IMH reported a surprise fourth quarter earnings beat as higher mortgage rates, tighter margins, and record gain-on-sale revenues buoyed results. The publicly-traded company also recently acquired two non-bank mortgage lenders, expanding its reach into the non-QM lending space.
For the fourth quarter of 2020, IMH reported net income of $16.7 million, or $0.81 per share, compared to an adjusted net income of $5.5 million, or $0.29 per share, in the year-ago period, beating analysts’ expectations of $0.65 per share. Revenue rose to $81.1 million from $54.9 million a year ago.
Lower mortgage rates, higher loan production volume, and gains on sale drove Impac’s profitability. Origination volume surged to a total of 2,329 loans for the quarter, compared to 1,790 during the same period last year. The average loan size was $331,826, down from $397,694 a year ago, reflecting the increasing demand for higher loan amount refinancing transactions.
Gain on sale increased 40% to $3.8 million due to higher loan production volume and the shift to purchase money business. Margin compression was a challenge but the company was able to offset it by increasing its warehouse line and securitizing more loans.
The company also closed two acquisitions during the fourth quarter: InterLinc Mortgage Services and Georgia Residential Mortgage. These acquisitions strengthen the company’s presence in the Non-QM space, facilitating access to a wider set of lending products for consumers.
Going forward, Impac Mortgage Holdings expects strong origination volumes to continue in 2021. The company plans to expand into new markets and make strategic investments to capture new business opportunities.
IMH is a publicly traded mortgage lender and financial services holding company whose focus is on the origination, servicing and correspondent investing of residential mortgages. In the fourth quarter of 2020, the company reported net income of $16.7 million, or $0.81 per share, compared to an adjusted net income of $5.5 million, or $0.29 per share, in the prior year period. This beat analysts’ expectations of $0.65 per share. Revenue rose to $81.1 million from $54.9 million a year ago.
The primary driver of this impressive growth was the surprising performance of lower mortgage rates, higher loan production volume, and gains on sale. IMH originated a total of 2,329 loans for the quarter compared to 1,790 a year ago, with the average loan size being slightly smaller at $331,826. By shifting more of their business towards purchase money customers, IMH was able to increase their gain-on-sale revenue by 40%, further driving profits. Additionally, margin compression was mitigated by increasing their warehouse line and securitizing more loans.
To further capitalize on market opportunities, the company has been making strategic acquisitions, such as InterLinc Mortgage Services and Georgia Residential Mortgage. These acquisitions bolster the company’s Non-QM offerings, giving them access to a wider set of lending products for their customers. IMH is also planning to expand into new markets and make investments to capture even more opportunities.
In summary, IMH’s impressive fourth quarter earnings were driven by lower mortgage rates, higher loan production volume, and gains on sale. To further capitalize on these opportunities, the company has been making strategic acquisitions and investments in order to gain access to a wider set of lending products and markets. Going forward, Impac Mortgage Holdings expects strong origination volumes to continue into 2021.
This article was contributed on Dec 01, 2023
