EX-99.1 2 b82027exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
(PRESS RELEASE)
FOR IMMEDIATE   Investor and Media Contact: Whitney Finch
RELEASE   Director of Investor Relations
August 9, 2010   813.421.7694
    wfinch@walterinvestment.com
WALTER INVESTMENT MANAGEMENT CORP. ANNOUNCES SECOND 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 June 30, 2010.
The Company reported income before income taxes for the quarter ended June 30, 2010 of $8.9 million, or $0.33 per diluted share, as compared to income before income taxes for the year ago period of $8.6 million, or $0.41 per diluted share. Net income for the second quarter of 2010 was $8.6 million, or $0.32 per diluted share, as compared to net income for the second quarter 2009 of $89.8 million, or $4.30 per diluted share, which included a non-cash tax benefit of $81.2 million related to WIM LLC’s conversion to a real estate investment trust (“REIT”) as part of its spin-off and merger transactions with Hanover Capital Mortgage Holdings, Inc. (“Hanover”) on April 17, 2009.
Mark J. O’Brien, Walter Investment’s Chairman and CEO, said, “We continue to see attractive opportunities in the market to acquire performing and nonperforming residential loans. While these opportunities remain our primary focus as we seek to grow the business, we continue to explore other options to expand our capabilities for growth and remain committed to prudently deploying our capital to acquire assets which meet our investment criteria and return objectives.”
Second Quarter 2010 Dividend Declaration
On August 3, 2010, the Board of Directors of the Company declared a dividend of $0.50 per share to shareholders of record as of August 13, 2010, which will be paid on August 27, 2010.
Second Quarter 2010 Operating Highlights
  •   Reflecting continued strong performance, consolidated delinquencies were 4.26 percent at June 30, 2010, as compared to 4.21 percent at March 31, 2010 and 5.06 percent at June 30, 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 June 30, 2010 was 10.25 percent and the Company’s interest cost on outstanding debt was 6.81 percent. The net interest margin for the quarter, which is net interest income as a percentage of average earning assets, was 5.10 percent, in-line with the second quarter of 2009.
 
  •   Loss severities were 14.3 percent in the second quarter, as compared to 11.9 percent for the first quarter of 2010 and 19.0 percent in the second quarter of 2009.
 
  •   During the second quarter of 2010, the Company paid dividends on April 30, 2010 of $12.9 million to its shareholders.
(WAC LISTED)
(LETTERHEAD)

 

 

Charles E. Cauthen, Walter Investment’s President and COO, said, “The diligent efforts of our field servicing organization continue to yield superior results from our portfolio. The ability to produce these solid results will support our efforts to grow the business through the second half of 2010 and beyond. Based on the early performance of our newly acquired loan pools, we expect continued superior performance from both our existing portfolio and these newly purchased pools.”
Second Quarter 2010 Financial Summary
Net interest income for the quarter was $20.9 million as compared to $22.0 million in the year-ago period. The decrease reflects lower outstanding balances and lower voluntary prepayment speeds, partially offset by an improvement in seriously delinquent accounts.
The provision for loan losses was $3.4 million, compared with $3.7 million in the year ago period. The decrease from the year earlier period was primarily driven by improved loss severities.
Non-interest income was $3.2 million in the second quarter of 2010 as compared to $3.6 million in the prior year period, primarily due to lower insurance premium revenue.
Non-interest expenses decreased from $13.3 million in the second quarter of 2009 to $11.6 million for the second quarter of 2010. The decrease resulted primarily from lower legal and professional fees associated with one-time spin-off related costs in 2009 and lower insurance claims costs.
Second Quarter 2010 Liquidity Summary
At June 30, 2010, the Company had $79.3 million of cash. The Company had no borrowings under its $15 million revolving credit facility at June 30, 2010.
Purchase of Pools of Loans
During the second quarter of 2010, the Company completed the purchase of two pools of performing, fixed-rate residential loans on single-family, owner occupied residences located within the Company’s existing southern United States geographic footprint. These purchases utilized $19.7 million of proceeds from the Company’s 2009 equity offering.
The Company has also recently entered into letters of intent to purchase additional pools of performing and nonperforming residential loans which, when settled, are expected to utilize approximately $20 million of proceeds from the equity offering.
Conference Call Webcast
Members of the Company’s leadership team will discuss Walter Investment’s second quarter results and other general business matters during a conference call and live webcast to be held on Tuesday, August 10, 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 non-conforming, less-than-prime, and other credit-challenged mortgage assets. Based in Tampa, Fla., the Company currently has $1.8 billion of assets under management and annual revenues of approximately $180 million. The Company is structured as a real estate investment trust (“REIT”) and employs approximately 230 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 August 9, 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     For the Six Months Ended  
    June 30,     June 30,  
    2010     2009     2010     2009  
 
                                
Net interest income:
                                
Interest income
   $ 41,882     $ 44,677     $ 83,510     $ 90,506  
Less: Interest expense
     21,022       22,654       42,296       45,743  
 
                        
Total net interest income
     20,860       22,023       41,214       44,763  
Less: Provision for loan losses
     3,447       3,733       6,637       8,109  
 
                        
Total net interest income after provision for loan losses
     17,413       18,290       34,577       36,654  
 
                                
Non-interest income:
                                
Premium revenue
     2,167       2,996       4,858       6,061  
Other income, net
     1,016       643       1,776       803  
 
                        
Total non-interest income
     3,183       3,639       6,634       6,864  
 
                                
Non-interest expenses:
                                
Claims expense
     913       1,373       1,825       2,662  
Salaries and benefits
     5,858       5,528       12,839       9,813  
Legal and professional
     936       1,896       1,835       2,600  
Occupancy
     328       465       673       800  
Technology and communication
     673       731       1,401       1,549  
Depreciation and amortization
     93       153       184       231  
General and administrative
     2,795       3,148       5,160       4,681  
Other expense
     52       49       103       386  
Related party — allocated corporate charges
     —       —               853  
 
                        
Total non-interest expenses
     11,648       13,343       24,020       23,575  
 
                                
Income before income taxes
     8,948       8,586       17,191       19,943  
Income tax expense (benefit)
     385       (81,225 )     516       (77,070 )
 
                        
Net income
   $ 8,563     $ 89,811     $ 16,675     $ 97,013  
 
                        
 
                                
Basic earnings per common and common equivalent share
   $ 0.32     $ 4.33     $ 0.62     $ 4.68  
Diluted earnings per common and common equivalent share
   $ 0.32     $ 4.30     $ 0.62     $ 4.64  
Weighted average common and common equivalent shares outstanding — basic
     26,414,338       20,750,501       26,379,005       20,750,501  
Weighted average common and common equivalent shares outstanding — diluted
     26,512,492       20,910,099       26,456,769       20,910,099  

 

 

Walter Investment Management Corp. and Subsidiaries
Consolidated Balance Sheets
(dollars in thousands, except share amounts)
                 
    June 30,     December 31,  
    2010     2009  
 
                
ASSETS
                
 
                
Cash and cash equivalents
   $ 79,270     $ 99,286  
Restricted cash
     9,668       8,963  
Restricted cash of securitization trusts
     39,829       42,691  
Receivables, net
     2,299       3,052  
Residential loans, net of allowance for loan losses of $3,320 and $3,460, respectively
     343,080       333,636  
Residential loans of securitization trusts, net of allowance for loan losses of $13,413 and $14,201, respectively
     1,272,676       1,310,710  
Subordinate security
     1,823       1,801  
Real estate owned
     26,963       21,981  
Real estate owned of securitization trusts
     35,212       41,143  
Deferred debt issuance costs
     17,795       18,450  
Other assets
     6,043       5,961  
 
            
Total assets
   $ 1,834,658     $ 1,887,674  
 
            
 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
 
                
Accounts payable
   $ 613     $ 13,489  
Accounts payable of securitization trusts
     399       556  
Accrued expenses
     26,404       28,296  
Deferred income taxes, net
     129       173  
Mortgage-backed debt of securitization trusts
     1,224,407       1,267,454  
Accrued interest of securitization trusts
     8,444       8,755  
Other liabilities
     786       767  
 
            
Total liabilities
     1,261,182       1,319,490  
 
            
 
                
Stockholders’ equity:
                
Preferred stock, $0.01 par value per share:
                
Authorized - 10,000,000 shares
                
Issued and outstanding - 0 shares at June 30, 2010 and December 31, 2009, respectively
     —       —  
Common stock, $0.01 par value per share:
                
Authorized - 90,000,000 shares
                
Issued and outstanding - 25,743,193 and 25,642,889 shares at June 30, 2010 and December 31, 2009, respectively
     257       256  
Additional paid-in capital
     124,922       122,552  
Retained earnings
     446,708       443,433  
Accumulated other comprehensive income
     1,589       1,943  
 
            
Total stockholders’ equity
     573,476       568,184  
 
            
Total liabilities and stockholders’ equity
   $ 1,834,658     $ 1,887,674  
 
            

 

 

Walter Investment Management Corp. and Subsidiaries
Operating Statistics
(Unaudited)
(dollars in thousands, except per share amounts)
                         
    2010     2010     2009  
    Q2     Q1     Q2  
     
 
                        
30+ Delinquencies (1)
     4.26 %     4.21 %     5.06 %
90+ Delinquencies (1)
     2.31 %     2.89 %     2.73 %
 
                        
Provision for Losses
   $ 3.4     $ 3.2     $ 3.7  
Net Charge-offs
   $ 4.0     $ 3.5     $ 3.9  
     
Charge-off Ratio (2)
     0.99 %     0.86 %     0.90 %
 
                        
Allowance for Losses
   $ 16.7     $ 17.3     $ 18.3  
Allowance for Losses Ratio (3)
     1.02 %     1.06 %     1.06 %
 
                        
30+ Delinquencies (1)
   $ 75.5     $ 75.4     $ 95.4  
REO (Real Estate Owned)
     62.2       62.0       55.8  
TIO (Taxes, Insurance, Escrow and Other Advances)
     16.2       16.4       14.8  
     
Nonperforming Assets (Delinquencies + REO + TIO)
   $ 153.9     $ 153.8     $ 166.0  
Nonperforming Assets Ratio (4)
     8.32 %     8.24 %     8.48 %
 
                        
Default Rate (5)
     6.37 %     5.68 %     5.51 %
Fixed Rate Mortgages
     5.96 %     5.55 %     5.37 %
Adjustable Rate Mortgages
     37.07 %     14.64 %     14.43 %
 
                        
Loss Severity (6)
     14.30 %     11.85 %     19.00 %
Fixed Rate Mortgages
     11.69 %     10.43 %     13.30 %
Adjustable Rate Mortgages
     41.54 %     39.02 %     47.00 %
 
                        
Number of Accounts Serviced (7)
     34,700       34,724       36,320  
 
                        
Total Portfolio (8)
   $ 1,850.6     $ 1,867.4     $ 1,956.5  
 
                        
ARM Portfolio (9)
   $ 23.5     $ 25.6     $ 29.6  
 
                        
Prepayment Rate (Voluntary CPR)
     3.13 %     2.64 %     4.06 %
 
                        
Book Value per Share (10)
   $ 22.28     $ 22.46     $ 25.69  
 
                        
Debt to Equity Ratio
     2.14:1       2.16:1       2.59:1  
(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 25,743,193.