Impac Mortgage Holdings recorded adjusted operating income of $96.9 million, or $6.52 per diluted common share, for all of 2016, significantly up from adjusted operating income of $33.5 million, or $2.56 per diluted common share, for all of 2015.
The company attributed the $63.4 million rise in 2016 to an increase in gain on sale of loans of $141.8 million resulting from a 40% increase in volume combined with an increase in gain on sale margins.
While a loss on mortgage servicing rights of $36.4 million in 2016 offset the increase in gain on sale of loans, it wasn’t enough to stop Impac from recording its best year in more than a decade.
For only the fourth quarter, Impac posted adjusted operating income of $23.9 million, compared to adjusted operating loss of $593,000 for the same quarter a year ago.
Total originations also surged for the whole year, increasing 40% to $12.9 billion as compared to $9.3 billion in 2015.
Impac explained that retail originations were the main driver behind the increase, representing 75% or $9.7 billion of total originations. Additionally, in 2016, retail originations had a 74% increase over 2015 retail originations.
For the fourth quarter of 2016, Impac’s total originations increased to $3.1 billion, a 60% increase as compared to $1.9 billion for the fourth quarter of 2015.
Joseph Tomkinson, chairman and CEO of Impac, said, “2016 proved to be our best year in over a decade, surpassing our projections with nearly $100 million of Adjusted Operating Income and $13 billion in total originations.”
“With our strong loan retention capabilities, we were able to take advantage of the low interest rate environment and create a low weighted average coupon servicing portfolio,” Tomkinson said. “As a result of the current rising rate environment, our servicing portfolio continues to increase in value and generate larger amounts of servicing income. This strategy was the core reason for our third-quarter capital raise, and we are pleased to be executing this strategy successfully.”
Looking ahead, he said, “In 2017, we expect that a rising rate environment will allow us to substantially grow our non-QM originations, continue to diversify our product offerings, and take advantage of the consolidation that is anticipated in the mortgage lending industry.”