- Q4 Income Before Income Taxes Is $8.1 Million - Income Before
Income Taxes and Spin-Off Related Costs Is $39.7 Million for 2009
TAMPA, Fla., Feb. 11 /PRNewswire-FirstCall/ -- Walter Investment
Management Corp. (NYSE Amex: WAC) ("Walter Investment" or the
"Company") today announced results for the fourth quarter and full
year ended December 31, 2009. The Company reported income before
income taxes for the quarter ended December 31, 2009 of $8.1
million, or $0.32 per diluted share as compared to income before
income taxes for the third quarter of $9.6 million, or $0.46 per
diluted share. Net income for the fourth quarter of 2009 was $8.5
million, or $0.34 per diluted share. For the year ended December
31, 2009, the Company reported income before income taxes and
spin-off related costs of $39.7 million, in line with its
previously announced guidance. Net income for the year ended
December 31, 2009 was $113.8 million, or $5.25 per diluted share.
Current year results included spin-off related costs of $2.1
million and an income tax benefit of $81.3 million which was the
result of the Company's conversion to a REIT on April 17, 2009. Net
income for the year ended December 31, 2008 was $2.4 million, or
$0.12 per diluted share and included a $17.0 million charge
incurred related to interest rate hedge ineffectiveness, a $12.3
million goodwill impairment charge and a $3.9 million charge for
estimated hurricane liabilities. Mark J. O'Brien, Walter
Investment's Chairman and CEO, said, "This has been an eventful and
exciting year for Walter Investment. The Company emerged from a
spin-off and merger transaction in April 2009 to become a
stand-alone public company, raised $76.8 million of common equity
and has established itself as a leader in servicing less-than-prime
mortgages. Our accomplishments in this short time frame have been
extraordinary considering the challenges presented by economic
conditions and the continuing weakness in the financial markets and
mortgage industry." "The year ahead will present new challenges as
we strive to grow our business and expand the Walter Investment
platform. We believe the continuing strong performance of our core
business, despite the difficult economic environment, demonstrates
that we are well positioned to take advantage of opportunities
available in the market." Fourth Quarter Dividend Declaration On
December 15, 2009, the Board of Directors of the Company declared a
dividend of $0.50 per share to shareholders of record as of
December 31, 2009, which was paid on January 20, 2010. Walter
Investment has paid a total of $35.6 million, or $1.50 per share in
dividends, since its April 2009 spin-off. Fourth Quarter 2009
Operating Highlights -- Consolidated delinquencies were 5.44
percent at year end, as compared to 5.55 percent at September 30,
2009 and 5.35 percent at December 31, 2008. 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 54 percent. -- On
an annualized basis, the asset yield for the quarter ended December
31, 2009 was 9.98 percent and the Company's cost of funds was 6.80
percent. The net interest margin for the quarter, which is net
interest income as a percentage of average earning assets, was 4.79
percent, slightly lower than the fourth quarter of last year, due
to lower outstanding balances, lower prepayment speeds and higher
90 day delinquencies. -- Loss severities were 12.1 percent in the
fourth quarter, as compared to 16.9 percent for the third quarter
of 2009. Severity levels for fixed rate residential loans, which
comprise 99 percent of the portfolio, were better than historical
averages at 10.7 percent, improving slightly from 12.5 percent in
the third quarter of 2009. -- During the fourth quarter of 2009,
the Company received net proceeds of $76.8 million from its
follow-on common stock offering and paid dividends of $12.8 million
to its shareholders. Charles E. Cauthen, Walter Investment's
President and COO, said, "Despite extremely difficult economic
conditions, our servicing operations continue to produce industry
leading results from our residential loan portfolio. Our challenge
for the upcoming year will be to sustain this portfolio performance
while leveraging our platform to achieve superior results from the
assets we acquire. We believe we can continue to achieve superior
results by mitigating risks through the application of our high
touch origination and servicing model and our deeply experienced
personnel." Fourth Quarter 2009 Financial Summary Net interest
income for the quarter was $20.1 million as compared to $22.1
million in the year-ago period on lower average outstandings, lower
voluntary prepayment speeds and slightly higher delinquencies. The
provision for losses was $4.0 million, compared with $8.3 million
in the year ago period. The decrease from the year earlier period
was primarily driven by additions to the allowance for loan losses
of $4.0 million and the REO valuation adjustment of $0.6 million in
the prior year, coupled with improved loss severities in the
current year. Non-interest income was $2.4 million in the fourth
quarter of 2009 as compared to $2.3 million in the prior year
period. Non-interest expenses increased from $9.6 million in the
fourth quarter of 2008 to $10.4 million for the fourth quarter of
2009. The increase was primarily attributable to costs associated
with being a stand-alone public company, including salaries and
benefits, legal, professional, technology and communications costs.
The Company's results for all periods presented include the results
of Walter Investment Management, LLC, while the results for Hanover
Capital Mortgage Holdings, Inc. are only included for post-merger
periods. Fourth Quarter 2009 Liquidity Summary At December 31,
2009, the Company had $99.3 million of cash, including $76.8
million of net proceeds from the equity offering. The Company had
no borrowings under its $15 million revolving credit facility at
December 31, 2009. Conference Call Webcast Members of the Company's
leadership team will discuss Walter Investment's third quarter
results and other general business matters during a conference call
and live webcast to be held on Friday, February 12, 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
http://www.walterinvestment.com/ About Walter Investment Management
Corp. Walter Investment Management Corp. is an asset manager,
mortgage servicer and mortgage portfolio owner specializing in
subprime, 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 215
people. For more information about Walter Investment Management
Corp., please visit the Company's website at
http://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 Registration Statement on Form
S-11 dated September 22, 2009, as amended October 8, 2009 and
October 16, 2009 and Walter Investment Management Corp.'s other
filings with the Securities and Exchange Commission. In particular
(but not by way of limitation), the following important factors and
assumptions could affect our future results and could cause actual
results to differ materially from those expressed in the
forward-looking statements: local, regional, national and global
economic trends and developments in general, and local, regional
and national real estate and residential mortgage market trends and
developments in particular; the availability of suitable qualifying
investments for the proceeds of our October 2009 secondary offering
and risks associated with any such investments we may pursue; the
availability of additional investment capital and suitable
qualifying investments, and risks associated with the expansion of
our business activities, including risks associated with expanding
our business outside of our current geographic footprint and/or
expanding the scope of our business to include activities not
currently undertaken by our business; limitations imposed on our
business due to our real estate investment trust, or REIT, status
and our continued qualification as a REIT for federal income tax
purposes; financing sources and availability, and future interest
expense; fluctuations in interest rates and levels of mortgage
prepayments; increases in costs and other general competitive
factors; natural disasters and adverse weather conditions,
especially to the extent they result in material payouts under
insurance policies placed with our captive insurance subsidiary;
changes in federal, state and local policies, laws and regulations
affecting our business, including, without limitation, mortgage
financing or servicing, changes to licensing requirements, and/or
the rights and obligations of property owners, mortgagees and
tenants; the effectiveness of risk management strategies;
unexpected losses resulting from pending, threatened or unforeseen
litigation or other third party claims against us; the ability or
willingness of Walter Energy, Inc. and other counterparties to
satisfy material obligations under agreements with us; our
continued listing on the NYSE Amex; uninsured losses or losses in
excess of insurance limits and the availability of adequate
insurance coverage at reasonable costs; the integration of the
former Hanover Capital Mortgage Holdings, Inc. business into that
of Walter Investment Management, LLC and its affiliates (the
"Merger"), and the realization of anticipated synergies, cost
savings and growth opportunities from the Merger; future
performance generally; and other presently unidentified factors. In
addition, the financial information presented herein is unaudited.
Should any of the financial information upon which a forward
looking statement is based be changed upon audit, the forward
looking statement may also change. All forward looking statements
set forth herein are qualified by these cautionary statements and
are made only as of February 11, 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 For the Year Ended December 31, Ended December 31,
---------------------- ---------------------- 2009 2008 2009 2008
---------- ---------- ---------- ---------- (Unaudited) Net
interest income: Interest income $41,847 $45,757 $175,372 $191,063
Less: Interest expense 21,754 23,683 89,726 102,115 Less: Interest
rate hedge ineffectiveness - - - 16,981 ---------- ----------
---------- ---------- Total net interest income 20,093 22,074
85,646 71,967 Less: Provision for loan losses 3,971 8,322 15,182
20,968 ---------- ---------- ---------- ---------- Total net
interest income after provision for loan losses 16,122 13,752
70,464 50,999 Non-interest income: Premium revenue 2,674 3,801
11,465 11,773 Other income, net (269) (1,512) 569 (3,139)
---------- ---------- ---------- ---------- Total non-interest
income 2,405 2,289 12,034 8,634 Non-interest expenses: Claims
expense 723 1,310 4,483 5,180 Salaries and benefits 5,314 3,662
20,568 15,934 Legal and professional 951 394 4,166 1,249 Occupancy
341 341 1,364 1,509 Technology and communication 744 396 2,980
1,404 Depreciation and amortization 100 85 436 416 General and
administrative 2,213 2,267 9,537 7,422 Other expense 54 251 493
1,370 Related party -allocated corporate charges - 866 853 3,469
Goodwill impairment charges - - - 12,291 Provision for estimated
hurricane insurance losses - - - 3,853 ---------- ----------
---------- ---------- Total non-interest expenses 10,440 9,572
44,880 54,097 Income before income taxes 8,087 6,469 37,618 5,536
Income tax expense (benefit) (436) (595) (76,161) 3,099 ----------
---------- ---------- ---------- Net income $8,523 $7,064 $113,779
$2,437 ========== ========== ========== ========== Basic earnings
per common and common equivalent share $0.34 $0.36 $5.26 $0.12
Diluted earnings per common and common equivalent share $0.34 $0.36
$5.25 $0.12 Weighted average common and common equivalent shares
outstanding -basic 25,074,070 19,871,205 21,496,369 19,871,205
Weighted average common and common equivalent shares outstanding
-diluted 25,172,433 19,871,205 21,564,621 19,871,205 Walter
Investment Management Corp. and Subsidiaries Consolidated Balance
Sheets (dollars in thousands, except share amounts) December 31,
---------------------------- 2009 2008 ---------- ---------- ASSETS
Cash and cash equivalents $99,286 $1,319 Short-term investments,
restricted 51,654 49,196 Receivables, net 3,052 5,447 Residential
loans, net of allowance for loan losses of $17,661 and $18,969,
respectively 1,644,346 1,771,675 Subordinate security 1,801 - Real
estate owned 63,124 48,198 Deferred debt issuance costs 18,450
19,745 Other assets 5,961 3,261 ---------- ---------- Total assets
$1,887,674 $1,898,841 ========== ========== LIABILITIES AND
STOCKHOLDERS' EQUITY Accounts payable $797 $2,181 Accrued expenses
28,296 46,367 Deferred income taxes, net 173 55,530 Mortgage-backed
debt 1,267,454 1,372,821 Accrued interest 8,755 9,717 Other
liabilities 767 748 ---------- ---------- Total liabilities
1,306,242 1,487,364 ---------- ---------- Stockholders' equity:
Member unit Issued -0 and 1 member unit at December 31, 2009 and
2008, respectively - - Preferred stock, $0.01 par value per share:
Authorized - 10,000,000 shares Issued and outstanding -0 shares at
December 31, 2009 and 2008, respectively - - Common stock, $0.01
par value per share: Authorized - 90,000,000 shares Issued and
outstanding -25,642,889 and 0 shares at December 31, 2009 and 2008,
respectively 256 - Additional paid-in capital 122,552 52,293
Retained earnings 456,681 684,127 Accumulated other comprehensive
income 1,943 1,747 ---------- ---------- 581,432 738,167 Less:
Receivable from Walter Energy - (326,690) ---------- ----------
Total stockholders' equity 581,432 411,477 ---------- ----------
Total liabilities and stockholders' equity $1,887,674 $1,898,841
========== ========== Walter Investment Management Corp. and
Subsidiaries Operating Statistics (Unaudited) (dollars in millions,
except per share amounts) 2009 2009 2008 Q4 Q3 Q4 -------- --------
-------- 30+ Delinquencies (1) 5.44% 5.55% 5.35% 90+ Delinquencies
(1) 3.37% 3.24% 3.05% Provision for Losses $4.0 $3.1 $8.3 Net
Charge-offs $4.1 $3.6 $4.3 Charge-off Ratio (2) 0.98% 0.85% 0.95%
Allowance for Losses $17.7 $17.8 $19.0 Allowance for Losses Ratio
(3) 1.06% 1.05% 1.06% 30+ Delinquencies (1) $98.7 $102.7 $102.7 REO
(Real Estate Owned) 63.1 56.7 48.2 TIO (Taxes, Insurance, Escrow
and Other Advances) 16.3 15.4 15.2 -------- -------- --------
Nonperforming Assets (Delinquencies + REO + TIO) $178.1 $174.8
$166.1 Nonperforming Assets Ratio (4) 9.40% 9.08% 8.19% Default
Rate (5) 6.15% 5.37% 4.80% Fixed Rate Mortgages 5.84% 5.20% 4.66%
Adjustable Rate Mortgages 27.55% 14.71% 12.49% Loss Severity (6)
12.08% 16.90% 21.40% Fixed Rate Mortgages 10.65% 12.51% 15.50%
Adjustable Rate Mortgages 42.42% 61.75% 47.70% Number of Accounts
Serviced (7) 35,236 35,725 37,591 Total Portfolio (8) $1,895.2
$1,924.7 $2,028.4 ARM Portfolio (9) 26.7 27.3 34.8 Prepayment Rate
(Voluntary CPR) 2.95% 3.36% 3.17% Book Value per Share (10) $22.67
$25.60 NM Debt to Equity Ratio 2.18:1 2.54:1 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 25,642,889. NM Not Meaningful DATASOURCE: Walter
Investment Management Corp. CONTACT: Investors and Media: Whitney
Finch, Director of Investor Relations, +1-813.421.7694, Web Site:
http://www.walterinvestment.com/
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