MHL Mortgageit Hldgs

MortgageIT Holdings, Inc. Reports First Quarter Financial Results - Company earns $15.7 million or $0.79 per diluted share NEW YORK, May 9 /PRNewswire-FirstCall/ -- MortgageIT Holdings, Inc. (NYSE:MHL), a residential mortgage company organized as a real estate investment trust ("REIT"), today announced financial results for the first quarter ended March 31, 2005. The Company reported earnings of $15.7 million, or $0.79 per diluted share for the quarter ended March 31, 2005. These results include after tax gains of $8.7 million resulting from not applying hedge accounting under the Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("FAS 133") to certain hedging transactions. As previously reported on March 31, the Company determined that it did not comply with FAS 133 for certain hedging transactions, including Eurodollar futures contracts used in its investment portfolio activities. The results also include the impact of special legal charges and reserves in the after tax amount of $1.5 million associated with the Company's FAS 133 review and restatement and other legal matters. Loan fundings generated by MortgageIT, Inc., the Company's wholly owned taxable REIT subsidiary ("TRS"), were $4.34 billion for the quarter, up approximately 100% from the year ago period. Purchase money fundings were a company record $2.20 billion in the quarter, up approximately 165% from the year ago period. Doug Naidus, Chairman and Chief Executive Officer, commented, "We've had an outstanding first quarter, having successfully increased our self-originated loan portfolio to $3 billion as promised, and doubling our TRS loan production from Q1 2004 levels while the industry remained generally flat for the period. We expect funding volumes to approach $5 billion for the first time in company history in the second quarter. Our new wholesale sub-prime and correspondent divisions crossed over to run-rate profitability during Q1, and should be accretive to TRS earnings in the second quarter. Finally, through a $50 million trust preferred securities offering which was completed subsequent to quarter's end, we obtained low-cost, non dilutive financing to further support our growth initiatives. We expect to see the impact of these achievements as the rest of 2005 unfolds." Financial and Operating Highlights: Loan Funding Information For the three months ended Mar 31, 2005 2004 Loan Fundings $4.3 billion $2.2 billion % Refinance 49% 62% % Purchase Money 51% 38% % ARM loans 52% 27% Loans Sold and Brokered to Third Parties $3.2 billion $1.8 billion * First quarter loan funding volume was $4.34 billion. This represents an increase of 99.4% from the year ago period. Included in the first quarter volume is a company-record $2.20 billion in purchase (non-refinance) mortgage funding volume representing an approximate 165% increase from the year ago period. * First quarter sub-prime volume was $647.8 million surpassing the Company's prior guidance of $500 million. Sixty-five percent of the volume was originated by the Company's newly formed wholesale sub-prime division which had 298 employees located in eight branches nationwide as of March 31, 2005. * During the first quarter of 2005 the Company transferred $814.4 million of self originated ARM loans to its investment portfolio. As of March 31, 2005, the Company had an investment portfolio of $3.1 billion, of which $2.38 billion was securitized. Subsequently the Company completed a $665 million securitization on April 27th to increase the securitized portfolio to $3.0 billion. * During the first quarter of 2005, the Company sold $2.8 billion of whole loans to third parties and brokered $400 million. The Company recorded pretax gain on sale of $32.1 million for the loans sold to third parties, which included $2.4 million in gains related to the decision not to apply hedge accounting to certain loans held for sale at year end 2004. Excluding this gain, the Company's third party gain on sale margin was 105 basis points. Segment Financial Results for the First Quarter of 2005 Segment results for the first quarter of 2005 are contained in the below table: Segments ($ 000s except per share data) TRS Portfolio Elimination Total Revenue 55,732 18,744 (4,519) 69,956 Expenses 48,801 3,014 (569) 51,246 Pretax Income 6,931 15,730 (3,950) 18,710 Taxes 2,980 2 0 2,982 Net Income 3,950 15,728 (3,950) 15,728 EPS 0.20 0.79 (0.20) 0.79 After tax gains relating to FAS 133 included in the above table 1,362 7,308 0 8,669 * The Company recorded after tax gains of $8.7 million or $0.44 per diluted share relating to the previously announced decision not to apply hedge accounting to certain hedging transactions. The Company intends to qualify for hedge accounting in future periods. * The Company's investment portfolio generated after tax GAAP earnings of $15.7 million in the first quarter or $0.79 per diluted share. Estimated REIT taxable earnings were $9.9 million or $0.50 per diluted share. The Company paid a $0.48 cent dividend for the first quarter of 2005. * The average portfolio size during the first quarter was $2.8 billion. Based on taxable income, the portfolio generated a net interest margin of 140 basis points which takes into account all portfolio expenses including general and administrative costs. * The TRS had net income of $4.0 million or $0.20 per diluted share prior to elimination. The TRS results include the impact of special legal charges and reserves in the after tax amount of $1.4 million associated with the Company's FAS 133 review and restatement and other legal matters. The results also include an after tax accounting gain of $1.4 million as a result of the Company's decision not to apply hedge accounting to certain loans held for sale at year end 2004. The Company determined that it qualified for hedge accounting for loans held for sale as of March 31, 2005. Outlook and Guidance * The Company expects to increase the size of its investment portfolio to $3.8 billion by the end of the second quarter fully utilizing the net proceeds from the $50 million trust preferred securities offering that was completed in April 2005. * The Company currently estimates that its second quarter dividend will be $0.48 per share. * The Company expects to report loan funding volume of approximately $4.9 to $5.3 billion in the second quarter of 2005, which would represent an increase of 45% to 57% over the second quarter of 2004. * The Company expects to report sub-prime loan funding volume of $750 million to $1.0 billion in the second quarter. Conference Call Information MortgageIT Holdings, Inc. will hold an investor conference call to discuss its first quarter financial performance at 10:00 a.m. Eastern Time, Tuesday, May 10, 2005. Interested parties may listen to the call by dial 800-370-0898 (U.S.), or 973-935-2101 (International), or by visiting the MortgageIT Holdings corporate website, http://www.mortgageitholdings.com/, to listen to a live conference call webcast. A replay of the conference call will be available through Tuesday, May 17, 2005 at midnight ET. The replay can be accessed by dialing 877-519-4471 (U.S.), and 973-341-3080 (International). The pass code for the replay is 5983896. An archived replay of the webcast will also be available on the Company's corporate website. About MortgageIT Holdings, Inc. MortgageIT Holdings, Inc. (NYSE:MHL) is a self-administered mortgage real estate investment trust ("REIT") focused on the residential lending market. The Company self-originates its investment portfolio of high quality adjustable rate mortgage ("ARM") loans through MortgageIT, Inc., its wholly owned residential mortgage lending subsidiary. MortgageIT, Inc. is a full-service residential mortgage lending company that is licensed to originate loans throughout the United States. MortgageIT Holdings is organized and conducts its operations to qualify as a REIT for federal income tax purposes. MortgageIT is organized and operates as MortgageIT Holdings' taxable REIT subsidiary. For more information, please visit http://www.mortgageitholdings.com/. Certain items in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to our ability to fund a fully-leveraged, self-originated loan portfolio, our anticipated loan funding volume and our ability to pay dividends. These statements are based on management's current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. MortgageIT Holdings can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from MortgageIT Holdings' expectations include, but are not limited to, MortgageIT's continued ability to originate new loans, including loans that we deem suitable for our securitization portfolio; changes in the capital markets, including changes in interest rates and/or credit spreads; and other risks detailed in MortgageIT Holdings' Annual Report on Form 10-K that was filed with Securities and Exchange Commission (SEC) on March 31, 2005 and from time to time in MortgageIT Holdings' other SEC Reports. Such forward-looking statements speak only as of the date of this press release. MortgageIT Holdings expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or change in events, conditions or circumstances on which any statement is based. MortgageIT Holdings, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS (Dollars in thousands) March 31, December 31, 2005 2004 (Unaudited) ASSETS Cash and cash equivalents $40,315 $70,224 Restricted cash 246 1,679 Marketable securities held to maturity 4,066 7,546 Portfolio ARM Loans ARM loans collateralizing debt obligations, net 2,379,556 1,432,692 ARM loans held for securitization, net 684,918 1,166,961 Total Portfolio ARM Loans 3,064,474 2,599,653 Mortgage loans held for sale 1,404,982 784,592 Hedging instruments 44,151 19,526 Accounts receivable, net of allowance 35,408 28,731 Prepaids and other assets 6,415 7,803 Goodwill 11,639 11,639 Property and equipment, net 5,630 5,567 Total assets $4,617,326 $3,536,960 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Collateralized debt obligations, net $2,229,829 $1,328,096 Warehouse lines payable 2,005,546 1,869,385 Repurchase agreements 83,475 67,674 Hedging instruments 3,151 1,145 Notes payable and other debt 15,000 15,000 Accounts payable, accrued expenses and other liabilities 67,009 63,993 Total liabilities 4,404,010 3,345,293 STOCKHOLDERS' EQUITY: Common stock, $.01 par value: 125,000,000 shares authorized; 19,405,706 issued and outstanding 194 194 Additional paid-in capital 240,477 238,405 Unearned compensation - restricted stock (7,477) (6,196) Accumulated other comprehensive income (loss) 14,058 (387) Accumulated deficit (33,936) (40,349) Total stockholders' equity 213,316 191,667 Total liabilities and stockholders' equity $4,617,326 $3,536,960 CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars and shares in thousands, except per share data) Three months ended March 31, 2005 2004 (As restated) Revenues: Gain on sale of mortgage loans $32,107 $14,354 Brokerage revenues 6,398 8,745 Interest income 53,752 5,317 Interest expense (31,486) (2,546) Net interest income 22,266 2,771 Realized and unrealized gain on hedging instruments 8,922 0 Other 263 7 Total revenues $69,956 $25,877 Operating expenses: Compensation and employee benefits $27,789 $16,531 Processing expenses 10,363 3,446 General and administrative expenses 6,818 2,317 Rent 2,275 1,814 Marketing, loan acquisition and business development 895 1,050 Professional fees 2,310 587 Depreciation and amortization 796 626 Total operating expenses 51,246 26,371 Income (loss) before income taxes 18,710 (494) Income taxes 2,982 (223) Net income (loss) 15,728 (271) Dividends on convertible redeemable preferred stock 0 1,661 Net income (loss) attributable to common stockholders $15,728 $(1,932) Per share data: Basic $0.81 ($3.73) Diluted $0.79 ($3.73) Weighted average number of shares - basic (1) 19,405 518 Weighted average number of shares - diluted (1) 19,846 518 (1) Reflects, on a retroactive basis, for all periods presented, the exchange of approximately 12.80 shares of MortgageIT, Inc. common stock for each share of MortgageIT Holdings, Inc. common stock and the retention and retirement of common shares pursuant to the reorganization of MortgageIT, Inc DATASOURCE: MortgageIT Holdings, Inc. CONTACT: Investors: Sean McGrath of MortgageIT Holdings, Inc., +1-212-651-4637, or Media: Ted Stacer of MortgageIT Holdings, Inc., +1-212-651-7653, or Joe LoBello of Brainerd Communicators, Inc., +1-212-986-6667, for MortgageIT Holdings, Inc. Web site: http://www.mortgageitholdings.com/

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