Impac Mortgage Holdings (IMH) significantly rebounded from a year ago, reporting second-quarter net earnings of $16.8 million, or $1.33 per diluted common share, compared to net earnings of $82 thousand or $0.01 per diluted common share for the second quarter of 2014.
Compared to the previous quarter, net earnings were down by of $34.0 million or $2.94 for the first quarter of 2015.
The lender also stated in its earnings that it recorded a change to the estimated contingent consideration liability to the seller of CashCall Mortgage, reducing the liability by $11.3 million.
The change in the contingent consideration is primarily due to lower estimated payments resulting from changes in assumptions based on current market conditions.
The company explained:
The contingent consideration liability primarily is related to the three year earn-out provision. If any of the applied assumptions should change, GAAP requires us to update the contingent consideration liability to its estimated fair value at each reporting period and record any fair value changes as a component of operating income. During the second quarter of 2015, with the expectation of ongoing volatility in gain on sale margins in the future, based on current market conditions, we updated certain assumptions resulting in lower future expected gain on sale revenue. This resulted in reducing the contingent consideration liability by $11.3 million over the remaining earn-out period of 2 ½ years.
Impac agreed to acquire the mortgage operations of CashCall back at the beginning of the year.
CashCall’s mortgage operations operate as a separate division of Impac Mortgage Corp. and use the name CashCall Mortgage.
The acquisition fell in line with the lender’s growth in the market and positioned the company to continue to roll out its new ALT Qualified Mortgage loan programs to consumers directly.