Impac Mortgage to expand wholesale lending to 26 states, 3Q earnings down 68%
Impac Mortgage Holdings (IMH) is expanding its whole lending division to 26 states in the next six months, executives said in the company's third-quarter earnings conference call. The firm offers wholesale lending in California and Michigan, but is seeking warehouse facilities to increase its lending channel to $48 million from $10 million. IMH's third-quarter earnings fell 68% from a year earlier, as losses from real estate-owned properties exceed the fair value of other trust assets. IMH earned $974,000, or 12 cents a share, for the three months ended Sept,. 30, down from $3 million, or 38 cents a share, in the third quarter of 2009. For the nine months, the company earned $10.2 million compared to a loss of $1.7 million for the same period last year. The company's third-quarter mortgage and real estate servicing fees fell to $15.5 million from $42.5 million a year earlier. The change in fair value of IMH's net trust assets, or its portfolio of residual interest, accounted for $9.6 million in the third quarter, which was offset by $10.1 million in losses from REO. However, losses from REO greatly improved from 2009 when they totaled $43.2 million. The change in fair value of net trust assets decreased 79.3% from the third quarter of 2009, net trust assets were valued at $46.3 million. For the nine months ending in September, IMH's noninterest income was $6.4 million, down 60.1% from $16.1 million one year ago. Maryland-based Impac Mortgage Holdings operates four subsidiaries: Integrated Real Estate Service Corp., IMH Assets Corp., Impac Warehouse Lending Group and Impac Funding Corp. IMH plans to generate more fees by providing fee-based services, such as monitoring, surveillance, recovery, title, escrow and servicing fees to third parties, but a challenging market has made it hard to do so. A $1.3 million loss from discontinued operations came from a repurchase provision of $1.8 million in loans from Fannie Mae. In the third quarter, IMH decided to stop offering debt-settlement services, which were costing the firm an average of $600,000 a quarter. The company's outstanding balance from debt-settlement services is $2 million, which will be recovered over the next 12 to 15 months. IMH expects to improve monthly cash flow by $200,000 from permanently suspending these operations. In October, IMH completed the $1.8 million acquisition of 51% of AmeriHome Mortgage Corp., a 36% discount from AmeriHome's book value of $2.8 million. IMH made a $950,000 capital contribution to AmeriHome, paid $150,000 to the founder of AmeriHome, and entered into a note payable requiring $20,000 monthly payments for three years. IMH has the option to purchase another 39% come Jan. 1. As of the end of the third quarter, IMH held $6.2 billion worth of assets on its balance sheet. Write to Christine Ricciardi. Disclosure: The author holds no relevant investments.