EX-99.1 2 b80821exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
(WALTER LOGO)
Press Release
FOR IMMEDIATE RELEASE
May 5, 2010
Investor and Media Contact: Whitney Finch
Director of Investor Relations
813.421.7694
wfinch@walterinvestment.com
WALTER INVESTMENT MANAGEMENT CORP. ANNOUNCES FIRST QUARTER 2010 FINANCIAL RESULTS
 
(Tampa, Fla.) – Walter Investment Management Corp. (NYSE Amex: WAC) (“Walter Investment” or the “Company”) today announced results for the quarter ended March 31, 2010.
The Company reported income before income taxes for the quarter ended March 31, 2010 of $8.2 million, or $0.31 per diluted share as compared to income before income taxes for the fourth quarter 2009 of $8.1 million, or $0.32 per diluted share. Net income for the first quarter of 2010 was $8.1 million, or $0.30 per diluted share as compared to net income for the fourth quarter 2009 of $8.5 million, or $0.34 per diluted share.
Mark J. O’Brien, Walter Investment’s Chairman and CEO, said, “We are pleased with the strong results from our existing portfolio, and are confident we are on a path to grow our core business as we begin to deploy the capital raised in the fourth quarter of 2009.”
“We believe the opportunities to acquire attractive loan pools are improving, as evidenced by our recently announced purchase of performing residential loans. We remain committed to prudently deploying our capital to acquire assets which meet our investment criteria and return objectives.”
First Quarter 2010 Dividend Declaration
On April 30, 2010, the Board of Directors of the Company declared a dividend of $0.50 per share to shareholders of record as of May 14, 2010, which will be paid on May 28, 2010.
First Quarter 2010 Operating Highlights
  •   Reflecting strong performance and favorable seasonal trends, consolidated delinquencies were 4.21 percent at March 31, 2010, as compared to 5.44 percent at December 31, 2009 and 4.59 percent at March 31, 2009. Walter Investment’s delinquency rates (adjusted to reflect comparable methodologies) remain better than the most recently released Mortgage Banker’s Association’s subprime industry survey average by more than 50 percent.
 
  •   On an annualized basis, the asset yield for the quarter ended March 31, 2010 was 10.09 percent and the Company’s interest cost on outstanding debt was 6.78 percent. The net interest margin for the quarter, which is net interest income as a percentage of average earning assets, was 4.93 percent, slightly lower than the first quarter of last year, due to lower outstanding balances and lower prepayment speeds.
 
  •   Loss severities were 11.9 percent in the first quarter, as compared to 12.1 percent for the fourth quarter of 2009 and 16.8 percent in the first quarter of 2009.
 
  •   During the first quarter of 2010, the Company paid dividends declared on December 15, 2009 of $12.8 million to its shareholders.
(WAC LOGO)
3000 Bayport Drive, Suite 1100, Tampa, Florida 33607
813,421,7600     www.walterinvestment.com

 

 

Charles E. Cauthen, Walter Investment’s President and COO, said, “As anticipated, our field servicing organization delivered excellent results from our existing portfolio in the first quarter, laying a strong foundation for the year ahead. As we add additional assets to our servicing platform, we must continue to deliver superior results and solid returns to our shareholders through our high touch origination and servicing model and our deeply experienced personnel.”
First Quarter 2010 Financial Summary
Net interest income for the quarter was $20.4 million as compared to $22.7 million in the year-ago period driven by lower outstanding balances and lower voluntary prepayment speeds.
The provision for loan losses was $3.2 million, compared with $4.4 million in the year ago period. The decrease from the year earlier period was primarily driven by improved loss severities, coupled with a lower frequency of default on the ARM portfolio.
Non-interest income was $3.5 million in the first quarter of 2010 as compared to $3.2 million in the prior year period.
Non-interest expenses increased from $10.2 million in the first quarter of 2009 to $12.4 million for the first quarter of 2010. The increase included $1.2 million of stock compensation expense and $0.7 million of severance expense associated with management changes, in addition to increased costs associated with being a stand-alone public company, including salaries and benefits, legal, professional, technology and communications costs.
First Quarter 2010 Liquidity Summary
At March 31, 2010, the Company had $96.3 million of cash. The Company had no borrowings under its $15 million revolving credit facility at March 31, 2010.
Purchase of Pool of Loans
On April 14, 2010, the Company entered into a definitive agreement to purchase a pool of 100% performing, fixed-rate residential loans on single-family, owner occupied residences located within the Company’s existing southeastern United States geographic footprint. The purchase closed on April 19, 2010, utilizing $11.1 million of proceeds from its equity offering.
Conference Call Webcast
Members of the Company’s leadership team will discuss Walter Investment’s first quarter results and other general business matters during a conference call and live webcast to be held on Thursday, May 6, 2010, at 10 a.m. Eastern Time. To listen to the event live or in an archive which will be available for 30 days, visit the Company’s website at www.walterinvestment.com.
About Walter Investment Management Corp.
Walter Investment Management Corp. is an asset manager, mortgage servicer and mortgage portfolio owner specializing in less-than-prime, non-conforming and other credit-challenged mortgage assets. Based in Tampa, Fla., the Company currently has $1.9 billion of assets under management and annual revenues of approximately $190 million. The Company is structured as a real estate investment trust (“REIT”) and employs approximately 220 people. For more information about Walter Investment Management Corp., please visit the Company’s website at www.walterinvestment.com.
Safe Harbor Statement
Certain statements in this release and in our public documents to which we refer, contain or incorporate by reference “forward-looking” statements as defined in Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Walter Investment Management Corp. is including this cautionary statement to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements that are not historical fact are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “project,” “estimate,” “forecast,” “objective,” “plan,” “goal” and similar expressions are intended to identify

 

 

forward looking statements. Forward-looking statements are based on the Company’s current belief, intentions and expectations; however, forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results, performance or achievements, to differ materially from those reflected in the statements made or incorporated in this release. Thus, these forward-looking statements are not guarantees of future performance and should not be relied upon as predictions of future events. These risks and uncertainties are contained in Walter Investment Management Corp.’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 2, 2010 and Walter Investment Management Corp.’s other filings with the SEC.
All forward looking statements set forth herein are qualified by this cautionary statement and are made only as of May 5, 2010. The Company undertakes no obligation to update or revise the information contained herein, including without limitation any forward-looking statements whether as a result of new information, subsequent events or circumstances, or otherwise, unless otherwise required by law.

 

 

Walter Investment Management Corp. and Subsidiaries
Consolidated Statements of Income
(dollars in thousands, except share and per share amounts)
                 
    For the Three Months Ended  
    March 31,  
    2010     2009  
Net interest income:
                
Interest income
   $ 41,628     $ 45,829  
Less: Interest expense
     21,274       23,089  
 
            
Total net interest income
     20,354       22,740  
Less: Provision for loan losses
     3,190       4,376  
 
            
Total net interest income after provision for loan losses
     17,164       18,364  
 
Non-interest income:
                
Premium revenue
     2,691       3,065  
Other income, net
     760       160  
 
            
Total non-interest income
     3,451       3,225  
 
Non-interest expenses:
                
Claims expense
     912       1,289  
Salaries and benefits
     6,981       4,285  
Legal and professional
     899       704  
Occupancy
     345       335  
Technology and communication
     728       818  
Depreciation and amortization
     91       78  
General and administrative
     2,365       1,533  
Other expense
     51       337  
Related party — allocated corporate charges
     —       853  
 
            
Total non-interest expenses
     12,372       10,232  
Income before income taxes
     8,243       11,357  
Income tax expense
     131       4,155  
 
            
Net income
   $ 8,112     $ 7,202  
 
            
 
Basic earnings per common and common equivalent share
   $ 0.30     $ 0.36  
Diluted earnings per common and common equivalent share
   $ 0.30     $ 0.36  
Weighted average common and common equivalent shares outstanding — basic
     26,343,279       19,871,205  
Weighted average common and common equivalent shares outstanding — diluted
     26,403,281       19,871,205  

 

 

Walter Investment Management Corp. and Subsidiaries
Consolidated Balance Sheets
(dollars in thousands, except share amounts)
                 
    March 31,     December 31,  
    2010     2009  
ASSETS
                
 
                
Cash and cash equivalents
   $ 96,302     $ 99,286  
Restricted cash
     8,901       8,963  
Restricted cash of securitization trusts
     41,324       42,691  
Receivables, net
     3,542       3,052  
Residential loans, net of allowance for loan losses of $3,384 and $3,460, respectively
     327,775       333,636  
Residential loans of securitization trusts, net of allowance for loan losses of $13,940 and $14,201, respectively
     1,292,561       1,310,710  
Subordinate security
     1,837       1,801  
Real estate owned
     25,284       21,981  
Real estate owned of securitization trusts
     36,667       41,143  
Deferred debt issuance costs
     18,137       18,450  
Other assets
     5,073       5,961  
 
            
Total assets
   $ 1,857,403     $ 1,887,674  
 
            
 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
 
                
Accounts payable
   $ 477     $ 13,489  
Accounts payable of securitization trusts
     555       556  
Accrued expenses
     25,438       28,296  
Deferred income taxes, net
     161       173  
Mortgage-backed debt of securitization trusts
     1,244,379       1,267,454  
Accrued interest of securitization trusts
     8,555       8,755  
Other liabilities
     776       767  
 
            
Total liabilities
     1,280,341       1,319,490  
 
            
 
                
Stockholders’ equity:
                
Preferred stock, $0.01 par value per share:
                
Authorized - 10,000,000 shares
Issued and outstanding - 0 shares at March 31, 2010 and December 31, 2009, respectively
     —       —  
Common stock, $0.01 par value per share:
                
Authorized - 90,000,000 shares
Issued and outstanding - 25,694,073 and 25,642,889 shares at March 31, 2010 and December 31, 2009, respectively
     257       256  
Additional paid-in capital
     123,471       122,552  
Retained earnings
     451,545       443,433  
Accumulated other comprehensive income
     1,789       1,943  
 
            
Total stockholders’ equity
     577,062       568,184  
 
            
Total liabilities and stockholders’ equity
   $ 1,857,403     $ 1,887,674  
 
            

 

 

Walter Investment Management Corp. and Subsidiaries
Operating Statistics
(Unaudited)
(dollars in thousands, except share amounts)
                         
    2010   2009   2009
    Q1   Q4   Q1
30+ Delinquencies (1)
     4.21 %     5.44 %     4.59 %
90+ Delinquencies (1)
     2.89 %     3.37 %     3.02 %
 
                        
Provision for Losses
   $ 3.2     $ 4.0     $ 4.4  
Net Charge-offs
   $ 3.5     $ 4.1     $ 4.9  
Charge-off Ratio (2)
     0.86 %     0.98 %     1.10 %
 
                        
Allowance for Losses
   $ 17.3     $ 17.7     $ 18.5  
Allowance for Losses Ratio (3)
     1.06 %     1.06 %     1.05 %
 
                        
30+ Delinquencies (1)
   $ 75.4     $ 98.7     $ 86.2  
REO (Real Estate Owned)
     62.0       63.1       50.9  
TIO (Taxes, Insurance, Escrow and Other Advances)
     16.4       16.3       15.0  
         
Nonperforming Assets (Delinquencies + REO + TIO)
   $ 153.8     $ 178.1     $ 152.1  
Nonperforming Assets Ratio (4)
     8.24 %     9.40 %     7.63 %
 
                        
Default Rate (5)
     5.68 %     6.15 %     5.06 %
Fixed Rate Mortgages
     5.55 %     5.84 %     4.58 %
Adjustable Rate Mortgages
     14.64 %     27.55 %     33.96 %
 
                        
Loss Severity (6)
     11.85 %     12.08 %     16.80 %
Fixed Rate Mortgages
     10.43 %     10.65 %     15.50 %
Adjustable Rate Mortgages
     39.02 %     42.42 %     40.30 %
 
                        
Number of Accounts Serviced (7)
     34,724       35,236       37,408  
 
                        
Total Portfolio (8)
   $ 1,867.4     $ 1,895.2     $ 1,993.6  
 
                        
ARM Portfolio (9)
   $ 25.6     $ 26.7     $ 31.8  
 
                        
Prepayment Rate (Voluntary CPR)
     2.64 %     2.95 %     3.56 %
 
                        
Book Value per Share (10)
   $ 22.46     $ 22.16     NM
 
                        
Debt to Equity Ratio
     2.16:1       2.23:1     NM
 
                        
 
(1)   Delinquencies are defined as the percentage of principal balances outstanding which have monthly payments over 30 days past due. The calculation of delinquencies excludes from delinquent amounts those accounts that are in bankruptcy proceedings that are paying their mortgage payments in contractual compliance with bankruptcy court approved mortgage payment obligations.
 
(2)   The charge-off ratio is calculated as annualized net charge-offs, divided by average residential loans before the allowance for losses.
 
(3)   The allowance for losses ratio is calculated as period-end allowance for losses divided by period-end residential loans before the allowance for losses.
 
(4)   The nonperforming assets ratio is calculated as period-end non-performing assets, divided by period-end principal balance of residential loans plus REO and TIO.
 
(5)   Default rate is calculated as the annualized balance of repossessions for the quarter divided by the average total balance of the portfolio for the quarter.
 
(6)   Loss severities are calculated as the loss on sale of REO properties divided by the carrying value of REO.
 
(7)   Includes REO accounts.
 
(8)   Total portfolio includes the principal balance of residential loans, REO and TIO.
 
(9)   ARM portfolio includes the principal balance of adjustable rate residential loans and REO resulting from defaulted adjustable rate residential loans.
 
(10)   Book Value per share is calculated by dividing the Company’s equity by total shares issued and outstanding of 25,694,073.
 
NM   Not Meaningful