Q4 2003 Impac Mortgage Holdings, Inc. Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Good morning. My name is Tishandra, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the year-end 2003 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 will now turn the call over to Ms. Tania Jernigan, Vice President of Investor Relations. You may begin.

TANIA JERNIGAN, VP - IR, IMPAC MORTGAGE HOLDINGS, INC.: Good morning, and welcome to Impac Mortgage Holdings' year-end 2003 earnings conference call. During this call, we will make projections or other forward-looking statements in regards to earnings, future dividend payments, loan acquisitions and originations, growth of total mortgage assets, reduction of interest rate and market risk (ph) exposure. I would like to refer you to review the business risk factors in our quarterly report on Form 10-Q for the filing period September 30, 2003, and in our annual report on Form 10-K for the fiscal year ending December 31st, 2002. These documents contain and identify important factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements that we make.

In addition, in this call, we will express non-GAAP measures in talking about our company's performance, and you can find the reconciliation of those measures to GAAP measures in our press release on our website at www.ImpacCompanies.com under Investor Relations.

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

JOSEPH TOMKINSON, CHAIRMAN, CEO, IMPAC MORTGAGE HOLDINGS, INC.: Good morning, and thank you for joining Impac Mortgage Holdings' year-end earnings conference call.

Across the board, our operating results for 2003 exceeded all of our initial (ph) expectations. The achievements for the year include the following milestones. Record net earnings increased 70 percent to $127.2 million as compared to $74.9 million for 2002. Estimated taxable income also increased 51 percent to $127.5 million as compared to 2002 taxable income of $84.4 million. Total acquisitions and originations increased 61 percent to another record high of $9.5 billion (ph) as compared to $5.9 million for 2002. In addition, our multifamily unit increased its annual production to 290 million as compared to 25 million for last year.

Total assets increased 62 percent to an all-time high of $10.7 billion from $6.6 billion at the end of year December 2002. Return on equity was 38.3 percent as compared to 28.7 percent during 2002. During the year, we issued 11 million new shares of common stock, which resulted in net cash proceeds of $150 million. As a result of our accretive capital raising efforts, and an increase in fair market value of the hedging instruments, our book value increased 35 percent to $9.02 at December 31st, 2003 from $6.70 at December 31st, 2002. Our market capitalization doubled to over $1 billion, and in June, we became a member of the New York Stock Exchange.

With the passage of the tax reform act of 2003, 100 percent of IFC's dividend paid to IMH are qualified at the 15 percent tax rate. Based upon the estimated taxable income calculations for 2003, this effectively calculates into approximately 25 percent of the total dividends paid to shareholders to be taxed at only the 15 percent tax rate, and the remaining 75 percent to be taxed as ordinary income. And last, but not least, our shareholders enjoyed a full return of 76 percent. This calculation is based on common stock price appreciation of $6.71 per share and common stock dividends paid of $2.05.

Consistent with our goal of providing reliable earnings and dividends, the company's business model continued to demonstrate the flexibility and value of our operating businesses. Despite the …