American Home Mortgage Investment Corp. — a mortgage real estate investment trust that originates its own loans — said third-quarter profits were up 35 percent from the same quarter last year, to $72 million.
The Melville, N.Y.-based lender said it achieved earnings of $1.36 per share despite “sharply higher” delinquencies in its $13 billion loan portfolio, and higher costs for credit provisions and repurchases of delinquent, previously sold loans.
The value of nonperforming loans doubled from the previous quarter, to $66.9 million, and allowances and reserves for losses associated with those loans were $12.5 million, compared with $6.9 million at the end of the second quarter.
These factors were offset by record loan production, net interest income from the lender’s portfolio, and record servicing and ancillary fee income, plus lower loan production expenses, the company said.
“Our company’s third-quarter results were accomplished during a period that was particularly difficult for our industry,” said Michael Strauss, American Home’s chief executive officer, in a press release. Mortgage lenders were also coping with the impacts of an inverted yield curve, falling national housing prices, reduced national loan originations, and servicing write-downs due to lower interest rates, Strauss said.
American Home’s loan production was a record $15.3 billion in the quarter, up from $14.9 billion in the previous quarter. The lender sold $14.3 billion in loans to third parties for a gain of $210.6 million, a 1.47 percent gain on sale margin. During the third quarter, loans and mortgage-backed securities in portfolio averaged $13 billion, and earned net interest income of $28.4 million.
Based on the third-quarter results, American Home is sticking to previous estimates that it will originate $55 billion to $60 billion in loans this year, and earnings for 2006 will be $4.85 to $5.15 per share.
American Home originates loans through a network of production offices and mortgage brokers and purchases others from correspondent lenders. The loans are serviced at the company’s Irving, Texas, servicing center.
This year, American Home acquired Chicago, Ill.-based Flower Bank and three loan origination branches from Pacific Crest Savings Bank, two of which are in Seattle.