Walter Investment Management Corp. Announces First Quarter 2010 Financial Results

TAMPA, Fla., May 5 /PRNewswire-FirstCall/ -- Walter Investment Management Corp. (NYSE Amex: WAC) ("Walter Investment" or the "Company") today announced results for the quarter ended March 31, 2010.

The Company reported income before income taxes for the quarter ended March 31, 2010 of $8.2 million, or $0.31 per diluted share as compared to income before income taxes for the fourth quarter 2009 of $8.1 million, or $0.32 per diluted share.  Net income for the first quarter of 2010 was $8.1 million, or $0.30 per diluted share as compared to net income for the fourth quarter 2009 of $8.5 million, or $0.34 per diluted share.

Mark J. O'Brien, Walter Investment's Chairman and CEO, said, "We are pleased with the strong results from our existing portfolio, and are confident we are on a path to grow our core business as we begin to deploy the capital raised in the fourth quarter of 2009."

"We believe the opportunities to acquire attractive loan pools are improving, as evidenced by our recently announced purchase of performing residential loans.  We remain committed to prudently deploying our capital to acquire assets which meet our investment criteria and return objectives."

First Quarter 2010 Dividend Declaration

On April 30, 2010, the Board of Directors of the Company declared a dividend of $0.50 per share to shareholders of record as of May 14, 2010, which will be paid on May 28, 2010.  

First Quarter 2010 Operating Highlights

• Reflecting strong performance and favorable seasonal trends, consolidated delinquencies were 4.21 percent at March 31, 2010, as compared to 5.44 percent at December 31, 2009 and 4.59 percent at March 31, 2009.   Walter Investment's delinquency rates (adjusted to reflect comparable methodologies) remain better than the most recently released Mortgage Banker's Association's subprime industry survey average by more than 50 percent.  

• On an annualized basis, the asset yield for the quarter ended March 31, 2010 was 10.09 percent and the Company's interest cost on outstanding debt was 6.78 percent.  The net interest margin for the quarter, which is net interest income as a percentage of average earning assets, was 4.93 percent, slightly lower than the first quarter of last year, due to lower outstanding balances and lower prepayment speeds.

• Loss severities were 11.9 percent in the first quarter, as compared to 12.1 percent for the fourth quarter of 2009 and 16.8 percent in the first quarter of 2009.

• During the first quarter of 2010, the Company paid dividends declared on December 15, 2009 of $12.8 million to its shareholders.

Charles E. Cauthen, Walter Investment's President and COO, said, "As anticipated, our field servicing organization delivered excellent results from our existing portfolio in the first quarter, laying a strong foundation for the year ahead.  As we add additional assets to our servicing platform, we must continue to deliver superior results and solid returns to our shareholders through our high touch origination and servicing model and our deeply experienced personnel."

First Quarter 2010 Financial Summary

Net interest income for the quarter was $20.4 million as compared to $22.7 million in the year-ago period driven by lower outstanding balances and lower voluntary prepayment speeds.

The provision for loan losses was $3.2 million, compared with $4.4 million in the year ago period.  The decrease from the year earlier period was primarily driven by improved loss severities, coupled with a lower frequency of default on the ARM portfolio.  

Non-interest income was $3.5 million in the first quarter of 2010 as compared to $3.2 million in the prior year period.  

Non-interest expenses increased from $10.2 million in the first quarter of 2009 to $12.4 million for the first quarter of 2010.  The increase included $1.2 million of stock compensation expense and $0.7 million of severance expense associated with management changes, in addition to increased costs associated with being a stand-alone public company, including salaries and benefits, legal, professional, technology and communications costs.  

First Quarter 2010 Liquidity Summary

At March 31, 2010, the Company had $96.3 million of cash.  The Company had no borrowings under its $15 million revolving credit facility at March 31, 2010.  

Purchase of Pool of Loans

On April 14, 2010, the Company entered into a definitive agreement to purchase a pool of 100% performing, fixed-rate residential loans on single-family, owner occupied residences located within the Company's existing southeastern United States geographic footprint. The purchase closed on April 19, 2010, utilizing $11.1 million of proceeds from its equity offering.

Conference Call Webcast

Members of the Company's leadership team will discuss Walter Investment's first quarter results and other general business matters during a conference call and live webcast to be held on Thursday, May 6, 2010, at 10 a.m. Eastern Time.  To listen to the event live or in an archive which will be available for 30 days, visit the Company's website at www.walterinvestment.com.

About Walter Investment Management Corp.

Walter Investment Management Corp. is an asset manager, mortgage servicer and mortgage portfolio owner specializing in less-than-prime, non-conforming and other credit-challenged mortgage assets. Based in Tampa, Fla., the Company currently has $1.9 billion of assets under management and annual revenues of approximately $190 million.  The Company is structured as a real estate investment trust ("REIT") and employs approximately 220 people.   For more information about Walter Investment Management Corp., please visit the Company's website at www.walterinvestment.com.

Safe Harbor Statement

Certain statements in this release and in our public documents to which we refer, contain or incorporate by reference "forward-looking" statements as defined in Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Walter Investment Management Corp. is including this cautionary statement to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements that are not historical fact are forward-looking statements. Words such as "expect," "believe," "anticipate," "project," "estimate," "forecast," "objective," "plan," "goal" and similar expressions are intended to identify forward looking statements.  Forward-looking statements are based on the Company's current belief, intentions and expectations; however, forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results, performance or achievements, to differ materially from those reflected in the statements made or incorporated in this release. Thus, these forward-looking statements are not guarantees of future performance and should not be relied upon as predictions of future events.  These risks and uncertainties are contained in Walter Investment Management Corp.'s Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 2, 2010 and Walter Investment Management Corp.'s other filings with the SEC.

All forward looking statements set forth herein are qualified by this cautionary statement and are made only as of May 5, 2010. The Company undertakes no obligation to update or revise the information contained herein, including without limitation any forward-looking statements whether as a result of new information, subsequent events or circumstances, or otherwise, unless otherwise required by law.

SOURCE Walter Investment Management Corp.