-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SUKgY6yPzk5AWrdjz1Td9cZoPYRiCEFi7FiKzeEo3mZfL2MyoKyzfgOzQY086E1h HTxexBEZO8KpfwJ1DZGoUQ== 0000950135-03-004149.txt : 20030805 0000950135-03-004149.hdr.sgml : 20030805 20030805160748 ACCESSION NUMBER: 0000950135-03-004149 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030804 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030805 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HANOVER CAPITAL MORTGAGE HOLDINGS INC CENTRAL INDEX KEY: 0001040719 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 133950486 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13417 FILM NUMBER: 03823915 BUSINESS ADDRESS: STREET 1: 379 THORNALL STREET STREET 2: 2ND FLOOR CITY: EDISON STATE: NJ ZIP: 08837 BUSINESS PHONE: 732-548-0101 MAIL ADDRESS: STREET 1: 379 THORNALL STREET STREET 2: 2ND FLOOR CITY: EDISON STATE: NJ ZIP: 08837 8-K 1 b47365hce8vk.txt HANOVER CAPITAL MORTGAGE HOLDINGS, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): AUGUST 4, 2003 HANOVER CAPITAL MORTGAGE HOLDINGS, INC. (Exact Name of Registrant as Specified in Charter) MARYLAND 001-13417 13-3950486 (State or Other (Commission File Number) (IRS Employer Jurisdiction of Identification No.) Incorporation) 379 THORNALL STREET, EDISON, NEW JERSEY 08837 (Address of Principal Executive Offices) (ZIP Code) Registrant's telephone number, including area code (732) 548-0101 ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. The following information is furnished pursuant to Item 12, "Results of Operations and Financial Condition": On August 4, 2003 Hanover Capital Mortgage Holdings, Inc. issued a press release reporting second quarter 2003 financial results and other information. The press release is attached hereto as Exhibit 99.1. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits
Exhibit Description ------- ----------- 99.1 Press Release issued August 4, 2003
[Signature on following page.] -1- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Hanover Capital Mortgage Holdings, Inc. /s/ J. Holly Loux ------------------------------------ Name: J. Holly Loux Title: Chief Financial Officer and Treasurer Date: August 5, 2003 -2- EXHIBIT INDEX
Exhibit Description - ------- ----------- 99.1 Press Release issued August 4, 2003
-3- EX-99.1 3 b47365hcexv99w1.txt EX-99.1 PRESS RELEASE ISSUED AUGUST 4, 2003 EXHIBIT 99.1 HANOVER CAPITAL MORTGAGE HOLDINGS ANNOUNCES 2003 SECOND QUARTER RESULTS AND $0.30 PER SHARE DIVIDEND EDISON, NEW JERSEY, AUGUST 4, 2003 - Hanover Capital Mortgage Holdings, Inc. (AMEX: HCM) reported net earnings for the quarter ended June 30, 2003 of $2,507,000, or $0.56 per share, compared to $1,392,000, or $0.32 per share, for the second quarter 2002, a 75% increase in earnings per share. Net earnings for the six-months ended June 30, 2003, were $5,056,000, or $1.12 per share, versus $2,704,000, or $0.62 per share, for the six-months ended June 30, 2002. The increase in earnings per share for both the three and six-month periods was primarily due to gains on sales of mortgage assets. The Board of Directors declared a second quarter dividend of $0.30 per share on August 1, 2003 to be paid on August 15, 2003 to stockholders of record as of August 8, 2003. As of June 30, 2003, stockholders' equity was $48.6 million, or $10.79 per share. During the second quarter of 2003, we invested substantially all of the approximately $6 million of capital received from the first quarter 2003 sales of mortgage loans that supported certain collateralized mortgage obligations. As of June 30, 2003, we had $170.0 million in assets, $121.4 million in liabilities and $48.6 million in stockholders' equity. As of that date, our interest earning assets were comprised of approximately $45.4 million of Agency-issued mortgage-backed securities, $27.2 million of subordinated mortgage-backed securities, $70.6 million of CMO collateral and $1.7 million of equity invested in HDMF-I LLC. Our liabilities consisted principally of $54.3 million in reverse repurchase agreements and $64.0 million in non-recourse borrowings secured by collateralized mortgage obligations. Over the course of the second quarter, we purchased approximately $26.5 million (principal balance) of subordinated mortgage-backed securities with a cost basis of approximately $12.6 million. We sold approximately $8.1 million of subordinated mortgage-backed securities and realized approximately $2.5 million of gains from such sales. As of June 30, 2003, we have purchased since our inception in 1997 approximately $148.1 million (principal balance) of subordinated mortgage-backed securities from third parties at an aggregate purchase price of $74.0 million. Since the inception of these purchases, to June 30, 2003, we have incurred cumulative losses of approximately $137,000. As of June 30, 2003, we held 74 subordinated bonds from 32 different securities issued by six major financial institutions. These securities, with a principal balance of $54.0 million and a cost basis of $25.0 million, have a weighted average coupon of 5.27% and a weighted average cash-on-cash yield of 11.4%. The collateral underlying these securities consisted of $11.8 billion of fixed-rate and $5.5 billion of adjustable-rate mortgage loans for a total of $17.3 billion of single-family mortgage loans. For the six months ended June 30, 2003, we earned a 21.5% yield, before gains, on net average invested subordinated mortgage-backed securities equity of $10.1 million. John A. Burchett, Chief Executive Officer, commented, "We are very pleased with our results for the second quarter and first six-months of 2003. The results for the quarter ended June 30, 2003 were positively affected by significant gains on sales of mortgage assets, and we do not expect gains on sales of mortgage assets at comparable levels in the third and fourth quarters. Accordingly, we currently anticipate earnings for these quarters to be in the range of $0.25 to $0.35 per share. We cannot assure you that we will generate the anticipated third and fourth quarter earnings." - more - -2- During the second quarter of 2003, four executives who are also directors received additional consideration as a result of certain performance targets set in 2002. As those performance targets were met, these officers received additional consideration that resulted in a reduction in additional paid-in capital of $583,333, representing the forgiveness of one-third of $1,750,000 in loans. In addition, 72,222 shares of our common stock will be issued and options exercisable for up to 26,720 shares vested. As previously announced, effective July 1, 2002, HCM acquired 100% of the outstanding securities of HanoverTrade, Inc. and Hanover Capital Partners Ltd. Prior to that time HCM owned only 97% of these subsidiaries. Financial information presented for periods after June 30, 2002 includes results for the core REIT, HanoverTrade, Inc. and Hanover Capital Partners Ltd. on a consolidated basis. Financial information presented for periods ended prior to July 1, 2002 reflects HCM's previous partial ownership of HanoverTrade, Inc. and Hanover Capital Partners Ltd. For the six-months ended June 30, 2003, Hanover Capital Partners Ltd. generated total revenues of $4.3 million as compared to $3.0 million for the same period in 2002. HanoverTrade, Inc. generated $3.6 million of total revenues for the six-months ended June 30, 2003 as compared to $4.4 million for the same period in 2002. HCM will host its quarterly investor conference call on Monday, August 4, 2003 at 11:00 AM EDT. The call will be broadcast on the Internet at www.vcall.com. To listen to the call, please go to the Web site at least fifteen minutes prior to the start of the call to register, download, and install any necessary audio software. For those not available to listen to the live broadcast, a replay will be available shortly after the call at the vcall Web site. Hanover Capital Mortgage Holdings, Inc. is a mortgage REIT with offices throughout the country staffed by seasoned mortgage capital markets professionals. HCM invests in mortgage-backed securities and mortgage loans and engages in fee income-generating activities through its subsidiaries, HanoverTrade, Inc. and Hanover Capital Partners Ltd. HanoverTrade operates an Internet exchange for trading mortgage loans, mortgage servicing rights and related assets, and provides state-of-the-art technologies supported by experienced valuation, operations and trading professionals. HanoverTrade also provides a full range of asset valuation, analysis and marketing services for mortgage-related assets. Hanover Capital Partners provides consulting and advisory services, focusing on loan sale advisory, loan file due diligence reviews, staffing solutions and mortgage assignment and collateral rectification services. For further information, visit HCM's Web site at www.hanovercapitalholdings.com. This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to statements regarding our ability to pay future dividends, successfully invest capital, achieve greater returns on investments, provide continued growth for our stockholders, and our third and fourth quarter 2003 results. Such forward-looking statements involve known and unknown risks, uncertainties or other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. Those risks and uncertainties can include: regulatory limitations on the types of investments in which we can participate, our ability to find suitable investments, fluctuation of interest rates, accelerated prepayment of principal, adverse general economic trends, the ability of HanoverTrade and Hanover Capital Partners to secure additional contracts and generate revenues, and our ability to retain key employees, among others. For more complete information concerning factors which could affect our results, please refer to our registration statements, reports and other documents filed with the Securities and Exchange Commission. Investors are cautioned that current results are not necessarily indicative of future results, and actual results may differ from projected amounts. - charts follow - -3- HANOVER CAPITAL MORTGAGE HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except as noted)
JUNE 30, DECEMBER 31, 2003 2002 --------- --------- (unaudited) ASSETS Mortgage loans: Held for sale $ 464 $ 413 Collateral for CMOs 70,609 102,751 Mortgage securities pledged as collateral for reverse repurchase agreements: Available for sale 62,861 4,082 Held to maturity -- 559 Trading 5,065 2,669 Mortgage securities pledged as collateral for CMOs -- 9,805 Mortgage securities, not pledged: Available for sale 4,667 6,186 Trading -- 602 Cash and cash equivalents 12,068 10,605 Accounts receivable 1,300 1,706 Accrued interest receivable 949 960 Equity investment in HDMF-I LLC 1,686 4,638 Notes receivable from related parties 1,167 2,563 Other assets 9,170 8,332 --------- --------- TOTAL ASSETS $ 170,006 $ 155,871 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: Reverse repurchase agreements $ 54,319 $ 6,283 CMO borrowing 64,002 102,589 Dividends payable -- 1,119 Accounts payable, accrued expenses and other liabilities 3,085 2,816 --------- --------- TOTAL LIABILITIES 121,406 112,807 --------- --------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock: $0.01 par value, 10 million shares authorized, -0- shares issued and outstanding Common stock: $0.01 par value, 90 million shares authorized, 4,503,126 and 4,474,222 shares issued and outstanding at June 30, 2003 and December 31, 2002, respectively 45 45 Additional paid-in capital 67,613 67,990 Retained earnings (deficit) (22,272) (25,322) Accumulated other comprehensive income 3,214 351 --------- --------- TOTAL STOCKHOLDERS' EQUITY 48,600 43,064 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 170,006 $ 155,871 ========= ========= BOOK VALUE PER SHARE $ 10.79 $ 9.62 ========= =========
- more - -4- HANOVER CAPITAL MORTGAGE HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) (unaudited)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, --------------------- ---------------------- 2003 2002 2003 2002 -------- -------- -------- -------- REVENUES: Interest income $ 2,432 $ 3,461 $ 4,827 $ 7,306 Interest expense 989 2,080 2,274 4,273 -------- -------- -------- -------- Net interest income 1,443 1,381 2,553 3,033 Loan loss provision 408 67 679 121 -------- -------- -------- -------- Net interest income after loan loss provision 1,035 1,314 1,874 2,912 Gain on sale of mortgage assets 2,494 305 5,777 905 Gain on mark to market of mortgage assets 18 300 18 575 Due diligence fees 1,433 -- 2,752 -- Assignment fees 641 -- 1,214 -- Technology 927 -- 1,812 -- Loan brokering, trading and advisory services 948 -- 1,344 -- Other income (loss) 58 (253) 105 (425) -------- -------- -------- -------- Total revenues 7,554 1,666 14,896 3,967 -------- -------- -------- -------- EXPENSES: Personnel 2,387 364 4,565 864 Subcontractor 933 -- 1,873 -- Legal and professional 379 239 775 429 General and administrative 437 236 826 459 Depreciation and amortization 389 -- 777 -- Other 188 99 350 205 Travel and entertainment 161 16 311 25 Occupancy 116 10 239 28 -------- -------- -------- -------- Total expenses 4,990 964 9,716 2,010 -------- -------- -------- -------- Operating income 2,564 702 5,180 1,957 Equity in income (loss) of unconsolidated subsidiaries: Hanover Capital Partners Ltd. -- 86 -- 112 HanoverTrade, Inc. -- 628 -- 655 HDMF-I LLC 3 20 (40) (1) Hanover Capital Partners 2, Inc. -- (44) -- (19) -------- -------- -------- -------- Income before income tax provision 2,567 1,392 5,140 2,704 Income tax provision 60 -- 84 -- -------- -------- -------- -------- NET INCOME $ 2,507 $ 1,392 $ 5,056 $ 2,704 ======== ======== ======== ======== BASIC EARNINGS PER SHARE $ 0.56 $ 0.32 $ 1.12 $ 0.62 ======== ======== ======== ======== DILUTED EARNINGS PER SHARE $ 0.54 $ 0.31 $ 1.10 $ 0.61 ======== ======== ======== ========
- more - -5- HANOVER CAPITAL MORTGAGE HOLDINGS, INC. AND SUBSIDIARIES SUBORDINATED MBS, CMO COLLATERAL AND RELATED LIABILITIES FOR THE SIX MONTHS ENDED JUNE 30, 2003 (unaudited) (in thousands)
Assets Liabilities Invested Equity ------------------- ---------------- ------------------- Average Effective Average Average Levered Balance Rate(1) Balance Cost Balance Return(2) ------- ------- ------- ---- ------- --------- Subordinated MBS $ 18,325 13.2% $ 8,192 2.8% $ 10,133 21.5% CMO Collateral 88,610 6.5 81,347 5.2 7,263 21.0 -------- ---- -------- ---- -------- ---- Total $106,935 7.6% $ 89,539 5.0% $ 17,396 21.3% ======== ==== ======== ==== ======== ====
(1) Effective yield calculation includes loan loss provision. (2) Does not include gains from sales of mortgage-related assets. Returns before operating expenses. * * * * -----END PRIVACY-ENHANCED MESSAGE-----