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AHM Sees Higher Delinquencies

Despite seeing a rise in delinquencies during the period, American Home Mortgage Investment Corp. saw its earnings soar during the fourth quarter of 2006. The company said that revenue for the fourth quarter of 2006 was $257.7 million, up 71.3% from the revenue of $150.5 million for the fourth quarter of 2005. Net earnings for the fourth quarter were $64.7 million, up a whopping 287.5% from the net earnings of $16.7 million for the 2005 fourth quarter.

Revenue for American Home Mortgage for the full year of 2006 was $1.03 billion, up 42% from the adjusted revenue of $722.6 million for the full year of 2005. Net earnings for 2006 were $263.5 million, up 39.1% from adjusted net earnings of $189.4 million for 2005.

"The fourth quarter was highly successful for our company with earnings of $1.21 per diluted share," said Michael Strauss, CEO of American Home Mortgage, in a statement. "During the quarter, we added $1 billion of recently originated loans to our portfolio, which are carried at cost. Loan origination volume was a record $15.5 billion due to our company achieving a record market share of 2.48% of national originations."

Despite this good news, he added, "During the quarter, our company did, however, experience its highest delinquency-related charges to date, which reduced our quarterly earnings."

Delinquencies and delinquency-related charges went up sharply in the fourth quarter and are expected to remain at elevated levels throughout 2007. For the fourth quarter, American Home Mortgage's provision expense associated with loans held for investment was $6.7 million, compared to its company's provision expense at $5.4 million in the third quarter. Its quarter-end allowance for loan loss balance was $14.2 million in the fourth quarter (compared to $10.9 million in 3Q06) and its nonperforming loans held for investment were $82.4 million in the fourth quarter (compared to $66.9 million in 3Q06).

The value of American Home Mortgage's residual assets decreased approximately $12.1 million in the fourth quarter due to changes in anticipated credit losses, future interest rates and prepayment speeds, and resulted in a writedown that was charged to income. (c) 2007 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com

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