffirmed


Melville, NY (January 26, 2006) - American Home Mortgage Investment Corp. (NYSE:
AHM) announced today results for the quarter and full year ended December 31,
2005.


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


Comparison of the Three Months Ended December 31, 2005 and 2004

o  Revenue for the fourth quarter of 2005 was $150.5 million, compared to
   adjusted revenue of $152.0 million for the fourth quarter of 2004, a decrease
   of 1.0%. GAAP revenue for the fourth quarter of 2004 was $80.6 million.

o  Net earnings for the fourth quarter of 2005 were $16.7 million, compared to
   adjusted net earnings of $48.6 million for the fourth quarter of 2004, a
   decrease of 65.7%. GAAP net loss for the fourth quarter of 2004 was $22.7
   million.

o  Earnings per diluted share for the fourth quarter of 2005 were $0.27,
   compared to adjusted earnings per diluted share of $1.14 for the fourth
   quarter of 2004, a decrease of 76.3%. GAAP loss per diluted share for the
   fourth quarter of 2004 was $0.62.

o  Dividends per common share for the fourth quarter of 2005 were $0.91,
   compared to $0.66 for the fourth quarter of 2004, an increase of 37.9%.

o  Book value per common share was $21.62 at December 31, 2005, compared to
   adjusted book value per common share of $18.95 at December 31, 2004, an
   increase of 14.0%. GAAP book value per common share was $17.18 at December
   31, 2004.


Comparison of the Three Months Ended December 31, 2005 and September 30, 2005

o  Revenue for the fourth quarter of 2005 was $150.5 million, compared to
   revenue of $204.8 million for the third quarter of 2005, a decrease of 26.6%.

o  Net earnings for the fourth quarter of 2005 were $16.7 million, compared to
   net earnings of $53.2 million for the third quarter of 2005, a decrease of
   68.6%.





o  Earnings per diluted share for the fourth quarter of 2005 were $0.27,
   compared to earnings per diluted share of $1.09 for the third quarter of
   2005, a decrease of 75.2%.

o  Dividends per common share for the fourth quarter of 2005 were $0.91,
   compared to $0.86 for the third quarter of 2005, an increase of 5.8%.

o  Book value per common share was $21.62 at December 31, 2005, compared to book
   value per common share of $22.81 at September 30, 2005, a decrease of 5.2%.

Comparison of the Year Ended December 31, 2005 and 2004

o  Adjusted revenue for the year ended December 31, 2005 was $722.6 million,
   compared to adjusted revenue of $436.6 million for the year ended December
   31, 2004, an increase of 65.5%. GAAP revenue for the year ended December 31,
   2005 totaled $793.9 million. GAAP revenue for the year ended December 31,
   2004 totaled $365.2 million.

o  Adjusted net earnings for the year ended December 31, 2005 were $189.4
   million, compared to adjusted net earnings of $146.3 million for the year
   ended December 31, 2004, an increase of 29.5%. GAAP net earnings for the year
   ended December 31, 2005 totaled $260.8 million. GAAP net earnings for the
   year ended December 31, 2004 totaled $74.9 million.

o  Adjusted earnings per diluted share for the year ended December 31, 2005 were
   $3.97, compared to adjusted earnings per diluted share of $3.74 for the year
   ended December 31, 2004, an increase of 6.1%. GAAP earnings per diluted share
   for the year ended December 31, 2005 were $5.58. GAAP earnings per diluted
   share for the year ended December 31, 2004 were $1.86.

o  Dividends per common share for the year ended December 31, 2005 were $3.24,
   compared to $2.43 for the year ended December 31, 2004, an increase of 33.3%.


Michael Strauss, American Home's Chief Executive Officer, commented, "During the
fourth quarter, our company's income was negatively impacted by low gain on sale
margins due to poor market conditions for whole loan sales at the end of the
quarter. As a result, our revenue from loan sales was off substantially compared
to the third quarter of 2005. In addition, credit spread widening and continued
high repayment speeds caused write-downs of our junior mortgage securities, our
inventory of newly originated loans and our pipeline of locked loan
applications. The overall result was a highly disappointing quarter. During the
quarter, however, our company did add $2.1 billion of loans into its investment
portfolio. The loans had a fair value in excess of their cost of $30.2 million,
which was not recognized in the fourth quarter's financial results. These loans
are expected to benefit net interest income in future quarters. In addition,
during the quarter our company's loan production was $13.6 billion. This equates
to a record market share for our company of 1.92% based on Freddie Mac's
estimate of national origination volume during the fourth quarter."

Mr. Strauss continued, "American Home's financial results have traditionally
been driven by net interest income and by the volume of loans we originate and
sell, and we have been pursuing strategies to enhance our company's results in
these areas. In 2005's fourth, and to a lesser extent third quarter, however,
our company's results were significantly impacted by reductions in our gain on
sale margin and by write-downs of our assets. Whether these factors will
continue to impact our results is uncertain. Our company is taking the following
actions to address these factors: To reestablish our gain on sale margins we
have adjusted, and continue to adjust, the interest rates we charge consumers to
reflect today's secondary market conditions. We are also selling our loans more
frequently to reduce the risk that changing market conditions will affect our
inventory of loans held for sale. To reduce the risk of further write-downs in
the value of our company's investment portfolio, in the third quarter of 2005 we
began carrying the self-originated securitized loans being added to our
portfolio at the loans' cost rather than the resultant securities' market value.
We also are classifying all market-purchased securities as available for sale
rather than


                                       2



trading. I believe these actions are appropriate responses to the market changes
that have affected our recent results."


FOURTH QUARTER RESULTS
----------------------

During the fourth quarter, American Home's mortgage loans and mortgage-backed
securities in portfolio averaged $10.5 billion, and earned net interest income
of $29.8 million equal to a net interest margin of 1.17%. In addition, during
the quarter, the Company earned $1.0 million of positive carry on interest rate
swaps which economically hedge the trading portion of the company's portfolio.
Under accounting rules these swaps are classified as free standing derivatives
and consequently are not included in GAAP net interest income. For the fourth
quarter, the combined net interest income and positive swap carry was $30.8
million or 1.21% of average portfolio assets. By comparison, during the third
quarter of 2005, the mortgage-backed securities portfolio averaged $7.1 billion
and earned net interest income of $21.6 million equal to a net interest margin
of 1.24%. During the third quarter, the Company had $0.6 million of negative
carry on the interest rate swaps which economically hedge the trading portion of
the Company's portfolio. Consequently, in the third quarter the combined net
interest income and negative swap carry was $21.0 million or 1.21% of average
portfolio assets.

During the fourth quarter, American Home's inventory of loans averaged $8.6
billion, earned a net interest margin of 1.14% and earned net interest income of
$23.5 million. This compares with an average balance of $5.7 billion, a net
interest margin of 2.06% and net interest income of $26.9 million in the third
quarter of 2005. During the fourth quarter, the Company had interest expense on
servicing financing and other obligations of $2.9 million compared to $1.7
million during the third quarter of 2005.

At December 31, 2005, the composition of the Company's loans held for investment
and MBS portfolio by type of loan was 64.5% 5/1 adjustable-rate mortgages
("ARMs"), 27.1% short reset ARMs, 4.3% HELOC and closed end seconds, 3.3% 3/1
ARMs and 0.8% other fixed and ARM types. The composition of the MBS portfolio by
credit quality based on Standard & Poor's ratings was 94.0% Agency and AAA, 3.8%
AA, A, and BBB and 2.2% unrated. On December 31, 2005, the MBS portfolio's
duration, net of liabilities and hedges, was estimated to be (0.03) years and
its projected average life was 2.50 years.

During the fourth quarter, the Company's loan production was $13.6 billion. Of
the $13.6 billion, 49% of loans were to homebuyers while 51% were for
refinancing. During the quarter, the Company estimates its national market share
reached 1.92% based on Freddie Mac's recent forecast of national market size,
compared to 1.70% in the third quarter of 2005 and 0.94% during the fourth
quarter of 2004. At December 31, 2005, the Company employed approximately 2,373
loan officers and account executives, including call center representatives, but
excluding sales assistants, compared to approximately 2,377 on September 30,
2005.

During the quarter, the Company continued to pursue its strategy of holding
loans in its investment portfolio, which are carried at their cost, less any
associated loan loss allowance. The amount of such loans placed into the
investment portfolio during the quarter was $2.1 billion. These loans had an
excess of fair value over carrying value of $30.2 million, or 1.43% of
principal.

During the quarter, the Company sold $11.0 billion of non-securitized loans to
third parties for a gain, net of hedges, fees and direct costs, of $105.4
million.

During the quarter, the Company recognized realized and unrealized losses, net
of hedges, on the value of its securities portfolio of $41.1 million, of which
$13.4 million was charged to current period income, and $27.7 million resulted
in other comprehensive loss.


                                       3



During the quarter, income associated with the Company's servicing assets was
$8.0 million, including $26.7 million of servicing fee revenue, $15.4 million of
amortization expense, and $3.3 million of impairment reserve provision. 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 $30.7 billion, compared to
$27.5 billion at the end of the third quarter.

The Company's total revenues for the quarter were $150.5 million. Of these
revenues, $50.4 million was from net interest income, $105.4 million was from
gains on newly originated mortgage loans including origination fees and net of
hedges, $26.7 million was from mortgage servicing fees, and $2.2 million was
from other sources. Revenues were decreased by $13.4 million of realized and
unrealized losses on MBS, net of hedges, $18.7 million of servicing amortization
and impairment reserve provision and $2.1 million of provision for loan losses.
During the quarter, the Company's expenses were $150.2 million, and the
Company's pre-tax income was $0.3 million. During the quarter, the Company's
taxable subsidiary had a pre-tax loss of $41.1 million resulting in a tax
benefit of $16.4 million. Consequently, net income for the quarter was $16.7
million while preferred dividends were $3.3 million and net income available to
common stockholders was $13.4 million, resulting in earnings per diluted share
of $0.27. Book value attributable to common stockholders on December 31, 2005
was $1.1 billion, or $21.62 per common share, compared to $1.1 billion, or
$22.81 per common share, on September 30, 2005.

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

American Home is reaffirming its 2006 earnings guidance of $4.85 to $5.15 per
diluted share. The Company expects the distribution of 2006 earnings among the
year's quarters will be affected by seasonality in the Company's production
segment and by progressively increasing net interest income due to the Company's
buildup of its investment portfolio. For 2006, the Company estimates that it
will earn 15% to 20% of its annual earnings during the first quarter, 22% to 27%
of its earnings during the second quarter, 26% to 31% of its earnings during the
third quarter and 27% to 32% of its earnings during the fourth quarter. The
Company's earnings guidance is based on a number of significant projections
including the Company's gain on sale margin rebounding to 1.25% to 1.30%
compared to its fourth quarter 2005 result of 0.96% and its third quarter 2005
result of 1.42%.

DIVIDEND POLICY
---------------

American Home's dividend policy remains unchanged at $0.91 per share per quarter
or $3.64 per share on an annualized basis. The dividend policy is being left
unchanged despite the Company's fourth quarter 2005 results due to the Company's
2006 earnings projections. Investors are advised that the Company's earnings
projections are based on a number of assumptions, and if such assumptions do not
materialize the Company may not be able to maintain its dividend policy. The
Company's dividend policy does not constitute an obligation to pay dividends,
which only occurs when its Board of Directors declares a dividend. The dividend
policy is subject to ongoing review by the Board of Directors based on, among
other things, the Company's business prospects, financial condition, earnings
projections and cash flow projections, and the Board may, when it deems doing so
is advisable, lower or eliminate the dividend without prior notice.

OTHER COMPANY HIGHLIGHTS
------------------------

On January 20, 2006, the Company acquired Waterfield Financial Corporation
("Waterfield"), a subsidiary of Union Federal Bank of Indianapolis, which
includes 46 retail, wholesale and correspondent mortgage loan production
branches in 16 states.

In conjunction with the transaction, American Home purchased 100% of the capital
stock of Waterfield at a purchase price equal to the book value of Waterfield's
net assets on the closing date of the acquisition.


                                       4



ADJUSTED FINANCIAL MEASURES
---------------------------

Throughout this news release the terms adjusted revenues, adjusted net earnings,
adjusted earnings per diluted share, adjusted net interest income, adjusted net
interest margin and other similar terms are used to identify financial measures
that are not prepared in accordance with Generally Accepted Accounting
Principles ("GAAP"). The Company has been, and expects to continue to be managed
on the basis of the adjusted financial measures. The adjusted financial measures
should be read in conjunction with the Company's GAAP results. A reconciliation
of the adjusted financial measures to financial measures prepared in accordance
with GAAP is included on pages A-1 through A-5 of this release.

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

American Home will hold an investor conference call today, January 26, 2006, at
10:30 a.m., Eastern Time, to discuss earnings. Interested parties may listen to
the live conference call by visiting the investor relations section of American
Home's corporate website, www.americanhm.com. A replay of the online broadcast
will be available on the site through February 9, 2006.

DIVIDEND REINVESTMENT & DIRECT STOCK PURCHASE AND SALE PLAN
-----------------------------------------------------------

American Home Mortgage Investment Corp. has established an Investors Choice
Dividend Reinvestment & Direct Stock Purchase and Sale Plan for its
shareholders. The plan offers affordable alternatives for buying and selling
common stock of American Home Mortgage Investment Corp. Participants in the plan
may also reinvest cash dividends and make periodic supplemental cash payments to
purchase additional shares of the Company's common stock. If you have additional
questions or would like to enroll in the plan, please contact the plan
administrator, American Stock Transfer & Trust Company, at 1-888-777-0319 (toll
free) or visit their website at www.amstock.com.

ABOUT AMERICAN HOME
-------------------

American Home Mortgage Investment Corp. is a mortgage real estate investment
trust ("REIT") focused on earning net interest income from self-originated
mortgage-backed securities and mortgage loans, and through its taxable
subsidiaries, from originating and servicing mortgage loans for institutional
investors. Mortgages are originated through a network of loan production offices
as well as through mortgage brokers and correspondents and are serviced at the
Company's Irving, Texas servicing center. For additional information, please
visit the Company's website at www.americanhm.com.

FORWARD-LOOKING STATEMENTS
--------------------------

This news release contains "forward-looking statements" that are based upon
expectations, estimates, forecasts, projections and assumptions. Any statement
in this news release that is not a statement of historical fact, including, but
not limited to, earnings guidance and forecasts, projections of financial
results and loan origination volume, expected future financial position,
dividend plans or business strategy, and any other statements of plans,
expectations, objectives, estimates and beliefs, is a forward looking statement.
Words such as "look forward," "will," "anticipate," "may," "expect," "plan,"
"believe," "intend," "opportunity," "potential," and similar words, or the
negatives of those words, are intended to identify forward-looking statements.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors that are difficult to predict, and are not guarantees of
future performance. As a result, actual future events may differ materially from
any future results, performance or achievements expressed in or implied by this
news release. Specific factors that might cause such a


                                       5



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 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 Page



                                        7



            AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
                              OPERATING STATISTICS

Three Months Ended Year Ended ------------------------- ------------------------- Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2005 2004 2005 2004 ----------- ----------- ----------- ----------- (1) (1) (1) As Adjusted As Adjusted As Adjusted ----------- ----------- ----------- ----------- Mortgage Holdings Segment: -------------------------------------------------------------------------- Average loans and mortgage-backed securities in portfolio ($ billions) (2) 10.5 7.3 8.0 5.3 Interest income ($ millions) 138.0 70.6 377.8 193.7 Average portfolio yield 5.27% 3.89% 4.75% 3.65% Interest expense ($ millions) 108.2 42.6 270.0 124.6 Average cost of funds and hedges 4.36% 2.48% 3.65% 2.49% Net interest income ($ millions) 29.8 28.0 107.8 69.1 Net interest margin 1.17% 1.57% 1.36% 1.32% Interest carry on free standing derivatives ($ millions) 1.0 -5.1 -7.3 -10.4 Net interest margin including interest carry on free standing derivatives 1.21% 1.29% 1.26% 1.12% Mortgage-backed securities purchased ($ billions) 3.5 0.1 6.8 5.3 Mortgage-backed securities sold ($ billions) 1.4 0.9 4.1 3.6 Net additions to loans in portfolio ($ billions) 2.1 0.0 3.5 0.0 Loans and mortgage-backed securities held - end of period ($ billions) 14.1 7.6 14.1 7.6 Mortgage-backed securities period end duration gap (in years) -0.03 0.07 -0.03 0.07 Loan Origination Segment: -------------------------------------------------------------------------- Loan originations ($ billions) 13.6 6.7 45.3 23.0 Refinance 51% 46% 47% 48% ARM 50% 55% 50% 49% Average mortgage loans, net ($ billions) 8.6 2.7 5.2 2.2 Net interest income ($ millions) 23.5 20.2 91.9 48.8 Net interest margin 1.14% 2.97% 1.76% 2.22% Loans securitized and held ($ billions) 0.0 1.5 2.9 5.3 Loans securitized and sold ($ billions) 0.0 2.0 10.3 4.0 Loans sold to third parties ($ billions) 11.0 2.9 28.5 13.7 Gain on sales of loans, net of hedge gains ($ millions) (3) 105.4 109.4 577.4 307.9 Excess of fair value over carrying value of loans added to investment portfolio ($ millions) 30.2 0.0 58.0 0.0 ----------- ----------- ----------- ----------- Total ($ millions) 135.6 109.4 635.4 307.9 ----------- ----------- ----------- ----------- Gain on sales of loans, net of hedge gains (% of principal) (3) 0.96% 1.69% 1.42% 1.34% Excess of fair value over carrying value of loans added to investment portfolio (% of principal) 1.43% 0.00% 1.63% 0.00% Total (% of principal) 1.03% 1.69% 1.44% 1.34% Applications accepted ($ billions) 17.8 9.9 67.8 36.5 Application pipeline ($ billions) 9.2 6.2 9.2 6.2 Dec. 31, Dec. 31, Loan Servicing Segment: 2005 2004 -------------------------------------------------------------------------- ------------ ------------ Loan servicing portfolio - total with warehouse ($ billions) 30.7 16.8 Loan servicing portfolio - loans sold or securitized ($ billions) 25.0 15.5 Weighted average note rate 5.79% 5.45% Weighted average service fee 0.330% 0.345% Average age (in months) 15 16
Notes: (1) Adjusted as if the Company's fourth quarter 2004 securitization had qualified for SFAS 140 sale accounting treatment in the fourth quarter of 2004. Please refer to the detailed reconciliation of the Company's GAAP and as adjusted results on pages A-1 through A-5. (2) Excludes loans held pending securitization. (3) Prior to the fourth quarter of 2005, includes gain on current period securitizations, net of hedge gains. 8 AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES OPERATING STATISTICS
Three Months Ended --------------------------------------------------------------- Dec. 31, Sept. 30, June 30, March 31, Dec. 31, 2005 2005 2005 2005 2004 -------- --------- -------- ----------- ----------- (1) (1) As Adjusted As Adjusted -------- --------- -------- ----------- ----------- Mortgage Holdings Segment: --------------------------------------------------------- Average loans and mortgage-backed securities in portfolio ($ billions) (2) 10.5 7.1 6.8 7.4 7.3 Interest income ($ millions) 138.0 84.5 77.1 78.2 70.6 Average portfolio yield 5.27% 4.76% 4.53% 4.23% 3.89% Interest expense ($ millions) 108.2 62.9 52.2 46.7 42.6 Average cost of funds and hedges 4.36% 3.84% 3.29% 2.71% 2.48% Net interest income ($ millions) 29.8 21.6 24.9 31.5 28.0 Net interest margin 1.17% 1.24% 1.48% 1.70% 1.57% Interest carry on free standing derivatives ($ millions) 1.0 -0.6 -2.7 -5.0 -5.1 Net interest margin including interest carry on free standing derivatives 1.21% 1.21% 1.32% 1.43% 1.29% Mortgage-backed securities purchased ($ billions) 3.5 2.4 0.9 0.0 0.1 Mortgage-backed securities sold ($ billions) 1.4 0.5 1.1 1.1 0.9 Net additions to loans in portfolio ($ billions) 2.1 1.3 0.1 0.0 0.0 Loans and mortgage-backed securities held - end of period ($ billions) 14.1 10.7 7.1 7.2 7.6 Mortgage-backed securities period end duration gap (in years) -0.03 0.17 0.08 0.09 0.07 Loan Origination Segment: --------------------------------------------------------- Loan originations ($ billions) 13.6 13.7 10.8 7.2 6.7 Refinance 51% 46% 41% 48% 46% ARM 50% 48% 50% 53% 55% Average mortgage loans, net ($ billions) 8.6 5.7 3.9 2.8 2.7 Net interest income ($ millions) 23.5 26.9 22.5 18.9 20.2 Net interest margin 1.14% 2.06% 2.37% 2.70% 2.97% Loans securitized and held ($ billions) 0.0 1.2 0.4 1.3 1.5 Loans securitized and sold ($ billions) 0.0 1.3 5.4 2.5 2.0 Loans sold to third parties ($ billions) 11.0 9.9 4.5 3.1 2.9 Gain on sales of loans, net of hedge gains ($ millions) (3) 105.4 176.5 182.6 112.9 109.4 Excess of fair value over carrying value of loans added to investment portfolio ($ millions) 30.2 26.5 1.3 0.0 0.0 -------- --------- -------- ----------- ----------- Total ($ millions) 135.6 203.0 183.9 112.9 109.4 -------- --------- -------- ----------- ----------- Gain on sales of loans, net of hedge gains (% of principal) (3) 0.96% 1.42% 1.78% 1.64% 1.69% Excess of fair value over carrying value of loans added to investment portfolio (% of principal) 1.43% 2.02% 0.95% 0.00% 0.00% Total (% of principal) 1.03% 1.48% 1.77% 1.64% 1.69% Applications accepted ($ billions) 17.8 19.7 17.3 13.0 9.9 Application pipeline ($ billions) 9.2 11.6 10.7 8.4 6.2 Dec. 31, Sept. 30, June 30, March 31, Dec. 31, 2005 2005 2005 2005 2004 -------- --------- -------- ----------- ----------- Loan Servicing Segment: --------------------------------------------------------- Loan servicing portfolio - total with warehouse ($ billions) 30.7 27.5 24.7 19.9 16.8 Loan servicing portfolio - loans sold or securitized ($ billions) 25.0 24.2 22.6 18.2 15.5 Weighted average note rate 5.79% 5.73% 5.62% 5.21% 5.45% Weighted average service fee 0.330% 0.331% 0.336% 0.344% 0.345% Average age (in months) 15 13 13 14 16
Notes: (1) - Adjusted as if the Company's fourth quarter 2004 securitization had qualified for SFAS 140 sale accounting treatment in the fourth quarter of 2004. Please refer to the detailed reconciliation of the Company's GAAP and as adjusted results on pages A-1 through A-5. (2) Excludes loans held pending securitization. (3) Prior to the fourth quarter of 2005, includes gain on current period securitizations, net of hedge gains. 9 AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share amounts)
Three Months Ended Year Ended ---------------------- ----------------------- Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2005 2004 2005 2004 --------- --------- --------- --------- (1) (1) (1) As As As Adjusted Adjusted Adjusted --------- --------- --------- --------- Net interest income: Interest income $ 265,435 $ 113,785 $ 700,760 $ 312,132 Interest expense (215,057) (67,002) (509,887) (199,598) --------- --------- --------- --------- Net interest income 50,378 46,783 190,873 112,534 --------- --------- --------- --------- Provision for loan losses (2,142) -- (2,142) -- --------- --------- --------- --------- Net interest income after provision for loan losses 48,236 46,783 188,731 112,534 --------- --------- --------- --------- Non-interest income: Gain on sales of mortgage loans 98,777 36,004 335,065 134,099 Gain on sales of current period securitized mortgage loans -- 40,674 168,998 80,794 Gain on sales of mortgage-backed securities and derivatives 38,068 2,873 49,536 63 Unrealized (loss) gain on mortgage-backed securities and derivatives (44,778) 27,224 (45,799) 109,265 Loan servicing fees 26,715 11,701 78,947 40,571 Amortization (15,379) (9,750) (53,937) (32,615) Impairment reserve provision (3,366) (5,013) (6,720) (15,152) --------- --------- --------- --------- Net loan servicing fees (loss) 7,970 (3,062) 18,290 (7,196) --------- --------- --------- --------- Other non-interest income 2,181 1,480 7,775 7,033 --------- --------- --------- --------- Non-interest income 102,218 105,193 533,865 324,058 --------- --------- --------- --------- Non-interest expenses: Salaries, commissions and benefits, net 95,237 60,588 359,949 189,393 Occupancy and equipment 16,459 11,556 58,855 37,642 Data processing and communications 6,402 5,869 24,788 16,165 Office supplies and expenses 4,612 4,385 19,722 13,730 Marketing and promotion 5,951 3,391 20,311 10,409 Travel and entertainment 6,982 5,106 21,007 14,190 Professional fees 3,586 5,378 14,232 12,159 Other 10,946 6,333 32,018 22,216 --------- --------- --------- --------- Non-interest expenses 150,175 102,606 550,882 315,904 --------- --------- --------- --------- Net income before income tax (benefit) expense 279 49,370 171,714 120,688 Income tax (benefit) expense (16,419) 755 (17,721) (25,575) --------- --------- --------- --------- Net income $ 16,698 $ 48,615 $ 189,435 $ 146,263 ========= ========= ========= ========= Dividends on preferred stock 3,304 2,340 13,217 3,988 --------- --------- --------- --------- Net income available to common shareholders $ 13,394 $ 46,275 $ 176,218 $ 142,275 ========= ========= ========= ========= Per share data: Basic $ 0.27 $ 1.15 $ 4.01 $ 3.78 Diluted $ 0.27 $ 1.14 $ 3.97 $ 3.74 Weighted average number of shares - basic 49,605 40,216 43,897 37,612 Weighted average number of shares - diluted 49,998 40,737 44,375 38,087
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 ------------------------------------------------------------- Dec. 31, Sept. 30, June 30, March 31, Dec. 31, 2005 2005 2005 2005 2004 --------- --------- --------- --------- --------- (1) (1) As As Adjusted Adjusted --------- --------- --------- --------- --------- Net interest income: Interest income $ 265,435 $ 180,038 $ 135,318 $ 119,969 $ 113,785 Interest expense (215,057) (133,169) (90,336) (71,325) (67,002) --------- --------- --------- --------- --------- Net interest income 50,378 46,869 44,982 48,644 46,783 --------- --------- --------- --------- --------- Provision for loan losses (2,142) -- -- -- -- --------- --------- --------- --------- --------- Net interest income after provision for loan losses 48,236 46,869 44,982 48,644 46,783 --------- --------- --------- --------- --------- Non-interest income: Gain on sales of mortgage loans 98,777 123,658 77,377 35,253 36,004 Gain on sales of current period securitized mortgage loans -- 19,960 104,377 44,661 40,674 Gain on sales of mortgage-backed securities and derivatives 38,068 6,116 620 4,732 2,873 Unrealized (loss) gain on mortgage-backed securities and derivatives (44,778) (10,965) (10,292) 20,236 27,224 Loan servicing fees 26,715 21,099 16,970 14,163 11,701 Amortization (15,379) (15,055) (12,832) (10,671) (9,750) Impairment reserve (provision) recovery (3,366) 11,577 (20,398) 5,467 (5,013) --------- --------- --------- --------- --------- Net loan servicing fees (loss) 7,970 17,621 (16,260) 8,959 (3,062) --------- --------- --------- --------- --------- Other non-interest income 2,181 1,585 2,543 1,466 1,480 --------- --------- --------- --------- --------- Non-interest income 102,218 157,975 158,365 115,307 105,193 --------- --------- --------- --------- --------- Non-interest expenses: Salaries, commissions and benefits, net 95,237 101,378 94,859 68,475 60,588 Occupancy and equipment 16,459 15,328 14,397 12,671 11,556 Data processing and communications 6,402 6,479 5,957 5,950 5,869 Office supplies and expenses 4,612 5,024 5,657 4,429 4,385 Marketing and promotion 5,951 5,104 5,126 4,130 3,391 Travel and entertainment 6,982 4,670 5,427 3,928 5,106 Professional fees 3,586 3,744 3,432 3,470 5,378 Other 10,946 7,360 6,843 6,869 6,333 --------- --------- --------- --------- --------- Non-interest expenses 150,175 149,087 141,698 109,922 102,606 --------- --------- --------- --------- --------- Net income before income tax (benefit) expense 279 55,757 61,649 54,029 49,370 Income tax (benefit) expense (16,419) 2,549 (3,851) -- 755 --------- --------- --------- --------- --------- Net income $ 16,698 $ 53,208 $ 65,500 $ 54,029 $ 48,615 ========= ========= ========= ========= ========= Dividends on preferred stock 3,304 3,304 3,304 3,305 2,340 --------- --------- --------- --------- --------- Net income available to common shareholders $ 13,394 $ 49,904 $ 62,196 $ 50,724 $ 46,275 ========= ========= ========= ========= ========= Per share data: Basic $ 0.27 $ 1.10 $ 1.54 $ 1.26 $ 1.15 Diluted $ 0.27 $ 1.09 $ 1.52 $ 1.24 $ 1.14 Weighted average number of shares - basic 49,605 45,174 40,384 40,308 40,216 Weighted average number of shares - diluted 49,998 45,669 40,886 40,811 40,737
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)
December 31, September 30, June 30, March 31, December 31, 2005 2005 2005 2005 2004 ------------ ------------- ------------ ------------ ------------ (1) Assets: As Adjusted ------------ ------------- ------------ ------------ ------------ Cash and cash equivalents $ 575,650 $ 624,424 $ 197,375 $ 162,762 $ 192,821 Accounts receivable and servicing advances 329,132 335,736 116,835 103,295 105,338 Mortgage-backed securities 10,602,104 9,208,172 6,917,986 7,181,170 7,601,793 Mortgage loans held for sale, net 2,208,749 1,901,293 1,965,074 1,627,891 1,316,609 Mortgage loans held for investment, net 3,479,721 1,445,429 134,597 -- -- Derivative assets 44,594 67,185 35,756 73,383 23,344 Mortgage servicing rights, net 319,671 300,659 261,839 228,412 189,229 Premises and equipment, net 68,782 64,174 61,441 55,986 51,576 Goodwill 99,527 99,268 98,826 92,745 90,877 Other assets 26,815 31,697 21,185 49,332 46,556 ------------ ------------- ------------ ------------ ------------ Total assets $ 17,754,745 $ 14,078,037 $ 9,810,914 $ 9,574,976 $ 9,618,143 ============ ============= ============ ============ ============ Liabilities and Stockholders' Equity: Liabilities: Warehouse lines of credit $ 3,474,191 $ 2,165,154 $ 665,697 $ 658,686 $ 735,783 Drafts payable 20,754 18,763 26,538 28,391 26,200 Commercial paper 1,079,179 1,334,296 1,291,684 858,382 529,790 Reverse repurchase agreements 9,806,144 8,041,579 6,337,630 6,720,167 7,071,168 Collateralized debt obligations 1,057,906 -- -- -- -- Payable for securities purchased 261,539 554,717 -- -- -- Derivative liabilities 16,773 -- 6,195 1,945 1,860 Trust preferred securities 203,688 96,964 48,414 -- -- Accrued expenses and other liabilities 277,476 239,382 177,761 176,859 165,626 Notes payable 319,309 305,766 256,060 159,339 135,761 Income taxes payable 30,770 56,310 47,753 54,250 54,342 ------------ ------------- ------------ ------------ ------------ Total liabilities 16,547,729 12,812,931 8,857,732 8,658,019 8,720,530 ------------ ------------- ------------ ------------ ------------ Stockholders' Equity: Preferred stock 134,040 134,040 134,040 134,040 134,040 Common stock 496 496 405 403 403 Additional paid-in capital 947,512 946,105 638,595 632,828 631,530 Retained earnings 203,778 235,556 224,442 193,064 170,979 Accumulated other comprehensive loss (78,810) (51,091) (44,300) (43,378) (39,339) ------------ ------------- ------------ ------------ ------------ Total stockholders' equity 1,207,016 1,265,106 953,182 916,957 897,613 ------------ ------------- ------------ ------------ ------------ Total liabilities and stockholders' equity $ 17,754,745 $ 14,078,037 $ 9,810,914 $ 9,574,976 $ 9,618,143 ============ ============= ============ ============ ============ Number of shares outstanding - preferred 5,600,000 5,600,000 5,600,000 5,600,000 5,600,000 Number of shares outstanding - common 49,639,646 49,590,821 40,538,479 40,335,255 40,288,077
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)
Year Three Months Ended Ended --------------------------------------------------------------------------- Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31, Dec. 31, 2005 2005 2005 2005 2004 2005 ----------- ----------- --------- --------- --------- ----------- Preferred stock Balance at beginning of period $ 134,040 $ 134,040 $ 134,040 $ 134,040 $ 50,857 $ 134,040 Issuance of preferred stock - offering -- -- -- -- 83,183 -- ----------- ----------- --------- --------- --------- ----------- Balance at end of period $ 134,040 $ 134,040 $ 134,040 $ 134,040 $ 134,040 $ 134,040 ----------- ----------- --------- --------- --------- ----------- Common stock Balance at beginning of period $ 496 $ 405 $ 403 $ 403 $ 402 $ 403 Issuance of common stock - earnouts -- -- 2 -- -- 2 Issuance of common stock - Omnibus Stock Plan -- 1 -- -- 1 1 Issuance of common stock - offering -- 90 -- -- -- 90 ----------- ----------- --------- --------- --------- ----------- Balance at end of period $ 496 $ 496 $ 405 $ 403 $ 403 $ 496 ----------- ----------- --------- --------- --------- ----------- Additional paid-in capital Balance at beginning of period $ 946,105 $ 638,595 $ 632,828 $ 631,530 $ 629,807 $ 631,530 Issuance of common stock - earnouts -- 139 5,005 846 734 5,990 Issuance of common stock - Omnibus Stock Plan 857 488 588 311 823 2,244 Issuance of common stock - offering -- 304,033 -- -- -- 304,033 Tax benefit for stock options exercised 434 2,638 -- -- -- 3,072 Restricted shares amortization 116 212 174 141 166 643 ----------- ----------- --------- --------- --------- ----------- Balance at end of period $ 947,512 $ 946,105 $ 638,595 $ 632,828 $ 631,530 $ 947,512 ----------- ----------- --------- --------- --------- ----------- Retained earnings Balance at beginning of period $ 235,556 $ 224,442 $ 193,064 $ 99,628 $ 151,297 $ 99,628 Net income 16,698 53,208 65,500 125,380 (22,736) 260,786 Dividends declared (48,476) (42,094) (34,122) (31,944) (28,933) (156,636) ----------- ----------- --------- --------- --------- ----------- Balance at end of period $ 203,778 $ 235,556 $ 224,442 $ 193,064 $ 99,628 $ 203,778 ----------- ----------- --------- --------- --------- ----------- Other comprehensive loss Balance at beginning of period $ (51,091) $ (44,300) $ (43,378) $ (39,339) $ (41,371) $ (39,339) Unrealized (loss) gain on mortgage- backed securities (7,730) (15,918) 6,901 (24,435) (12,491) (41,182) (Loss) gain on cash flow hedges, net of amortization (19,989) 9,127 (7,823) 20,396 14,523 1,711 ----------- ----------- --------- --------- --------- ----------- Balance at end of period $ (78,810) $ (51,091) $ (44,300) $ (43,378) $ (39,339) $ (78,810) ----------- ----------- --------- --------- --------- ----------- Total stockholders' equity $ 1,207,016 $ 1,265,106 $ 953,182 $ 916,957 $ 826,262 $ 1,207,016 =========== =========== ========= ========= ========= =========== Adjustment (1) -- -- -- -- 71,351 -- Adjusted total stockholders' equity (1) ----------- ----------- --------- --------- --------- ----------- $ 1,207,016 $ 1,265,106 $ 953,182 $ 916,957 $ 897,613 $ 1,207,016 =========== =========== ========= ========= ========= ===========
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 -------------------------------------------------------------------------- Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31, 2005 2005 2005 2005 2004 ------------ ------------ ------------ ----------- ----------- Cash flows from operating activities: Net income $ 16,698 $ 53,208 $ 65,500 $ 125,380 $ (22,736) Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 3,454 3,098 2,739 2,439 2,288 Provision for loan losses 2,142 -- -- -- -- Amortization and impairment of mortgage servicing rights 18,745 3,478 33,230 5,082 12,034 Accretion and amortization of mortgage-backed securities, net 1,509 (2,571) (1,169) 4,593 7,700 Amortization of deferred cash flow hedge (loss) gain (346) 1,689 1,738 17,052 515 Loss on sales of mortgage-backed securities and derivatives 876 2,819 447 3,336 390 Unrealized loss (gain) on mortgage-backed securities 40,968 74,595 (4,533) 51,003 15,850 Unrealized loss (gain) on free standing derivatives 6,149 (31,137) 25,903 (40,312) (14,482) Increase (decrease) in forward delivery contracts and mortgage put options 24,124 (13,547) 13,930 (9,595) 766 Capitalized mortgage servicing rights on securitized loans -- (27,536) (62,629) (79,711) (123) Capitalized mortgage servicing rights on sold loans (37,757) (14,762) (4,027) (2,347) (2,912) (Increase) decrease in interest rate lock commitments (10,508) 14,501 (6,264) 210 (395) (Increase) decrease in mortgage loan basis adjustments (32,201) (12,649) (10,584) 30,954 (27,113) Other (645) 2,196 (2,155) 1,177 (3,720) (Increase) decrease in operating assets: Accounts receivable 18,156 (218,519) (14,401) 12,952 (10,569) Servicing advances (11,552) (382) 861 731 (5,304) Income taxes receivable -- -- 25,797 -- -- Other assets 4,882 (10,512) 2,350 7,714 (40,401) Increase (decrease) in operating liabilities: Accrued expenses and other liabilities 31,696 53,657 (1,269) 21,432 (4,695) Income taxes payable (25,106) 8,557 (6,497) (92) 24,209 Origination of mortgage loans held for sale (11,482,292) (12,394,139) (10,647,029) (7,255,400) (6,744,078) Principal received from sales of mortgage loans held for sale 11,179,015 9,448,293 4,457,519 3,080,795 2,974,379 Proceeds from securitizations of mortgage loans held for sale -- 2,993,315 5,855,914 7,336,612 75,209 Additions to mortgage-backed securities and derivatives (152,666) (1,191,209) (466,522) (2,840,259) (15,112) Principal proceeds from sales of self-originated mortgage-backed securities 1,333,188 -- 1,104,227 -- 852,283 Cash received from residual assets in securitizations 26,958 35,431 23,539 16,556 14,709 Principal repayments of mortgage-backed securities 212,927 274,035 172,172 108,403 132,510 ------------ ------------ ------------ ----------- ----------- Net cash provided by (used in) operating activities 1,168,414 (948,091) 558,787 598,705 (2,778,798) ------------ ------------ ------------ ----------- ----------- Cash flows from investing activities: Purchases of premises and equipment (8,062) (5,831) (8,194) (6,849) (5,909) Origination of mortgage loans held for investment (2,084,025) (1,301,364) (133,757) -- -- Proceeds from repayments of mortgage loans held for investment 75,613 5,108 -- -- -- Purchases of mortgage-backed securities (3,298,636) (2,417,565) (933,929) -- (107,009) Principal proceeds from sales of purchased mortgage- backed securities 24,592 518,517 20,962 1,133,989 50,710 Principal repayments of purchased mortgage-backed securities 409,080 414,667 361,049 368,671 351,687 ------------ ------------ ------------ ----------- ----------- Net cash (used in) provided by investing activities (4,881,438) (2,786,468) (693,869) 1,495,811 289,479 ------------ ------------ ------------ ----------- ----------- Cash flows from financing activities: Increase (decrease) in warehouse lines of credit, net 1,309,037 1,499,457 7,011 (77,097) 188,199 Increase (decrease) in reverse repurchase agreements, net 1,764,565 1,703,949 (382,537) (351,001) 172,144 Increase (decrease) in collateralized debt obligations 1,057,906 -- -- (2,022,218) 2,022,218 (Decrease) increase in payable for securities purchased (293,178) 554,717 -- -- -- (Decrease) increase in commercial paper, net (255,117) 42,612 433,302 328,592 67,078 Increase (decrease) in drafts payable, net 1,991 (7,775) (1,853) 2,191 (19,326) Increase in trust preferred securities 106,724 48,550 48,414 -- -- Increase in notes payable, net 13,543 49,706 96,721 23,578 7,313 Proceeds from issuance of preferred stock -- -- -- -- 83,425 Proceeds from issuance of common stock 857 304,522 587 311 776 Dividends paid (42,078) (34,130) (31,950) (28,931) (26,167) ------------ ------------ ------------ ----------- ----------- Net cash provided by (used in) financing activities 3,664,250 4,161,608 169,695 (2,124,575) 2,495,660 ------------ ------------ ------------ ----------- ----------- Net (decrease) increase in cash and cash equivalents (48,774) 427,049 34,613 (30,059) 6,341 Cash and cash equivalents, beginning of period 624,424 197,375 162,762 192,821 186,480 ------------ ------------ ------------ ----------- ----------- Cash and cash equivalents, end of period $ 575,650 $ 624,424 $ 197,375 $ 162,762 $ 192,821 ============ ============ ============ =========== ===========
14 AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Year Ended ------------ December 31, 2005 ------------ Cash flows from operating activities: Net income $ 260,786 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 11,730 Provision for loan losses 2,142 Amortization and impairment of mortgage servicing rights 60,535 Accretion and amortization of mortgage-backed securities, net 2,362 Amortization of deferred cash flow hedge gain 20,133 Loss on sales of mortgage-backed securities and derivatives 7,478 Unrealized loss on mortgage-backed securities 162,033 Unrealized gain on free standing derivatives (39,397) Increase in forward delivery contracts 14,912 Capitalized mortgage servicing rights on securitized loans (169,876) Capitalized mortgage servicing rights on sold loans (58,893) Increase in interest rate lock commitments (2,061) Increase in mortgage loans basis adjustments (24,480) Other 573 (Increase) decrease in operating assets: Accounts receivable (201,812) Servicing advances (10,342) Income taxes receivable 25,797 Other assets 4,434 Increase (decrease) in operating liabilities: Accrued expenses and other liabilities 105,516 Income taxes payable (23,138) Origination of mortgage loans held for sale (41,778,860) Principal received from sales of mortgage loans held for sale 28,165,622 Proceeds from securitizations of mortgage loans held for sale 16,185,841 Additions to mortgage-backed securities and derivatives (4,650,656) Principal proceeds from sales of self-originated mortgage-backed securities 2,437,415 Cash received from residual assets in securitizations 102,484 Principal repayments of mortgage-backed securities 767,537 ------------ Net cash provided by operating activities 1,377,815 ------------ Cash flows from investing activities: Purchases of premises and equipment (28,936) Origination of mortgage loans held for investment (3,519,146) Proceeds from repayments of mortgage loans held for investment 80,721 Purchases of mortgage-backed securities (6,650,130) Principal proceeds from sales of purchased mortgage-backed securities 1,698,060 Principal repayments of purchased mortgage-backed securities 1,553,467 ------------ Net cash used in investing activities (6,865,964) ------------ Cash flows from financing activities: Increase in warehouse lines of credit, net 2,738,408 Increase in reverse repurchase agreements, net 2,734,976 Decrease in collateralized debt obligations (964,312) Increase in payable for securities purchased 261,539 Increase in commercial paper, net 549,389 Decrease in drafts payable, net (5,446) Increase in trust preferred securities 203,688 Increase in notes payable, net 183,548 Proceeds from issuance of common stock 306,277 Dividends paid (137,089) ------------ Net cash provided by financing activities 5,870,978 ------------ Net increase in cash and cash equivalents 382,829 Cash and cash equivalents, beginning of period 192,821 ------------ Cash and cash equivalents, end of period $ 575,650 ============
15 AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES FAIR VALUE OF FINANCIAL INSTRUMENTS (Unaudited) (In thousands)
December 31, 2005 --------------------------------------- Fair Value in Excess of Carrying Fair Carrying Value Value Value ----------- ----------- ----------- Assets: Cash and cash equivalents $ 575,650 $ 575,650 $ -- Accounts receivable and servicing advances 329,132 329,132 -- Mortgage-backed securities 10,602,104 10,602,104 -- Mortgage loans held for sale, net 2,208,749 2,224,234 15,485 Mortgage loans held for investment, net 3,479,721 3,529,844 50,123 Mortgage servicing rights, net 319,671 320,827 1,156 Derivative assets* 44,594 96,176 51,582 ----------- $ 118,346 ----------- Carrying Value in Excess of Fair Value ----------- Liabilities: Warehouse lines of credit $ 3,474,191 $ 3,474,191 $ -- Drafts payable 20,754 20,754 -- Commercial paper 1,079,179 1,079,179 -- Reverse repurchase agreements 9,806,144 9,805,640 504 Collateralized debt obligations 1,057,906 1,057,906 -- Payable for securities purchased 261,539 261,539 -- Derivative liabilities 16,773 16,773 -- Trust preferred securities 203,688 203,688 -- Notes payable 319,309 319,309 -- ----------- $ 504 ----------- Fair Value in Excess of Carrying Value ----------- ----------- $ 118,850 ===========
* 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 Holdings Segment: ---------------------------------------------------- Average loans and mortgage-backed securities in portfolio ($ billions) (2) 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% Interest carry on free standing derivatives ($ millions) -5.0 -5.0 -5.1 -5.1 Net interest margin including interest carry on free standing derivatives 0.98% 1.43% 1.21% 1.29% Mortgage-backed securities purchased ($ billions) 0.0 0.0 0.1 0.1 Mortgage-backed securities sold ($ billions) 1.1 1.1 0.9 0.9 Net additions to loans in portfolio ($ billions) 0.0 0.0 0.0 0.0 Loans and mortgage-backed securities held - end of period ($ billions) 7.2 7.2 6.0 1.6 7.6 Mortgage-backed securities period end duration gap (in years) 0.09 0.09 0.07 0.07 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 0.0 1.5 1.5 Loans securitized and sold ($ billions) 4.5 -2.0 2.5 0.0 2.0 2.0 Loans sold to third parties ($ billions) 3.1 3.1 2.9 2.9 Gain on sales of loans, net of hedge gains ($ millions) (3) 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) 0.0 0.0 0.0 0.0 ------- ----------- ----------- ------ ----------- ----------- Total ($ millions) 156.4 -43.5 112.9 36.0 73.4 109.4 ------- ----------- ----------- ------ ----------- ----------- Gain on sales of loans, net of hedge gains (% of principal) (3) 2.26% 1.64% 0.56% 1.69% Excess of fair value over carrying value of loans added to investment portfolio (% of principal) 0.00% 0.00% 0.00% 0.00% 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
Notes: (1) - Adjustments reflect the net effect on the period presented to reconcile the Company's operating statistics, results of operations and financial condition prepared in accordance with GAAP to the amounts adjusted as if the Company's fourth quarter 2004 securitization had qualified for SFAS 140 sale accounting treatment in the fourth quarter of 2004. (2) Excludes loans held pending securitization. (3) Prior to the fourth quarter of 2005, includes gain on current period securitizations, net of hedge gains. A-1 AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES OPERATING STATISTICS
Year Ended Year Ended -------------------------------- -------------------------------- December 31, 2005 December 31, 2004 -------------------------------- -------------------------------- (1) As (1) As GAAP Adjustments Adjusted GAAP Adjustments Adjusted ------ ----------- -------- ------ ----------- -------- Mortgage Holdings Segment: ---------------------------------------------------- Average loans and mortgage-backed securities in portfolio ($ billions) (2) 7.6 0.4 8.0 5.3 5.3 Interest income ($ millions) 357.9 19.9 377.8 191.5 2.2 193.7 Average portfolio yield 4.73% 4.75% 3.64% 3.65% Interest expense ($ millions) 262.3 7.7 270.0 124.4 0.2 124.6 Average cost of funds and hedges 3.71% 3.65% 2.56% 2.49% Net interest income ($ millions) 95.6 12.2 107.8 67.1 2.0 69.1 Net interest margin 1.26% 1.36% 1.28% 1.32% Interest carry on free standing derivatives ($ millions) -7.3 -7.3 -10.4 -10.4 Net interest margin including interest carry on free standing derivatives 1.17% 1.26% 1.08% 1.12% Mortgage-backed securities purchased ($ billions) 6.8 6.8 5.3 5.3 Mortgage-backed securities sold ($ billions) 4.1 4.1 3.6 3.6 Net additions to loans in portfolio ($ billions) 3.5 3.5 0.0 0.0 Loans and mortgage-backed securities held - end of period ($ billions) 14.1 14.1 6.0 1.6 7.6 Mortgage-backed securities period end duration gap (in years) -0.03 -0.03 0.07 0.07 Loan Origination Segment: Loan originations ($ billions) 45.3 45.3 23.0 23.0 Refinance 47% 47% 48% 48% ARM 50% 50% 49% 49% Average mortgage loans, net ($ billions) 6.1 -0.9 5.2 2.3 -0.1 2.2 Net interest income ($ millions) 114.3 -22.4 91.9 51.2 -2.4 48.8 Net interest margin 1.88% 1.76% 2.24% 2.22% Loans securitized and held ($ billions) 4.4 -1.5 2.9 3.8 1.5 5.3 Loans securitized and sold ($ billions) 12.3 -2.0 10.3 2.0 2.0 4.0 Loans sold to third parties ($ billions) 28.5 28.5 13.7 13.7 Gain on sales of loans, net of hedge gains ($ millions) (3) 620.9 -43.5 577.4 234.5 73.4 307.9 Excess of fair value over carrying value of loans added to investment portfolio ($ millions) 58.0 58.0 0.0 0.0 Total ($ millions) ----- ----- ----- ----- 678.9 635.4 234.5 307.9 ----- ----- ----- ----- Gain on sales of loans, net of hedge gains (% of principal) (3) 1.53% 1.42% 1.02% 1.34% Excess of fair value over carrying value of loans added to investment portfolio (% of principal) 1.63% 1.63% 0.00% 0.00% Total (% of principal) 1.54% 1.44% 1.02% 1.34% Applications accepted ($ billions) 67.8 67.8 36.5 36.5 Application pipeline ($ billions) 9.2 9.2 6.2 6.2 December 31, 2005 December 31, 2004 -------------------------------- -------------------------------- Loan Servicing Segment: Loan servicing portfolio - total with warehouse ($ billions) 30.7 30.7 16.8 16.8 Loan servicing portfolio - loans sold or securitized ($ billions) 25.0 25.0 12.0 3.5 15.5 Weighted average note rate 5.79% 5.79% 5.48% 5.45% Weighted average service fee 0.330% 0.330% 0.348% 0.345% Average age (in months) 15 15 20 16
Notes: (1) - Adjustments reflect the net effect on the period presented to reconcile the Company's operating statistics, results of operations and financial condition prepared in accordance with GAAP to the amounts adjusted as if the Company's fourth quarter 2004 securitization had qualified for SFAS 140 sale accounting treatment in the fourth quarter of 2004. (2) Excludes loans held pending securitization. (3) Prior to the fourth quarter of 2005, includes gain on current period securitizations, net of hedge gains. A-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) As (1) As GAAP Adjustments Adjusted GAAP Adjustments Adjusted --------- ----------- --------- --------- ----------- --------- Net interest income: Interest income $ 146,894 $ (26,925) $ 119,969 $ 115,959 $ (2,174) $ 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 47,182 (399) 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 (6,581) 33,805 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 33,443 71,750 105,193 --------- ----------- --------- --------- ----------- --------- 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)
Year Ended Year Ended ------------------------------------ ------------------------------------ December 31, 2005 December 31, 2004 ------------------------------------ ------------------------------------ (1) As (1) As GAAP Adjustments Adjusted GAAP Adjustments Adjusted --------- ----------- --------- --------- ----------- --------- Net interest income: Interest income $ 727,685 $ (26,925) $ 700,760 $ 314,306 $ (2,174) $ 312,132 Interest expense (526,653) 16,766 (509,887) (201,373) 1,775 (199,598) --------- ----------- --------- --------- ----------- --------- Net interest income 201,032 (10,159) 190,873 112,933 (399) 112,534 --------- ----------- --------- --------- ----------- --------- Provision for loan losses (2,142) -- (2,142) -- -- -- --------- ----------- --------- --------- ----------- --------- Net interest income after provision for loan losses 198,890 (10,159) 188,731 112,933 (399) 112,534 --------- ----------- --------- --------- ----------- --------- Non-interest income: Gain on sales of mortgage loans 335,065 -- 335,065 134,099 -- 134,099 Gain on sales of current period securitized mortgage loans 194,256 (25,258) 168,998 40,120 40,674 80,794 Gain on sales of mortgage-backed securities and derivatives 50,936 (1,400) 49,536 63 -- 63 Unrealized (loss) gain on mortgage- backed securities and derivatives (8,536) (37,263) (45,799) 75,460 33,805 109,265 Loan servicing fees 76,096 2,851 78,947 40,571 -- 40,571 Amortization (51,767) (2,170) (53,937) (32,615) -- (32,615) Impairment reserve provision (8,768) 2,048 (6,720) (12,423) (2,729) (15,152) --------- ----------- --------- --------- ----------- --------- Net loan servicing fees (loss) 15,561 2,729 18,290 (4,467) (2,729) (7,196) --------- ----------- --------- --------- ----------- --------- Other non-interest income 7,775 -- 7,775 7,033 -- 7,033 --------- ----------- --------- --------- ----------- --------- Non-interest income 595,057 (61,192) 533,865 252,308 71,750 324,058 --------- ----------- --------- --------- ----------- --------- Non-interest expenses: Salaries, commissions and benefits, net 359,949 -- 359,949 189,393 -- 189,393 Occupancy and equipment 58,855 -- 58,855 37,642 -- 37,642 Data processing and communications 24,788 -- 24,788 16,165 -- 16,165 Office supplies and expenses 19,722 -- 19,722 13,730 -- 13,730 Marketing and promotion 20,311 -- 20,311 10,409 -- 10,409 Travel and entertainment 21,007 -- 21,007 14,190 -- 14,190 Professional fees 14,232 -- 14,232 12,159 -- 12,159 Other 32,018 -- 32,018 22,216 -- 22,216 --------- ----------- --------- --------- ----------- --------- Non-interest expenses 550,882 -- 550,882 315,904 -- 315,904 --------- ----------- --------- --------- ----------- --------- Net income before income tax benefit 243,065 (71,351) 171,714 49,337 71,351 120,688 Income tax benefit (17,721) -- (17,721) (25,575) -- (25,575) --------- ----------- --------- --------- ----------- --------- Net income $ 260,786 $ (71,351) $ 189,435 $ 74,912 $ 71,351 $ 146,263 ========= =========== ========= ========= =========== ========= Dividends on preferred stock 13,217 -- 13,217 3,988 -- 3,988 --------- ----------- --------- --------- ----------- --------- Net income available to common shareholders $ 247,569 $ (71,351) $ 176,218 $ 70,924 $ 71,351 $ 142,275 ========= =========== ========= ========= =========== ========= Per share data: Basic $ 5.64 $ (1.63) $ 4.01 $ 1.89 $ 1.90 $ 3.78 Diluted $ 5.58 $ (1.61) $ 3.97 $ 1.86 $ 1.87 $ 3.74 Weighted average number of shares - basic 43,897 43,897 43,897 37,612 37,612 37,612 Weighted average number of shares - diluted 44,375 44,375 44,375 38,087 38,087 38,087
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 Thursday, January 26, 2006 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-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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