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Impac Mortgage Holdings, Inc. (NYSE MKT: IMH), announces today that its continuing operations, comprised primarily of mortgage lending, real estate services and long-term portfolio, earned $6.7 million or $0.86 per diluted share for the third quarter 2012, and $10.5 million or $1.35 per diluted share for the nine months ended September 30, 2012. The Company also announces its intentions to settle two of its remaining legacy lawsuits, which will result in a charge of $6.1 million during the third quarter of this year.
The Company’s continued operations will report net profits in the third quarter primarily due to the mortgage lending segment earnings of $8.2 million or $1.04 per diluted share, as compared to $3.8 million or $0.46 per diluted share for the second quarter 2012. In addition, the real estate services segment continues to earn net profits, albeit a decline from second quarter 2012, recording net earnings of $3.6 million or $0.46 per diluted share in the third quarter. The decline in real estate services from second quarter was primarily due to a continued and anticipated decline in the long term mortgage portfolio. The Company’s continuing operations’ net earnings declined by $583 thousand or 8% from Q2 2012 primarily driven by a $2.5 million loss from the change in fair value of our net trust assets (residual interests) in the long-term portfolio segment.
The mortgage lending segment net earnings in the third quarter of 2012 increased by $4.4 million or 115% over the second quarter 2012. The increase was due to the increase in lending volumes by 33% over the second quarter. The Company increased its residential mortgage originations to $709.8 million in the third quarter 2012 as compared to $532.5 million in the second quarter 2012. The Company has originated $1.6 billion in residential mortgage originations, year to date, September 30, 2012. In addition, the servicing portfolio increased to $1.7 billion during the third quarter, from $1.1 billion, in the second quarter which also helped improve the Company’s profitability and cash flows. The Company also increased its warehouse borrowing capacity from $145 million at June 30, 2012, to $185 million at September 30, 2012.