Here’s the key to Impac’s strong second quarter

Wholesale and correspondent originations increase 38%

Impac Mortgage Holdings (IMH) reported second-quarter net earnings of $82 thousand or $0.01 per diluted common share, compared to a net loss of $3 million in the first quarter of 2014 or $0.33 per diluted common share.  This is also down compared to net earnings of $1.3 million in the second quarter of 2013 or $0.14 per diluted share common share. 

For the first six months ended June 30, Impac posted a net loss of $2.9 million or $0.31 per diluted common share, as compared to net earnings of $616 thousand or $0.08 per diluted common share for the same period a year ago.

Meanwhile, the company experienced a rise in lending volume, predominately due to the ongoing low interest rate environment, resulting in a 38% increase in wholesale and correspondent originations, as compared to the first quarter of 2014.

Mortgage lending volumes grew in the second quarter of 2014 to $465.2 million from $353.1 million in the first quarter of 2014, but decreased compared to $780.1 million in the second quarter of 2013.

Similarly, mortgage lending revenues and margins increased in the second quarter of 2014 to $6.5 million, up from $4.6 million in the first quarter. But this is down compared to $20.5 million a year ago.

Mortgage-servicing rights fell by $19.8 million to $16.2 million, compared to $36 million at Dec. 31, 2013. This was driven by bulk sales of servicing rights totaling $1.6 billion in UPB, and the sale of AmeriHome, which had servicing rights totaling $702.1 million in UPB.

However, partially offsetting the decrease was servicing retained loan sales of $807.0 million.

“In our long-term mortgage portfolio, based on continued improved performance of the portfolio which was better than expected, we updated certain loss and discount rate assumptions in the portfolio at June 30, 2014 resulting in a $4.3 million increase in the estimated fair value of the net trust assets in the second quarter of 2014,” the company said.

Looking ahead, in the second half of 2014, the company anticipates a continued increase in overall originations as well as operational efficiencies.

The company plans to increase originations through its business-to-business channels, by expanding our sales forces, by hiring experienced lending sales personal for our wholesale and correspondent channels and increasing efficiencies and service to our customers.

Impac recently announced it is moving into non-Qualified Mortgage lending, offering 4 new products:  Alt-QM Jumbo, Alt-QM Agency, Alt-QM Income and Alt-QM Investor.

“We believe there is an underserved market for these programs where certain borrowers are finding financing for purchase or refinance is either non-existent or available with stringent and costly parameters,” Bill Ashmore, president of Impac Mortgage, said.

“We are not new to the non-agency space,” Ashmore continued. “We think this market is very similar to what we saw in 1995 when we first created Alt-A loans, and subsequently originated to $90 billion in that product from 1995-2007.”

“We believe that with our efforts to substantially increase our conforming mortgage loan volume, launch our new AltQM loan programs in the third quarter, while also keeping our expenses somewhat flat to our second quarter run rate, combined with our efforts to increase revenue per loan should result in improved performance,” Joseph Tomkinson, chairman and CEO of Impac, said.  

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