Impac Mortgage Holdings Inc. generated almost $4 million in net income during the first quarter as it continued to downsize to adjust for origination declines and benefited from servicing gains.
"Originators have experienced reduced origination volume at compressed gain-on-sale margins, as capacity exceeded demand. Our origination business is not immune to these market conditions, however our mortgage servicing portfolio served as a countercyclical balance to our first-quarter results," Impac Mortgage President George Mangiaracina said in a press release.
The company's results were down slightly from net income above $4 million during the first quarter of 2017. But they improved on a loss of almost $45 million in the fourth quarter of last year, when longtime chairman and CEO Joseph Tomkinson announced plans to step down.
Originations totaled $1.3 billion, an amount 16% lower than the same quarter a year ago. But loans made outside of the Consumer Financial Protection Bureau's Qualified Mortgage definition, which provides a safe harbor from ability to repay liability, were up 35% from a year ago at more than $248 million. The majority, or 77%, of these non-QM loans came through the wholesale and correspondent loan channels, with the balance originated through the retail channel.
While originations at the company overall have been lower recently, originations brought in through the correspondent loan channel have been increasing.
In addition to reductions in commission, personnel and operating expenses due to downsizing, factors that helped Impac offset declining revenue from originations included a mark-to-market gain on mortgage servicing rights.
The company, which has been retaining servicing since 2016, saw its servicing portfolio increase to almost $17 billion in the first quarter compared to a little over $13 billion a year ago.