* Reports GAAP loss of $0.17 per diluted share, which includes a
$0.45 per share charge pertaining to national wholesale sub-prime
exit NEW YORK, May 8 /PRNewswire-FirstCall/ -- MortgageIT Holdings,
Inc. (NYSE:MHL), a residential mortgage company organized as a real
estate investment trust ("REIT"), today announced operating and
financial results for the first quarter ended March 31, 2006. The
Company reported a GAAP net loss for the first quarter of 2006 of
$4.7 million, or $0.17 per diluted share. Adjusted net loss for the
first quarter of 2006 was $4.0 million, or $0.14 per diluted share.
Net loss and adjusted net loss per diluted share are based upon
weighted average outstanding shares of 28.4 million. Additional
operating information is included in the "Operating Statistics
Table" provided later in this press release. Doug Naidus, Chairman
and Chief Executive Officer, commented, "The Company has built
momentum over the first three months of 2006. Now that we have
completed the exit from our national wholesale sub-prime business,
we are in an excellent position to capitalize on the positive
trends we are seeing. Gain on sale margins continue to expand,
funding volumes are increasing with a seasonal tailwind, and our
portfolio has continued to perform well as prepayment speeds remain
slow. As such, we are guiding to a $0.30 dividend in the second
quarter, a 20% increase from the first quarter." Mortgage Banking
Financial and Operating Highlights: * For the first quarter ended
March 31, 2006, MortgageIT, Inc., the Company's mortgage banking
subsidiary, had a pre-tax loss of $26.3 million. After-tax loss
totaled $15.0 million or $0.53 per share. The national wholesale
sub-prime exit, which is now complete, resulted in a charge to
earnings of $0.45 per share or approximately $12.8 million after
tax. At March 31, 2006, the Company had an immaterial amount of
wholesale sub-prime inventory on its balance sheet and had reduced
its wholesale sub-prime staff by approximately 96% from year end
levels. * The Company funded $7.2 billion in mortgage originations
in the first quarter of 2006. This represents a 66% increase from
the year ago first quarter. The Company funded slightly more than
$100 million of sub-prime loans in the first quarter of 2006. *
Prime gain on sale margin during the first quarter was
approximately 92 basis points (bps). This is a 22 bps increase from
the fourth quarter of 2005. Sub-prime gain on sale margin for the
first quarter was approximately negative 232 bps as the Company
focused on selling remaining sub-prime inventory consistent with
its efforts to exit the national wholesale sub-prime channel.
Combined gain on sale margin for loans sold to third parties during
the quarter ended March 31, 2006 was approximately 71 bps.
Portfolio Financial and Operating Highlights: * The Company's
investment portfolio earned $11.0 million or $0.39 per share in
adjusted earnings during the first quarter of 2006. * As of March
31, 2006, the Company had an investment portfolio of approximately
$5.2 billion, plus approximately $23.2 million of self-originated
mortgage backed securities. The portfolio had an average balance of
$4.9 billion during the first quarter of 2006. During the first
quarter of 2006, the Company securitized approximately $750.0
million of self-originated ARM loans. * Adjusted net interest
margin on the loan portfolio was 89 bps during the first quarter of
2006, down from 105 bps in the fourth quarter of 2005. Adjusted
return on assets ("ROA") on the portfolio was 71 bps in the first
quarter, down from 90 bps in the fourth quarter of 2005. Outlook
and Guidance * The Company expects its mortgage banking business to
return to profitability in the second quarter of 2006. It expects
prime gain on sale margins to significantly exceed first quarter
2006 levels. * The Company expects to pay a second quarter dividend
of $0.30 per share. * The Company expects the average balance of
its investment portfolio to be approximately $5.0 billion during
the second quarter of 2006. * The Company expects to report loan
funding volume of approximately $7.75 to $8.25 billion in the
second quarter of 2006, which would represent an increase of 21% to
29% over the second quarter of 2005. Year-ago fundings included
approximately $791 million of wholesale sub-prime originations.
Adjusted Financial Measures Adjusted net loss, adjusted net
interest margin, adjusted return on assets, and adjusted earnings
per share (diluted) are non-GAAP financial measures which are
reported by the Company in addition to net loss and earnings per
share (diluted) as prepared in accordance with GAAP. As indicated
in its first quarter 2005 release, during the first quarter of
2005, the Company did not qualify under the Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("FAS 133") with respect to
certain hedging activities. The non- GAAP financial measures
reported by the Company are presented as if the Company qualified
under FAS 133 in all periods. If the Company qualified under FAS
133, gains and losses on derivative hedges would have been deferred
and amortized over the hedge period. Since the Company did not
qualify under FAS 133, both realized and unrealized gains and
losses were recognized in GAAP earnings in prior periods.
Management believes that by making these adjustments in this
manner, the non-GAAP measures provide a useful gauge of the
Company's operating performance because, as adjusted, these amounts
highlight that portion of the Company's reported earnings that is
more likely to be ongoing in nature. First Quarter 2006 Conference
Call Information MortgageIT Holdings, Inc. will hold an investor
conference call to discuss its first quarter financial results on
Tuesday, May 9, 2006 at 10:00 a.m. Eastern Time. Interested parties
may listen to the live call by dialing 888-694-4702 (U.S.) or
973-582-2741 (International) and referencing the conference ID
#7263046, 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 16, 2006, 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 7263046. An
archived replay of the webcast also will 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 banking subsidiary. MortgageIT, Inc. is a
full- service residential mortgage banking 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/.
Forward-Looking Statements In this press release, 2006 results are
unaudited. Also, this press release contains certain
"forward-looking statements," within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements are statements that relate to future, not past, events.
In this context, forward-looking statements often address the
Company's expected future business and financial performance, and
often contain words such as "expects," "anticipates," "intends,"
"plans," "believes," "will" or other similar words or expressions.
Forward-looking statements, by their nature, address matters that
are, to different degrees, uncertain and include, among other
things, statements relating to the Company's ability to fund a
fully- leveraged, self-originated loan portfolio, its anticipated
loan funding volume and the Company's ability to pay dividends.
These statements are based on the current economic environment and
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. Forward-looking statements are inherently subject to
significant economic, competitive, and other contingencies that are
beyond the control of management. The Company can give no assurance
that its expectations will be attained. Factors that could cause
actual results to differ materially from the Company's expectations
include, but are not limited to, MortgageIT, Inc.'s continued
ability to originate new loans, including loans that the Company
deems suitable for its securitization portfolio; changes in the
capital markets, including changes in interest rates and/or credit
spreads; and other risks detailed in the Company's Annual Report on
Form 10-K that was filed with the Securities and Exchange
Commission ("SEC") on March 15, 2006 and from time to time in the
Company's other SEC filings. Such forward-looking statements speak
only as of the date of this press release. The Company 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 and Subsidiaries
Consolidated Balance Sheets (Unaudited) (Dollars in thousands)
March 31, December 31, 2006 2005 ASSETS Cash $55,079 $36,757
Restricted cash 1,889 712 Marketable securities held to maturity
1,489 3,675 Portfolio ARM Loans ARM loans collateralizing debt
obligations, net 5,214,439 4,681,554 ARM loans held for
securitization, net 0 282 Total Portfolio ARM Loans 5,214,439
4,681,836 Mortgage loans held for sale 2,856,370 3,378,197
Mortgage-backed securities-available for sale 23,211 23,357 Hedging
instruments 72,659 54,472 Accounts receivable, net of allowance
148,752 146,043 Prepaids and other assets 46,933 31,262 Goodwill
11,639 11,639 Property and equipment, net 14,790 13,941 Total
assets $8,447,250 $8,381,891 LIABILITIES AND STOCKHOLDERS' EQUITY
Collateralized debt obligations $4,992,895 $4,485,197 Warehouse
lines payable 2,689,694 3,177,990 Repurchase agreements 102,282
87,058 Hedging instruments 6,410 8,801 Junior subordinated
debentures 128,871 77,324 Notes payable and other debt 30,000
15,000 Accounts payable, accrued expenses and other liabilities
138,598 176,619 Total liabilities 8,088,750 8,027,989 STOCKHOLDERS'
EQUITY (DEFICIT) Common stock 292 289 Treasury stock (1,178)
(1,178) Additional paid-in capital 393,380 393,304 Unearned
compensation -- restricted stock (5,060) (5,889) Accumulated other
comprehensive income (loss) 28,732 13,225 Accumulated deficit
(57,666) (45,849) Total stockholders' equity 358,500 353,902 Total
liabilities and stockholders' equity $8,447,250 $8,381,891
Consolidated Statements of Operations (Unaudited) (Dollars and
shares in thousands, except per share data) Three Months Ended Mar
31, 2006 2005 Revenues: Gain on sale of mortgage loans $45,752
$32,107 Brokerage revenues 6,438 6,398 Interest income 113,908
53,752 Interest expense (104,981) (31,486) Net interest income
8,927 22,266 Realized and unrealized gain on hedging instruments
420 8,922 Other 238 263 Total revenues 61,775 69,956 Operating
expenses: Compensation and employee benefits 37,242 27,789
Processing expenses 23,918 10,363 General and administrative
expenses 7,580 6,818 Rent 3,688 2,275 Marketing, loan acquisition
and business development 1,270 895 Professional fees 2,597 2,310
Depreciation and amortization 1,547 796 Total operating expenses
77,842 51,246 (Loss) income before income taxes (16,067) 18,710
Income taxes (11,340) 2,982 Net (loss) income (4,727) 15,728
Dividends on convertible redeemable preferred stock, accrued and
unpaid - - Net (loss) income attributable to common stockholders
($4,727) $15,728 Earnings per Share: Basic ($0.17) $0.81 Diluted
($0.17) $0.79 Number of Shares: Basic 28,352 19,405 Diluted 28,352
19,846 Segment Financial Results for the First Quarter of 2006 ($
thousands -- except EPS) Mortgage Banking Portfolio Consolidated
Amount EPS Amount EPS Amount EPS After tax (loss)/earnings prior to
elimination (14,986) (0.53) 8,902 0.31 (6,084) (0.22)
Elimination(1) 20 0.00 1,337 0.05 1,358 0.05 After tax
(loss)/earnings net of elimination (14,966) (0.53) 10,239 0.36
(4,727) (0.17) Adjustment for after tax impact relating to
FAS133(2) 0 0.00 742 0.03 742 0.03 Adjusted (Loss)/Earnings
(14,966) (0.53) 10,981 0.39 (3,985) (0.14) (1) Eliminates the
economic impact of inter-company loan sales from the mortgage bank
to the portfolio. (2) Adjusts previous gains and losses on
derivative hedges reported by the Company (as a result of not
qualifying under FAS 133) and the corresponding amortization
associated with those gains and losses. Operating Statistics Table
Rolling five quarter information (Quarter ended) Mar 31, Jun 30,
Sep 30, Dec 31, Mar 31, 2005 2005 2005 2005 2006 Mortgage Banking
Metrics Loan volume ($ millions) $4,340 $6,389 $9,249 $9,244 $7,195
% Purchase 51% 56% 48% 47% 44% % Refinance 49% 44% 52% 53% 56% %
Funded in MortgageIT name (banked) 92% 93% 95% 96% 95% Held for
sale warehouse balance (avg) ($ millions) $1,500 $2,139 $3,655
$4,828 $4,267 Warehouse weighted average coupon 6.33% 5.87% 5.24%
5.59% 5.60% Warehouse borrowing cost 3.33% 3.74% 4.36% 4.95% 5.31%
Warehouse net interest margin 3.00% 2.13% 0.88% 0.64% 0.29% Number
of production branches 51 53 58 54 49 Gain on sale on total loans
sold to third parties (Bps) 105 114 93 71 71 Gain on sale prime
loans sold to third parties (Bps) 97 93 80 70 92 Gain on sale
sub-prime loans sold to third parties (Bps) 186 227 175 75 (232)
Gain on sale on loans transferred to portfolio (Bps) 87 70 78 66 NM
Margin on loans brokered (Bps) 133 116 128 122 135 Loan Portfolio
Metrics Average loan assets in portfolio ($ millions) $2,786 $3,404
$4,197 $4,804 $4,939 Weighted average coupon of loans 5.12% 5.17%
5.37% 5.41% 5.48% Scheduled loan basis amortization 0.21% 0.22%
0.28% 0.26% 0.18% Incremental loan basis amortization due to higher
prepayment rates --% 0.05% 0.08% 0.00% 0.00% Net weighted average
coupon 4.91% 4.90% 5.01% 5.15% 5.30% Interest expense (net of
hedging) 3.07% 3.62% 3.93% 4.19% 4.47% FAS133 adjustment --% -0.17%
-0.14% -0.10% -0.06% Adjusted net interest margin 1.84% 1.45% 1.22%
1.05% 0.89% General and administrative (includes servicing expense)
0.41% 0.44% 0.34% 0.07% 0.15% Credit provision 0.09% 0.09% 0.09%
0.09% 0.03% Adjusted loan portfolio return on assets 1.34% 0.92%
0.79% 0.90% 0.71% Adjusted loan portfolio return on assets prior to
increased prepayments 1.34% 0.97% 0.87% 0.90% 0.71% Credit Reserve
for HFI Portfolio (Based on Average Balance) Credit reserve balance
0.047% 0.062% 0.073% 0.086% 0.090% 60 to 89 days past due 0.06%
0.11% 0.26% 0.26% 0.25% Over 90 days past due --% --% 0.04% 0.12%
0.03% Foreclosure 0.04% 0.17% 0.13% 0.09% 0.24% Total past due and
foreclosure 0.10% 0.28% 0.43% 0.47% 0.52% DATASOURCE: MortgageIT
Holdings, Inc. CONTACT: Investors: Sean McGrath of MortgageIT
Holdings, Inc., +1-212-651-4637; or Media: Joe LoBello of Brainerd
Communicators, Inc., +1-212-986-6667, for MortgageIT Holdings, Inc.
Web site: http://www.mortgageitholdings.com/
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