Q3 2003 Impac Mortgage Holdings, Inc. Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Good afternoon, my name is Brandy and I will be your conference facilitator today. At this time I would like to welcome everyone to the third-quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question and answer period. (OPERATOR INSTRUCTIONS) I would now like to turn today's call over to Tania Jernigan, VP of Investor Relations.

TANIA JERNIGAN, VP OF INVESTOR RELATIONS, IMPAC MORTGAGE HOLDINGS, INC.: Good morning and welcome to the Impac Mortgage Holdings' third-quarter earnings conference call. During this call we will make projections or other forward-looking statements in regards to earnings, future dividend payments, loan origination and acquisitions, total of total mortgage assets, and reduction of interest rate and market risk exposure.

I would like to refer you to review the business risk factors in our quarterly report on form 10Q for the filing period of September 30, 2003, and in our annual report on form 10-K filing for the fiscal year ended December 31, 2002. These documents contain any identifying important factors that could cause the actual results to differ materially from those contained in our projections or other forward-looking statements. In addition in this call we will discuss non-GAAP measures in talking about our Company's performance and you can find the reconciliation of these measures to GAAP measures in our 10Q and on our Website at www.Impaccompanies.com under Investor Relations.

I would now like to get started by introducing Joseph Tomkinson, our Chairman and CEO of Impac Mortgage Holdings.

JOSEPH TOMKINSON, CEO, IMPAC MORTGAGE HOLDINGS, INC.: Thank you for joining the Impac Mortgage Holdings' third-quarter earnings conference call. I would like to start by taking a moment to review our financial highlights for the quarter and briefly discuss key drivers to third-quarter earnings. I will close with a review of our business model and risk management strategies which continue to demonstrate our ability to be flexible with our operating businesses and deliver consistent earnings.

Financial highlights for the third-quarter of 2003 include the following. Record net earnings which increased 12 percent to $33.4 million or 63 cents per share as compared to $29 million or 58 cents per share for the second-quarter of 2003.

Estimated taxable income increased to $32.5 million or 61 cents per diluted share as compared to second-quarter 2003 taxable income of $28.7 million or 56 cents per diluted share.

Total acquisitions of originations increased 42 percent to another record high of $2.7 billion as compared to $1.9 billion during the second-quarter of 2003. This includes the Novelle production which increased to $138.7 million as compared to $105.7 million for the last quarter. And our multifamily unit which increased production to $90 million as compared to 74 million for the second quarter of this year.

Total assets increased to an all-time high of $9 billion. This is up from $6.6 billion as of December 31, 2002. Quarterly return on equity was 34.8 percent as compared to 34.5 percent during the second quarter of a year.

During the quarter we issued 2.1 million new shares of common stock which resulted in net cash proceeds of $30.1 million. As a result of our accretive capital raising efforts, and an increase in the fair market value of hedging instruments, our book value increased from $7.46 at June 30, 2003, to $8.11 as of September 30, 2003.

Our pro forma book value which excludes mark-to-market losses of our hedging instruments was $8.65.

Consistent with the Company's goal to provide reliable dividends we declared a third-quarter dividend of 50 cents per common share and stated that we plan to declare and pay at least a 50 cent dividend in the fourth-quarter this year. This effectively results in five dividends being paid during 2003 for a total of at least $2.48 per common share. We believe that the dividends paid during this year should be sufficient to meet our retaxable income distribution requirements for the year.

I would also like to point out that on July 1 of this year, IMH purchased all of the outstanding shares of common stock of the IMPAC Funding Corporation. As a result, IMH now …