News Release
For the fourth quarter of 2022, the Company reported a net loss of
For the year ended
Adjusted earnings (loss) is not considered an accounting principle generally accepted in
| Results of Operations |
For the Three Months Ended |
|
For the Year Ended |
|||||||||||||||||
| (in thousands, except share data) |
|
|
|
|
|
|
|
|
|
|||||||||||
| (unaudited) |
2022 |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|||||||||||
| Revenues: | ||||||||||||||||||||
| Gain (loss) on sale of loans, net | $ |
865 |
|
$ |
(682 |
) |
$ |
14,861 |
|
$ |
6,317 |
|
$ |
65,294 |
|
|||||
| Real estate services fees, net |
349 |
|
290 |
|
212 |
|
1,081 |
|
1,144 |
|
||||||||||
| (Loss) gain on mortgage servicing rights, net |
(157 |
) |
196 |
|
(68 |
) |
194 |
|
34 |
|
||||||||||
| Servicing fees (expense), net |
36 |
|
32 |
|
(39 |
) |
63 |
|
(432 |
) |
||||||||||
| Broker fee income |
50 |
|
— |
|
— |
|
50 |
|
— |
|
||||||||||
| Other |
(73 |
) |
3 |
|
(29 |
) |
890 |
|
279 |
|
||||||||||
| Total revenues (expenses), net |
1,070 |
|
(161 |
) |
14,937 |
|
8,595 |
|
66,319 |
|
||||||||||
| Expenses: | ||||||||||||||||||||
| Personnel expense |
5,060 |
|
5,701 |
|
13,204 |
|
30,705 |
|
52,778 |
|
||||||||||
| General, administrative and other |
3,664 |
|
3,792 |
|
3,978 |
|
15,698 |
|
16,795 |
|
||||||||||
| Occupancy |
2,041 |
|
1,038 |
|
1,062 |
|
5,297 |
|
4,236 |
|
||||||||||
| Business promotion |
261 |
|
545 |
|
2,249 |
|
4,425 |
|
7,395 |
|
||||||||||
| Total expenses |
11,026 |
|
11,076 |
|
20,493 |
|
56,125 |
|
81,204 |
|
||||||||||
| Operating (loss) earnings: |
(9,956 |
) |
(11,237 |
) |
(5,556 |
) |
(47,530 |
) |
(14,885 |
) |
||||||||||
| Other (expense) income: | ||||||||||||||||||||
| Net interest (expense) income |
(1,390 |
) |
(1,334 |
) |
403 |
|
(3,869 |
) |
2,398 |
|
||||||||||
| Change in fair value of long-term debt |
(430 |
) |
(435 |
) |
1,459 |
|
2,757 |
|
2,098 |
|
||||||||||
| Change in fair value of net trust assets |
— |
|
— |
|
7,284 |
|
9,248 |
|
6,582 |
|
||||||||||
| Total other (expense) income, net |
(1,820 |
) |
(1,769 |
) |
9,146 |
|
8,136 |
|
11,078 |
|
||||||||||
| (Loss) earnings before income taxes |
(11,776 |
) |
(13,006 |
) |
3,590 |
|
(39,394 |
) |
(3,807 |
) |
||||||||||
| Income tax expense |
(8 |
) |
7 |
|
8 |
|
38 |
|
71 |
|
||||||||||
| Net (loss) earnings | $ |
(11,768 |
) |
$ |
(13,013 |
) |
$ |
3,582 |
|
$ |
(39,432 |
) |
$ |
(3,878 |
) |
|||||
| Other comprehensive (loss) earnings: | ||||||||||||||||||||
| Change in fair value of instrument specific credit risk |
6,097 |
|
3,347 |
|
(1,148 |
) |
17,213 |
|
(2,722 |
) |
||||||||||
| Total comprehensive (loss) earnings | $ |
(5,671 |
) |
$ |
(9,666 |
) |
$ |
2,434 |
|
$ |
(22,219 |
) |
$ |
(6,600 |
) |
|||||
| Diluted weighted average common shares |
31,144 |
|
21,523 |
|
21,359 |
|
23,918 |
|
21,332 |
|
||||||||||
| Diluted (loss) earnings per share | $ |
(0.38 |
) |
$ |
(0.62 |
) |
$ |
0.15 |
|
$ |
(1.65 |
) |
$ |
(0.22 |
) |
|||||
Net loss for the year ended
Other income decreased
Total expenses decreased to
General, administrative and other expenses decreased to
Occupancy expense increased to
Business promotion decreased
| Origination Data | |||||||||
| (in millions) | |||||||||
| Total Originations |
Q4 2022 |
|
Q3 2022 |
|
% |
|
Q4 2021 |
|
% |
| Retail |
|
|
|
|
-79% |
|
|
|
-99% |
| Wholesale |
|
|
|
|
-50% |
|
|
|
-94% |
| Total Originations |
|
|
|
|
-65% |
|
|
|
-97% |
|
|
|
|
|
|
|
|
|
|
|
| Total Originations |
YE 2022 |
|
YE 2021 |
|
% |
|
|
|
|
| Retail |
|
|
|
|
-82% |
|
|
|
|
| Wholesale |
|
|
|
|
-54% |
|
|
|
|
| Total Originations |
|
|
|
|
-76% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NonQM Originations |
YE 2022 |
|
YE 2021 |
|
% |
|
|
|
|
| Retail |
|
|
|
|
4% |
|
|
|
|
| Wholesale |
|
|
|
|
-47% |
|
|
|
|
| NonQM Originations |
|
|
|
|
-32% |
|
|
|
|
For the year ended 2022, total originations were
During the fourth quarter of 2021, we originated
In 2022, our NonQM originations had a weighted average Fair Isaac Corporation credit score (FICO) of 738 and a weighted average LTV ratio of 67%. In 2021, our NonQM originations had a weighted average FICO of 747 and a weighted average LTV ratio of 65%. In 2022, the retail channel accounted for 43% of NonQM originations while the TPO channels accounted for 57% of NonQM production. In 2021, the retail channel accounted for 28% of NonQM originations while the TPO channels accounted for 72% of NonQM production.
We believe the quality, consistency and performance of our NonQM originations has been demonstrated through the previous issuance of 21 securitizations since 2018, whereby our originations were represented as the largest originator in over half of the deals and represented no less than the third largest originator in the other deals. Four of the 21 securitizations were 100% backed by NonQM collateral from the Company with the senior tranches receiving
In
Real estate services fees, net are generated from our former long term mortgage portfolio. We provide portfolio loss mitigation and real estate services including real estate owned (REO) surveillance and disposition services, default surveillance and loss recovery services, short sale and real estate brokerage services, portfolio monitoring and reporting services. Additionally, as previously noted, in
As of
Recent Updates
In line with our expense management strategies, in addition to the lease termination in January, we repositioned our retail consumer direct channel, CashCall Mortgage (CCM) to be a mortgage broker rather than a direct lender at the end of 2022 and into 2023. As noted in previous years, our government-sponsored enterprise (GSE) loan originations were sold directly through aggregators. While we remain in good standing with our aggregator partners, the cost to produce retail loans in light of the rising rate environment and severe margin compression felt across the residential mortgage industry proved challenging, resulting in lower origination volumes and higher cost to produce throughout 2022. We believe that the broker fulfillment model has many strengths including a reduced expense load associated with personnel, operational and technology support, and reduced marketing needs due to organic lead volume generated by the CCM brand. Broker fulfillment also supports a broader product offering to CCM consumers, allowing the Company to move away from the expense and complexity of managing multiple lending products with support from several departments. We believe adopting a more cost-effective origination strategy is essential to managing the overall monthly expense load of the retail channel while also driving revenue across a broad spectrum of product offerings to consumers.
Additionally, given our lack of conventional GSE origination volume and servicing rights over the past several years, with no direct GSE deliveries to Fannie Mae or Freddie Mac since 2016 and 2020, respectively, we intend to voluntarily relinquish our GSE Seller/Servicer designation which have been suspended during these periods of non-delivery. We expect to be a third-party originator with both GSEs to support our broker model as needed.
Our wholesale channel continued to experience significant volume and margin deterioration during the latter half of 2022, and into 2023. The continued volatility experienced with the NonQM market associated with liquidity, product offerings, expansive credit to meet consumer demand, and rising rates have all proven to be a considerable hindrance to maintaining a profitable channel in the wholesale space. It is our belief that the market conditions and projections will not improve in the near term, and as a result, in the first quarter of 2023, the Company decided to wind down operations within its wholesale channel until market conditions improve. With minimal active loans in the pipeline, the Company had no outstanding warehousing or counterparty obligations associated with its wholesale activity. At
As noted above, the Company intends to remain focused on serving consumers through its retail channel, exclusively through a broker model fulfillment strategy until market conditions improve to support other opportunities in the direct and/or wholesale lending space.
In the fourth quarter of 2022, the Company completed the exchange offers and redemption of its outstanding Series B Preferred Stock and Series C Preferred Stock. In connection with the consummation of those transactions and final dispositions in the Company’s
| Summary Balance Sheet |
|
|
|
||||
| (in thousands, except per share data) |
2022 |
|
2021 |
||||
| ASSETS | |||||||
| Cash | $ |
25,864 |
|
$ |
29,555 |
||
| Mortgage loans held-for-sale |
13,052 |
|
308,477 |
||||
| Mortgage servicing rights |
- |
|
749 |
||||
| Securitized mortgage trust assets |
- |
|
1,642,730 |
||||
| Other assets |
21,415 |
|
41,260 |
||||
| Total assets | $ |
60,331 |
|
$ |
2,022,771 |
||
| LIABILITIES & STOCKHOLDERS' EQUITY | |||||||
| Warehouse borrowings | $ |
3,622 |
|
$ |
285,539 |
||
| Debt |
42,753 |
|
66,536 |
||||
| Securitized mortgage trust liabilities |
- |
|
1,614,862 |
||||
| Other liabilities |
25,559 |
|
45,898 |
||||
| Total liabilities |
71,934 |
|
2,012,835 |
||||
| Total equity |
(11,603 |
) |
9,936 |
||||
| Total liabilities and stockholders’ equity | $ |
60,331 |
|
$ |
2,022,771 |
||
| Book value per share | $ |
(0.32 |
) |
$ |
0.47 |
||
| Tangible Book value per share | $ |
(0.32 |
) |
$ |
0.47 |
||
Mr.
Non-GAAP Financial Measures
This release contains adjusted earnings (loss) and per share as performance measures, to supplement our consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in
|
For the Three Months Ended |
|
For the Year Ended |
||||||||||||||||||
| Adjusted Earnings (Loss) |
|
|
|
|
|
|
|
|
|
|||||||||||
| (in thousands, except per share data) |
|
|
|
|
||||||||||||||||
| (Loss) earnings before income taxes: | $ |
(11,776 |
) |
$ |
(13,006 |
) |
$ |
3,590 |
|
$ |
(39,394 |
) |
$ |
(3,807 |
) |
|||||
| Change in fair value of mortgage servicing rights |
138 |
|
(223 |
) |
(32 |
) |
(317 |
) |
(221 |
) |
||||||||||
| Change in fair value of long-term debt |
430 |
|
435 |
|
(1,459 |
) |
(2,757 |
) |
(2,098 |
) |
||||||||||
| Change in fair value of net trust assets, including trust REO (losses) gains |
— |
|
— |
|
(7,284 |
) |
(9,248 |
) |
(6,582 |
) |
||||||||||
| Legacy corporate-owned life insurance (1) |
225 |
|
177 |
|
166 |
|
(257 |
) |
330 |
|
||||||||||
| Adjusted loss before tax | $ |
(10,983 |
) |
$ |
(12,617 |
) |
$ |
(5,019 |
) |
$ |
(51,973 |
) |
$ |
(12,378 |
) |
|||||
| Diluted weighted average common shares |
31,144 |
|
21,523 |
|
21,359 |
|
23,918 |
|
21,332 |
|
||||||||||
| Diluted adjusted loss per common share before tax | $ |
(0.35 |
) |
$ |
(0.59 |
) |
$ |
(0.23 |
) |
$ |
(2.17 |
) |
$ |
(0.58 |
) |
|||||
|
For the Three Months Ended |
|
For the Year Ended |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
2022 |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||||||
| Diluted (loss) earnings per common share | $ |
(0.38 |
) |
$ |
(0.62 |
) |
$ |
0.15 |
|
$ |
(1.65 |
) |
$ |
(0.22 |
) |
|||||
| Adjustments: | ||||||||||||||||||||
| Cumulative non-declared dividends on preferred stock |
— |
|
0.02 |
|
0.02 |
|
— |
|
0.04 |
|
||||||||||
| Change in fair value of mortgage servicing rights |
0.01 |
|
(0.01 |
) |
— |
|
(0.01 |
) |
(0.01 |
) |
||||||||||
| Change in fair value of long-term debt |
0.01 |
|
0.01 |
|
(0.07 |
) |
(0.11 |
) |
(0.10 |
) |
||||||||||
| Change in fair value of net trust assets, including trust REO gains (losses) |
— |
|
— |
|
(0.34 |
) |
(0.39 |
) |
(0.31 |
) |
||||||||||
| Legacy corporate-owned life insurance |
0.01 |
|
0.01 |
|
0.01 |
|
(0.01 |
) |
0.02 |
|
||||||||||
| Diluted adjusted loss per common share before tax | $ |
(0.35 |
) |
$ |
(0.59 |
) |
$ |
(0.23 |
) |
$ |
(2.17 |
) |
$ |
(0.58 |
) |
|||||
Conference Call
The Company will hold a conference call on
Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements, some of which are based on various assumptions and events that are beyond our control, may be identified by reference to a future period or periods or by the use of forward-looking terminology, such as “may,” “capable,” “will,” “intends,” “believe,” “expect,” “likely,” “potentially,” “appear,” “should,” “could,” “seem to,” “anticipate,” “expectations,” “plan,” “ensure,” “desire,” or similar terms or variations on those terms or the negative of those terms. The forward-looking statements are based on current management expectations. Actual results may differ materially as a result of several factors, including, but not limited to the following: any adverse impact or disruption to the Company’s operations; changes in general economic and financial conditions (including federal monetary policy, interest rate changes, and inflation); increase in interest rates, inflation, and margin compression; ability to successfully implement and maintain a broker model; ability to successfully sell loans to third-party investors; successful development, marketing, sale and financing of new and existing financial products; volatility in the mortgage industry; performance of third-party sub-servicers; our ability to manage personnel expenses, operational and technology support, and reduced marketing needs; our ability to successfully use warehousing capacity and satisfy financial covenants; our ability to maintain compliance with the continued listing requirements of the NYSE American for our common stock; increased competition in the mortgage lending and broker industry by larger or more efficient companies; issues and system risks related to our technology; ability to successfully create cost and product efficiencies through new technology including cyber risk and data security risk; more than expected increases in default rates or loss severities and mortgage related losses; ability to obtain additional financing through lending and repurchase facilities, debt or equity funding, strategic relationships or otherwise; the terms of any financing, whether debt or equity, that we do obtain and our expected use of proceeds from any financing; increase in loan repurchase requests and ability to adequately settle repurchase obligations; the outcome of any claims we are subject to, including any settlements of litigation or regulatory actions pending against us or other legal contingencies; impact on the
For a discussion of these and other risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, see our latest Annual Report on Form 10-K and Quarterly Reports on Form 10-Q we file with the
About the Company
For additional information, questions or comments, please call
View source version on businesswire.com: https://www.businesswire.com/news/home/20230316005560/en/
Chief Administrative Officer
(949) 475-3988
Justin.Moisio@ImpacMail.com
Source:
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