ATLANTA, Aug. 7 /PRNewswire-FirstCall/ -- HomeBanc Corp. (NYSE:HMB)
("HomeBanc" or the "Company"), a real estate investment trust
("REIT"), today reported the Company's consolidated results of
operations for the three- and six-month periods ended June 30,
2006. Financial Highlights - Estimated REIT taxable income
available to holders of common stock of $15.7 million, or $0.28 per
share, for the three months ended June 30, 2006; - GAAP
consolidated net income attributable to holders of common stock of
$1.6 million, or $0.03 per diluted share, for the three months
ended June 30, 2006; the amounts give effect to the distribution of
preferred dividends; - REIT portfolio assets, comprised of mortgage
loans held for investment (net) and securities held to maturity and
available for sale, of $6.1 billion at June 30, 2006, representing
a 2% increase over the balance at March 31, 2006; - Mortgage loan
origination volume of $1.45 billion for the three months ended June
30, 2006; and - New loan application volume of $1.62 billion for
the three months ended June 30, 2006. Patrick S. Flood, HomeBanc
Chairman and CEO, said, "During the second quarter, we continued to
focus on executing Phase II of our strategy. Our performance during
the quarter reflects this focus, as well as the effects of a number
of extremely challenging market conditions including a seventeenth
consecutive Fed rate increase, industry overcapacity, aggressive
pricing and credit practices, and of particular importance to
HomeBanc, unusual and unfavorable real estate conditions in
Florida. We currently expect that these market conditions will
prevail throughout 2006. While these conditions are challenging, we
maintain our focus on executing our strategic plan and are hopeful
that conditions will improve by mid-2007." Comparison of the Three
Months Ended June 30, 2006 and 2005 - Total consolidated revenues
increased $5.3 million, or 19%, to $33.5 million for the second
quarter of 2006, compared to $28.2 million for the same quarter of
2005, due primarily to the growth in net interest income resulting
from our larger portfolio of mortgage loans held for investment and
investment securities; - Net interest income after provision for
loan losses was $19.9 million for the three months ended June 30,
2006, representing an increase of $4.3 million from $15.5 million
for the same period of 2005; - Net gain on sale of mortgage loans
was $11.2 million during the period, or 77 basis points ("bps"),
compared to $11.9 million, or 160 bps on loans sold in the same
period of 2005; - Total expenses for the quarter as a percentage of
average assets decreased to .49% for the second quarter of 2006
from .73% for the second quarter of 2005; and - Total consolidated
GAAP net income available to holders of common stock was $1.6
million for the quarter ended June 30, 2006, compared to a net loss
of $3.6 million for the same period of 2005. Comparison of the Six
Months Ended June 30, 2006 and 2005 - Total consolidated revenues
increased 47%, or $23.0 million, to $71.9 million for the six
months ended June 30, 2006, compared to $48.9 million for the same
period of 2005, due primarily to the growth in net interest income
resulting from mortgage loans held for investment and investment
securities and the impact of derivative financial instruments; -
Total expenses for the six months ended June 30, 2006 as a
percentage of average assets decreased to 1.07% from 1.57% for the
same period of 2005; and - Total consolidated GAAP net income
available to holders of common stock was $2.1 million for the six
months ended June 30, 2006, compared to a net loss of $11.2 million
for the same period of 2005. The Company's estimated REIT taxable
income available to holders of common stock for the three- and
six-month periods ended June 30, 2006 was $15.7 million and $36.1
million, respectively. Estimated REIT taxable income available to
holders of common stock, as defined in the following table, is a
non-GAAP financial measure. Because of the REIT tax requirements on
distributions, management believes that estimated REIT taxable
income available to holders of common stock is an additional
meaningful measure to evaluate our performance. The most comparable
GAAP measure is net income (loss) attributable to holders of common
stock which reflects the impact of dividends on preferred stock.
Estimated REIT taxable income available to holders of common stock
should not be considered as a substitute for any measures derived
in accordance with GAAP and may not be comparable to other
similarly titled measures of other companies. The Company uses
estimated REIT taxable income available to holders of common stock
as a basis for establishing the amount of dividends payable to
holders of its common stock. The principal differences between net
income attributable to holders of common stock and estimated REIT
taxable income available to holders of common stock in the periods
are intercompany gains or losses on the sale of loans from our
taxable REIT subsidiary ("TRS") to HomeBanc that are excluded under
GAAP in the Company's consolidated financial statements,
amortization of those gains or losses and the creation of mortgage
servicing rights, which give rise to income under Statement of
Financial Accounting Standards ("SFAS") No. 140 but are excluded
from income for income tax purposes. The following table presents a
reconciliation of (loss) income before income taxes to net income
attributable to holders of common stock and to estimated REIT
taxable income available to holders of common stock for the three-
and six-month periods ended June 30, 2006: Three Months Six Months
Ended Ended ($ in thousands) June 30, 2006 June 30, 2006 (Loss)
income before income taxes $(256) $34 Income tax benefit (3,126)
(3,822) Net income (loss) 2,870 3,856 Preferred stock dividend
(1,250) (1,986) Cumulative effect of change in accounting principle
- 270 Net income available to holders of common stock 1,620 2,140
Income tax benefit (3,126) (3,822) Book/tax differences(1) (9,522)
(7,550) Taxable loss of REIT subsidiaries 26,730 45,371 Estimated
REIT taxable income available to holders of common stock(2) $15,702
$36,139 (1) Consists of various transactions and balances that are
treated differently for GAAP and income tax purposes, including
both permanent and temporary differences. Common differences
include intercompany gains or losses on the sale of loans from our
TRS to HomeBanc Corp., which are excluded from income under SFAS
No. 65, as amended, but are included in income for income tax
purposes; the amortization of these intercompany gains or losses;
and the creation of mortgage servicing rights, which give rise to
income under SFAS No. 140 but are excluded from income for income
tax purposes. (2) We define estimated REIT taxable income available
to holders of common stock to be estimated REIT taxable income
calculated under the Internal Revenue Code of 1986, as amended, for
purposes of the REIT distribution requirement, less dividends
applicable to preferred stock. A REIT is required to distribute at
least 90% of its REIT taxable income, which, in general, includes
all dividends received from TRSs (generally, calculated without
regard to the dividends paid deduction for distributions paid to
REIT shareholders, and earnings retained by TRSs), plus 90% of net
after-tax income from foreclosure property. Revenues Net interest
income after provision for loan losses was $19.9 million for the
three months ended June 30, 2006, an increase of $4.3 million, from
$15.5 million for the same period of 2005. This increase is
primarily due to the growth in net interest income resulting from
the accumulation of mortgage loans held for investment and the
mortgage backed securities ("MBS") investment strategy initiated in
the fourth quarter of 2005. The Company's portfolio of loans held
for investment and securities held to maturity and available for
sale increased 38% to $6.1 billion at June 30, 2006 from $4.4
billion at June 30, 2005. The Company's net gain on sale of
mortgage loans for the three months ended June 30, 2006 was $11.2
million. The Company sold $1.5 billion of loans during the period.
Origination Volume Mr. Flood added, "For the first time in our
history, we are experiencing a downturn that is consistent with the
downturn in the national market, largely as a result of the
unfavorable conditions prevailing in our Florida markets.
Accelerated housing appreciation, combined with five recent
hurricanes and the subsequent increase in insurance costs and
higher interest rates, are all weighing heavily on the Florida
market. However, based on long-term demographic trends and a 3.3%
unemployment rate, we expect that Florida will recover and again be
a positive contributor to our long-term growth plans." The Mortgage
Bankers Association Long-Term Mortgage Finance Forecast dated July
12, 2006 (the "MBA Forecast") predicts an 18% decline in total
mortgage originations in 2006 as compared to 2005. Our total
mortgage originations decreased by approximately 19% during the
second quarter of 2006 compared to the second quarter of 2005. The
Company's decline of total originations in the period was driven by
a significant decline in our Florida markets of approximately 28%,
which is the Company's largest market, accounting for approximately
48% of total originations for the first six months of 2006. The
Florida Association of Realtors' website estimated a 30% decrease
in sales of existing homes during the second quarter of 2006
compared to the same period in the prior year. In the Company's two
other markets, Georgia experienced a decline of 14% and North
Carolina experienced an increase of 28% in the current quarter when
compared to the prior-year period. Loans Held for Investment Loans
held for investment of $4.8 billion at June 30, 2006, together with
MBS held to maturity and available for sale of $1.3 billion, were
2% greater than loans held for investment of $5.3 billion and MBS
held to maturity and available for sale of $654 million at March
31, 2006. The net interest margin was 1.33% for the three months
ended June 30, 2006. The duration gap for the portfolio as measured
by the net interest reset period was estimated to be 0.4 months at
June 30, 2006. During the quarter, $210 million of loans were
transferred to the REIT portfolio and $355 million of loans were
repaid, representing an annualized constant prepayment rate of 24%.
During the quarter, the Company changed its intent with respect to
$357 million of loans held for investment and transferred the loans
to mortgage loans held for sale. For consolidated GAAP purposes, no
gain on sale is recognized on loans transferred from the TRS to the
REIT or vice versa. The following table presents the Company's net
interest margin for the three- and six-month periods ended June 30,
2006: Estimated Average Revenue/ Annualized Balance (Expense)
Rate/Yield $ in thousands Three months ended June 30, 2006 Mortgage
loans $5,604,744 $87,004 6.23% Mortgage-backed securities 836,616
10,771 5.16 Borrowings to finance mortgage loans 5,544,198 (77,450)
(5.60) Mortgage-backed security repurchase agreements 743,866
(8,632) (4.65) Impact of derivative financial instruments 9,670
0.62 Net interest margin $21,363 1.33% Six months ended June 30,
2006 Mortgage loans $5,689,218 $172,031 6.10% Mortgage-backed
securities 611,611 16,130 5.32 Borrowings to finance mortgage loans
5,591,253 (147,928) (5.34) Mortgage-backed security repurchase
agreements 559,690 (12,494) (4.50) Impact of derivative financial
instruments 22,502 0.74 Net interest margin $50,241 1.61% Loan
Servicing The Company serviced $6.9 billion of unpaid principal
balance of loans, excluding loans held for sale, related to 33,636
mortgage loans at June 30, 2006, of which 25,252 loans were owned
by the Company and 8,384 loans were serviced for third party
investors. The loan servicing portfolio carried a weighted average
annual servicing fee of 0.303% at June 30, 2006. The mortgage loans
held by the Company on a unit basis had a 90-day or greater
delinquency rate of 0.37%. The mortgage loans held by the Company
on an unpaid principal balance basis had a 90-day or greater
delinquency rate of 0.36%, inclusive of foreclosures and delinquent
bankruptcy loans, at June 30, 2006. Operating Highlights Three
Months Three Months Ended Ended % June 30, 2006 June 30, 2005
Change ($ in millions) Loan Originations: Total Originations $1,448
$1,793 (19)% Purchase 1,158 1,357 (15) Refinance 290 436 (34) ARM
869 1,321 (34) Fixed 579 472 23 Loans sold to third parties 1,456
746 95 Loan applications 1,624 2,283 (29) Total strategic marketing
alliances (SMA) - at period-end 218 235 (7)% Realtors 118 108 9
Builders 100 127 (21) Total SMA locations - at period-end 250 270
(7)% Realtors 150 143 5 Builders 100 127 (21) As of and for the
three months ended June 30, 2006 March 31, 2006 ($ in millions)
Loans Held for Investment: Loans held for investment ("LHFI"), net
$4,789 $5,292 Securities available for sale 1,078 443 Securities
held to maturity 201 211 Total portfolio $6,068 $5,946 Portfolio
composition (LHFI) 1-month interest-only ARMs 5.0% 5.6% 6-month
interest-only ARMs 11.8 13.0 3-year fixed interest-only ARMs 11.1
11.5 5-year fixed interest-only ARMs 50.8 48.3 7-year fixed
interest-only ARMs 16.3 16.0 10-year fixed interest-only ARMs 0.7
0.7 All other mortgage loans 4.3 4.9 Total 100.0% 100.0% Average
decision FICO score 724 723 Average loan to value ("LTV") 77.2%
79.9% Average combined loan to value ("CLTV") 86.3% 85.8%
Geographic concentration (total portfolio): Florida 52% 53% Georgia
42 41 North Carolina 5 5 Other 1 1 As of and for the three months
ended % June 30, 2006 March 31, 2006 Change ($ in millions) Loan
Servicing: Total servicing portfolio (excluding loans held for sale
at TRS) $6,904 $6,742 2% Loans serviced for third parties 2,115
1,450 46 Loans serviced for REIT 4,789 5,292 (9) Real estate owned
(REIT and TRS) 5,803 3,145 Weighted average service fee -
securitized 0.287% 0.289% Weighted average service fee - third
parties 0.344 0.384 Weighted average service fee - all loans 0.303
0.307 REIT portfolio delinquency of 90 days or more - per unit
basis 0.37 0.32 REIT portfolio delinquency of 90 days or more -
unpaid principal balance basis 0.36 Not reported Important Note:
Certain amounts in this press release have been rounded for
presentation purposes. Calculations appearing herein are based on
the actual underlying amounts and may vary from the calculations
that would result from use of the rounded amounts. Delinquency data
is reported using the MBA method. Dividend Reinvestment and Stock
Purchase Plan The Company offers a Dividend Reinvestment and Stock
Purchase Plan (the "Plan"). The Plan offers a convenient and
economical way for existing investors to increase their holdings
and for new investors to make an initial investment in our common
stock. Participants in the Plan may also reinvest cash dividends
and make periodic cash payments to purchase additional shares. If
you have questions or would like to enroll in the Plan, please
contact the Plan administrator, Computershare Trust Company, N.A.
("Computershare") at 800-697-8199 (toll free). You also can enroll
through Computershare's website, http://www.computershare.com/.
Conference Call HomeBanc Corp. will host a conference call on
Tuesday, August 8, 2006 at 10:30 a.m. Eastern time to discuss
second quarter results. The conference call dial-in number is
800-949-8987 in the United States and Canada and 706-634-0965 from
international locations. The conference ID number is 2786112. You
may also listen to the call under the Investor Relations section of
the HomeBanc Corp. website at http://www.homebanc.com/. PowerPoint
slides to accompany the conference call will be available on the
Company's website under Investor Relations - Financial/Statistical
Information and also on the Company's website under Investor
Relations - Webcast Live link. The Internet broadcast will be
archived on both websites until August 22, 2006. A digital
recording of the conference call will be available for replay two
hours after the call's completion and will be available through
August 15, 2006. To access this recording, dial 800-642-1687 and
conference ID 2786112. About our Company HomeBanc Corp. is the
parent company of HomeBanc Mortgage Corporation, a mortgage banking
company that focuses on originating purchase money residential
mortgage loans in the southeast United States. HomeBanc Corp. has
made an election to be taxed as a REIT for federal income tax
purposes. For more information about HomeBanc Corp., HomeBanc
Mortgage or the Company's mortgage products, contact HomeBanc at
http://www.homebanc.com/. Cautionary Notice Regarding
Forward-Looking Statements This press release may include
forward-looking statements within the meaning and subject to the
protection of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Such forward- looking
statements include statements regarding the stability of the
Company's net interest margin; estimated REIT taxable income
available to holders of common stock; statements regarding
expectations and guidance of increased mortgage originations for
the Company for 2006 and 2007, total industry mortgage originations
for 2006, and growth in the Company's portfolio of retained
mortgage loans; statements regarding the improvement of prevailing
market conditions and mortgage origination volumes in Florida;
statements regarding validation of our operating model and the
Company's ability to achieve continued success in execution of our
strategy. Such forward-looking statements are based on information
presently available to the Company's management and are subject to
various risks and uncertainties, including, without limitation,
risks of changes in interest rates and the yield curve on our
mortgage loan production, our product mix, our interest sensitive
assets and liabilities and our net interest margin; unanticipated
changes in the Florida market for mortgage loans, or the
deterioration of economic and real estate market conditions in
Florida, generally; risks associated with expansion of our
business, including expansion into new geographic markets,
introduction of new mortgage loan products or growth through
acquisitions; mortgage loan prepayment assumptions and estimated
lives of loans and the estimates used to value our mortgage
servicing rights; the risk that loan applications may not be
indicative of loan origination volume realized in the future due to
fallout from applicants not completing the application process or
not closing a loan; interest rate risks and credit risks of
customers; loan loss experience and the rate of loan charge-offs;
risks inherent in originating mortgage loans; loss experience
arising from alleged breaches of representations and warranties
provided to buyers of mortgage loans sold; risks related to the
Company's execution of its Phase II business strategy and its
ability to meet the requirements for operation as a REIT; the
failure of assumptions underlying the establishment of reserves for
loan and contingency losses and other estimates including estimates
about loan prepayment rates and the estimates used to value our
mortgage servicing rights, and the estimates and assumptions
utilized in our hedging strategy; risks in our ability to retain
experienced loan officers; risks inherent in the application of our
accounting policies as described in the footnotes to financial
statements included in our filings with the SEC; risks of
maintaining securities held available for sale whose value must be
marked to market in our periodic financial statements; pricing
pressure that could negatively impact gain on sale relative to the
amount of loans sold; and the other risks described in the
Company's SEC reports and filings, including, without limitation,
under the captions "Special Cautionary Notice Regarding
Forward-Looking Statements" and "Risk Factors." You should not
place undue reliance on forward-looking statements, since the
statements speak only as of the date that they are made. The
Company has no obligation and does not undertake to publicly
update, revise or correct any of the forward-looking statements
after the date of this press release, or after the respective dates
on which such statements otherwise are made, whether as a result of
new information, future events or otherwise. This press release
should be read in conjunction with the Company's financial
statements and the footnotes thereto filed with the SEC including,
without limitation, the financial statements and footnotes set
forth in the Company's Quarterly Report on Form 10-Q for the period
ended June 30, 2006, which will be filed with the SEC by August 9,
2006. HomeBanc Corp. and Subsidiaries Condensed Consolidated
Statement of Operations (Unaudited) Three Months Ended Six Months
Ended June 30, June 30, 2006 2005 2006 2005 (Dollars in thousands,
except per share data) Revenues: Net interest income: Interest
income: Mortgage loans, including fees $87,004 $56,852 $172,031
$98,903 Securities available for sale 7,793 - 10,605 - Securities
held to maturity 2,978 - 5,525 - Total interest income 97,775
56,852 188,161 98,903 Interest expense: Short-term borrowings
(22,536) (9,363) (35,576) (21,141) Long-term borrowings (53,876)
(31,268) (102,344) (49,906) Total interest expense (76,412)
(40,631) (137,920) (71,047) Net interest income 21,363 16,221
50,241 27,856 Provision for loan losses 1,503 675 1,542 1,203 Net
interest income after provision for loan losses 19,860 15,546
48,699 26,653 Net gain on sale of mortgage loans 11,166 11,952
18,217 20,535 Other revenue 2,432 654 5,014 1,718 Total revenues
33,458 28,152 71,930 48,906 Expenses: Salaries and associate
benefits, net 15,017 15,402 33,840 30,458 Marketing and promotions
6,333 6,512 12,935 12,866 Occupancy and equipment expense 3,994
3,520 8,141 7,325 Depreciation and amortization 2,049 1,949 4,282
3,823 Minority interest 42 101 94 125 Other operating expense 6,279
5,974 12,604 10,681 Total expenses 33,714 33,458 71,896 65,278
Income (loss) before income taxes (256) (5,306) 34 (16,372) Income
tax benefit (3,126) (1,664) (3,822) (5,172) Income (loss) before
cumulative effect of change in accounting principle $2,870 $(3,642)
$3,856 $(11,200) Cumulative effect of change in accounting
principle, net of taxes of $171 - - 270 - Net income (loss) $2,870
$(3,642) $4,126 $(11,200) Net income (loss) attributable to common
shareholders $1,620 $(3,642) $2,140 $(11,200) Earnings (loss) per
share of common stock outstanding: Income (loss) before cumulative
effect of change in accounting principle Basic $0.03 $(0.06) $0.03
$(0.21) Diluted $0.03 $(0.06) $0.03 $(0.21) Cumulative effect of
change in accounting principle Basic $ - $ - $0.00 $ - Diluted $ -
$ - $0.00 $ - Net income (loss) Basic $0.03 $(0.06) $0.04 $(0.21)
Diluted $0.03 $(0.06) $0.04 $(0.21) Dividends declared per share of
common stock outstanding $0.26 $0.19 $0.26 $0.19 Weighted average
shares of common stock outstanding: Basic 56,358,255 56,431,573
56,389,449 54,074,854 Diluted 57,895,364 56,431,573 57,700,391
54,074,854 HomeBanc Corp. and Subsidiaries Condensed Consolidated
Statement of Operations (Unaudited) June 30, December 31, 2006 2005
(Dollars in thousands, except per share data) Assets Cash $22,924
$41,505 Restricted cash 113,767 15,744 Mortgage loans held for
sale, net 414,941 195,231 Mortgage loans held for investment, net
of allowance of $4,269 and $3,691, respectively 4,789,037 5,449,376
Mortgage servicing rights, net 25,590 10,088 Receivable from
custodian 107,807 128,641 Trading securities 4,669 - Securities
available for sale 1,077,522 111,256 Securities held to maturity
(fair value of $197,756 and $68,628, respectively) 201,294 68,425
Accrued interest receivable 21,986 18,284 Premises and equipment,
net 45,107 41,672 Goodwill, net 39,995 39,995 Deferred tax asset,
net 27,380 23,762 Other assets 123,580 108,733 Total assets
$7,015,599 $6,252,712 Liabilities and shareholders' equity
Warehouse lines of credit $354,603 $344,269 Aggregation credit
facilities 305,132 118,685 Repurchase agreements 1,149,303 215,927
Loan funding payable 105,413 69,405 Accrued interest payable 9,587
6,039 Other liabilities 182,923 103,479 Collateralized debt
obligations 4,381,808 5,026,598 Junior subordinated debentures
representing obligations for trust preferred securities 134,022
51,547 Total liabilities 6,622,791 5,935,949 Minority interest 38
62 Commitments and contingencies - - Shareholders' equity:
Preferred stock - par value $.01 per share; 25,000,000 shares
authorized; 2,000,000 and 0 shares issued and outstanding at June
30, 2006 and December 31, 2005, respectively 47,992 - Common stock
- par value $.01 per share; 150,000,000 shares authorized;
56,642,413 and 56,628,969 shares issued and outstanding at June 30,
2006 and December 31, 2005, respectively 566 566 Additional paid-in
capital 319,259 336,225 Accumulated deficit (53,459) (57,585)
Treasury stock, at cost (19,482 and 6,647 shares at June 30, 2006
and December 31, 2005, respectively) (156) (69) Unearned
compensation - (1,546) Accumulated other comprehensive income
78,568 39,110 Total shareholders' equity 392,770 316,701 Total
liabilities and shareholders' equity $7,015,599 $6,252,712
DATASOURCE: HomeBanc Corp. CONTACT: INVESTORS, Carol Knies,
+1-404-459-7653, or , or MEDIA, Mark Scott, +1-404-459-7452, or ,
both of HomeBanc Corp. Web site: http://www.homebanc.com/
http://www.computershare.com/
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