Opteum Inc. (NYSE:OPX) (�Opteum� or the �Company�), a real estate
investment trust (�REIT�), today announced that it has filed a Form
12b-25 with the Securities and Exchange Commission in respect of
its Quarterly Report on Form 10-Q for the period ended June 30,
2007. The Company today also announced preliminary estimates of its
second quarter results of operations and Book Value Per Share at
June 30, 2007. These estimates are subject to continuing review by
the Company�s independent registered public accounting firm and are
subject to change. As previously announced, the Company expects to
report its definitive second quarter results and file its second
quarter Form 10-Q on Tuesday, August 14, 2007. The Company today
also announced the June 30, 2007, composition of the Company�s
investment portfolio of residential mortgage-backed securities
(�MBS�). This information appears in the tables at the end of this
press release. Book Value Per Share The Company estimates its Book
Value Per Share at June 30, 2007, at approximately $1.17 compared
with $4.80 as of March 31, 2007. Book Value Per Share is regularly
used as a valuation metric by various equity analysts that follow
the Company and may be deemed a non-GAAP financial measure pursuant
to Regulation G. The Company computes Book Value Per Share by
dividing total stockholders� equity by the total number of shares
outstanding of the Company�s Class A Common Stock. Estimated Second
Quarter Results of Operations The Company presently estimates a
consolidated net loss of approximately $162.5 million, or
approximately ($6.53) per Class A Common Share for the three-month
period ended June 30, 2007. The Company presently estimates its
second quarter loss from continuing operations at approximately
$82.0 million and losses from discontinued operations, net of tax,
of approximately $80.5 million. Discontinued operations refer to
the mortgage loan origination operations previously conducted by
the Company�s majority-owned subsidiary, Orchid Island TRS, LLC
(�OITRS�). Estimated Second Quarter Results of Continuing
Operations The Company�s estimated second quarter loss from
continuing operations includes an estimated realized loss of
approximately $18.6 million on the sale of MBS and an estimated
other-than-temporary impairment charge of approximately $55.3
million on MBS previously held in an unrealized loss position. In
accordance with U.S. generally accepted accounting principles
(�GAAP�), the Company previously reported the unrealized losses on
MBS that were held as available for sale securities as accumulated
other comprehensive loss (�AOCI�) on the Company�s consolidated
balance sheet. During the second quarter, the Company sold MBS with
a market value at the time of sale of approximately $782 million,
resulting in the estimated realized loss of approximately $18.6
million. These sales were undertaken to preserve and protect the
Company�s liquidity during a period of substantially increased
market distress in the secondary market for mortgage loans and to
give comfort to the Company�s lenders that the Company could meet
its margin calls, all of which have been satisfied. Under GAAP, the
estimated $18.6 million realized loss is required to be reported in
current period earnings and reduces AOCI. In addition, as a result
of these sales, the Company is no longer able to assert its ability
and intent to hold the remaining unsold MBS to maturity.
Accordingly, GAAP requires the elimination of the AOCI associated
with these remaining unsold assets, and this will result in the
Company recognizing an estimated $55.3 million other-than-temporary
impairment charge to earnings during the second quarter. The
Company estimates that its net interest margin on its MBS portfolio
will be approximately 86 basis points as of June 30, 2007,
following the recognition of this other-than-temporary impairment
charge. Further, the recognition of the other-than-temporary
impairment charge in the Company�s second quarter results and the
corresponding elimination of the AOCI balance will not result in
any material incremental reduction in the Company�s consolidated
stockholders� equity at June 30, 2007, because the AOCI balance was
previously included as a deduction in arriving at consolidated
stockholders� equity in prior periods. The Company estimates its
consolidated stockholders� equity at approximately $28.8 million as
of June 30, 2007. Estimated Second Quarter Results of Discontinued
Operations The Company�s estimated second quarter losses from
discontinued operations of approximately $80.5 million, net of tax,
include an estimated $10.5 in losses on sales of assets of the
discontinued operations, net of tax, and an estimated $70.0 million
in losses from discontinued operations, net of tax. The estimated
$70.0 million in losses from discontinued operations, net of tax,
includes an estimated $26.2 million negative fair value adjustment
to the Company�s retained interests in securitizations. Management
Commentary During the second quarter, the Company exited the
mortgage loan origination business by closing OITRS�s Conduit and
Wholesale mortgage origination channels and selling OITRS�s Retail
mortgage origination channel. As previously disclosed, these
actions were precipitated by a dramatic deterioration in the
secondary market for mortgage loans and continuing weakness in
consumer demand for mortgage products and services. During the
second quarter, the Company also completed the sale by OITRS of
approximately two-thirds of its private-label and agency mortgage
servicing portfolio, the performing loans of which had an aggregate
unpaid principal balance of approximately $5.67 billion as of March
31, 2007. The proceeds of this sale were used to repay debt that
was secured by OITRS�s mortgage servicing portfolio. On July 26,
2007, the Company announced that OITRS had entered into a
definitive agreement to sell substantially all of its remaining
mortgage servicing portfolio, the loans of which had an aggregate
unpaid principal balance of approximately $2.97 billion as of June
30, 2007. This sale, which is subject to various closing
conditions, is expected to be completed by September 4, 2007, and
the proceeds will be used to repay the remaining debt that is
currently secured by OITRS�s mortgage servicing portfolio and for
other general corporate purposes. Commenting on the Company�s
second quarter guidance, Jeffrey J. Zimmer, Chairman, President and
Chief Executive Officer, said, �The magnitude of our second quarter
estimated losses is far greater than we could have imagined when
the second quarter began and such losses were precipitated by the
now well-known developments in the secondary market for mortgage
loans. We were unable to immunize ourselves from these developments
and our second quarter results were significantly impacted as a
result. However, unlike some other mortgage market participants, we
have survived the recent market turmoil and we believe that we are
well positioned for the future. This is in no small part due to our
prudent liquidity management and our decision to exit the mortgage
loan origination business so as to reduce our exposure to the
housing and secondary mortgage market in the future.� Mr. Zimmer
continued, �Our recent past performance notwithstanding, we are
optimistic about our prospects going forward for several reasons.
First, a positive net interest margin on our MBS portfolio has been
re-established. At June 30, our MBS portfolio�s net interest margin
is estimated at a positive 86 basis points and the portfolio was
valued at approximately $1.8 billion. Second, our MBS portfolio is
100% invested in Fannie Mae, Freddie Mac and Ginnie Mae agency MBS
rather than private-label MBS. Third, because we own various
interest-rate-sensitive assets, we stand to benefit if the economic
data begin to show compelling evidence that inflation is under
control and the Federal Reserve eases monetary policy. Fourth, by
the end of the third quarter, we expect that we will have monetized
substantially all of the value associated with our mortgage
servicing rights portfolio, will have fully repaid the debt secured
by this asset and will have further enhanced our liquidity. Fifth,
we have over $100 million in trust preferred debt capital that does
not mature until 2035. Sixth, and perhaps most importantly, the
mortgage origination business albatross is no longer around our
necks and we will no longer incur the substantial operating losses
associated with this business that we have experienced over the
course of the last several quarters. In summary, we believe that
our future is bright. We sincerely thank our shareholders, our
lenders and our counterparties that have stood by us through these
difficult times, and we look forward to restoring our
profitability.� The Company has scheduled an online Web simulcast
and conference call to discuss these announcements that will begin
at 8:15�a.m. E.T. today, Friday, August 10, 2007. An online replay
will be available approximately two hours following the conclusion
of the live broadcast and will continue for four days. A link to
these events will be available at the Company's website
www.opteum.com. Those persons without Internet access may listen to
the live call by dialing (800) 240-5318 or (303) 262-2141,
confirmation code: 11095503. About Opteum Opteum Inc. is a REIT
that invests primarily in, but is not limited to, residential
mortgage-related securities issued by the Federal National Mortgage
Association (Fannie Mae), the Federal Home Loan Mortgage
Corporation (Freddie Mac) and the Government National Mortgage
Association (Ginnie Mae). Its objective is to earn returns on the
spread between the yield on its assets and its costs, including the
interest expense on the funds it borrows. Statements herein
relating to matters that are not historical facts are
forward-looking statements as defined in the Private Securities
Litigation Reform Act of 1995. The reader is cautioned that such
forward-looking statements are based on information available at
the time and on management's good faith belief with respect to
future events, and are subject to risks and uncertainties that
could cause actual performance or results to differ materially from
those expressed in such forward-looking statements. Important
factors that could cause such differences are described in Opteum
Inc.'s filings with the Securities and Exchange Commission,
including Opteum Inc.'s most recent Annual Report on Form 10-K or
Quarterly Report on Form 10-Q. Opteum Inc. assumes no obligation to
update forward-looking statements to reflect subsequent results,
changes in assumptions or changes in other factors affecting
forward-looking statements. Opteum Inc. Unaudited RMBS Portfolio
Information as of June 30, 2007 Prices Obtained From Independent
Third-Party Broker/Dealers � Valuation Asset Category June 30, 2007
Market Value As a Percentage of Mortgage Assets As a Percentage of
Mortgage Assets, Cash and P&I Receivable Adjustable Rate
Mortgage Backed Securities (1) $ 1,171,276,901 64.40% 62.91% Hybrid
Adjustable Rate Mortgage Backed Securities 213,858,546 11.76%
11.49% Fixed Rate Mortgage Backed Securities 392,575,297 21.59%
21.09% Fixed Rate Agency Debt 36,777,056 2.02% 1.98% Fixed Rate CMO
4,148,229 0.23% 0.22% Total: Mortgage Assets (2) $ 1,818,636,030
100.00% � Total Cash and Net Short-Term Receivables $ 42,938,043
2.31% Cash out on Margin (Encumbered Cash) - 0.00% Total: All
Assets $ 1,861,574,073 100.00% � (1)�Adjustable Rate MBS are those
that reset coupons within one year�s time. (2)�The value of
unencumbered securities at June 30, 2007, is $401,568. �
Characteristics Asset Category Weighted Average Coupon Weighted
Average Lifetime Cap Weighted Average Periodic Cap Per Year (3)
Weighted Average Coupon Reset (in Months) Longest Maturity Weighted
Average Maturity (in Months) Adjustable Rate Mortgage Backed
Securities (3) 5.42% 9.85% 1.74% 4.95 1-Apr-44 318 Hybrid
Adjustable Rate Mortgage Backed Securities 4.40% 9.91% 2.04% 13.87
1-May-36 336 Fixed Rate Mortgage Backed Securities 6.89% n/a n/a
n/a 1-Jan-37 261 Fixed Rate Agency Debt 4.00% n/a n/a n/a 25-Feb-10
32 Fixed Rate CMO � 7.00% � n/a � n/a � n/a � 18-May-27 � 239
Total: Mortgage Assets 5.59% 9.86% 1.79% 6.32 1-Apr-44 302 � (3)
13.4% ($156.9 million) of the Adjustable Rate Mortgage Portfolio
have no periodic caps. These assets are excluded from the weighted
average periodic cap per year calculation. � � Agency June 30, 2007
Market Value As a Percentage of Mortgage Assets Pool Status June
30, 2007 Market Value As a Percentage of Mortgage Assets Fannie Mae
$ 1,413,318,075 77.71% Whole Pool $ 1,255,302,839 69.02% Freddie
Mac 107,250,345 5.90% Non Whole Pool 563,333,191 30.98% Ginnie Mae
298,067,610 16.39% � � � Total Portfolio $ 1,818,636,030 100.00%
Total Portfolio $ 1,818,636,030 100.00% � Prepayment Speeds Asset
Category Weighted Average One Month Prepayment Speeds (CPR)
Weighted Average Three Month Prepayment Speeds (CPR) (4) Adjustable
Rate Mortgage Backed Securities 41.32% 43.75% Hybrid Adjustable
Rate Mortgage Backed Securities 21.92% 23.09% Fixed Rate Mortgage
Backed Securities 13.06% 14.49% Fixed Rate Agency Debt 23.53%
21.63% Fixed Rate CMO 18.92% 21.86% Total: Mortgage Assets 32.57%
34.54% � (4)��On June 6, 2007, Prepayment Speeds were released for
paydowns occurring in May 2007 (March � May for three month
speeds). The numbers above reflect that data. � Valuation - By RMBS
Asset Type June 30, 2007 Market Value % of Asset Class % of Total
Mortgage Assets Adjustable Rate Mortgages (�ARMs�) One Month LIBOR
$ 12,670,357 1.08% 0.70% Moving Treasury Average 31,055,407 2.65%
1.71% Cost Of Funds Index 4,065,761 0.35% 0.22% Six Month LIBOR
69,269,904 5.91% 3.81% Six Month CD Rate 1,963,598 0.17% 0.11% One
Year LIBOR 519,168,747 44.33% 28.55% Conventional One Year CMT
267,523,707 22.84% 14.71% FHA and VA One Year CMT 262,174,245
22.38% 14.42% Other 3,385,176 0.29% 0.19% Total ARMs $
1,171,276,901 100.00% 64.40% � Hybrid ARMs Generic Fannie or
Freddie Hybrid ARMs 13 - 18 Months to First Reset $ 140,201,424
65.56% 7.71% 19 - 24 Months to First Reset 59,405,634 27.78% 3.27%
25 - 36 Months to First Reset 0 0.00% 0.00% 37 - 60 Months to First
Reset 0 0.00% 0.00% Total Generic Fannie or Freddie Hybrid ARMs $
199,607,057 93.34% 10.98% � Agency Alt-A Hybrid ARMs 13 - 18 Months
to First Reset $ 0 0.00% 0.00% 19 - 24 Months to First Reset
6,830,586 3.19% 0.38% 25 - 36 Months to First Reset 1,229,916 0.58%
0.07% 37 - 60 Months to First Reset 0 0.00% 0.00% Total Agency
Alt-A Hybrid ARMs $ 8,060,502 3.77% 0.44% � GNMA Hybrid ARMs 13 -
24 Months to First Reset $ 6,190,987 2.89% 0.34% Total GNMA Hybrid
ARMs $ 6,190,987 2.89% 0.34% � � � � Total Hybrid ARMs $
213,858,546 100.00% 11.76% � June 30, 2007 Market Value % of Asset
Class % of Total Mortgage Assets Fixed Rate Agency Debt Feb 2010
Stated Final Maturity $ 36,777,056 100.00% 2.02% Total Fixed Rate
Agency Debt $ 36,777,056 100.00% 2.02% � Fixed Rate CMOs Fixed Rate
CMOs $ 4,148,229 100.00% 0.23% Total Fixed Rate CMOs $ 4,148,229
100.00% 0.23% � Fixed Rate Assets 10yr Other (Seasoned, Low Avg
Bal, Low FICO, etc.) $ 1,372,253 0.35% 0.08% 15yr $85,000 Maximum
Loan Size 53,563,574 13.64% 2.95% 15yr $110,000 Maximum Loan Size
3,329,453 0.85% 0.18% 15yr 100% Investor Property 556,523 0.14%
0.03% 15yr 100% FNMA Expanded Approval Level 3 425,887 0.11% 0.02%
15yr 100% Alt-A 27,768,368 7.07% 1.53% 15yr Geography Specific (NY,
FL, VT, TX) 1,370,340 0.35% 0.08% 15yr Other (Seasoned, Low Avg
Bal, Low FICO, etc.) 13,776,947 3.51% 0.76% 20yr Other (Seasoned,
Low Avg Bal, Low FICO, etc.) 859,029 0.22% 0.05% 20yr 100% Alt-A
644,835 0.16% 0.04% 30yr $85,000 Maximum Loan Size 121,866,429
31.04% 6.70% 30yr $110,000 Maximum Loan Size 29,065,679 7.40% 1.60%
30yr 100% Investor Property 4,907,970 1.25% 0.27% 30yr 100% FNMA
Expanded Approval Level 3 25,427,458 6.48% 1.40% 30yr 100% Alt-A
22,209,490 5.66% 1.22% 30yr Geography Specific (NY, FL, VT, TX)
6,461,160 1.65% 0.36% 30yr 100% GNMA Builder Buydown Program
3,183,039 0.81% 0.18% 30yr Other (Seasoned, Low Avg Bal, Low FICO,
etc.) 75,786,862 19.31% 4.17% Total Fixed Rate Assets $ 392,575,297
100.00% 21.59% � � � � Total (All RMBS Portfolio Assets) $
1,818,636,030 100.00% Total Cash and Short-Term Receivables
42,938,043 Total Value of RMBS Portfolio Assets, Cash and
Short-Term Receivables $ 1,861,574,073
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