Mr. Tomkinson, Chairman and CEO of Impac Mortgage Holdings, Inc., stated, “The net earnings and cash flows from the Company’s mortgage operations are, and will continue to be, the main drivers of the Company’s consolidated earnings. In fact, origination volumes have grown quarter over quarter to new record levels since our re-emergence in the mortgage lending business. Although it has taken over four years, through our hard work and persistence the Company and our employees are finally seeing the fruits of our labor.”
The Company’s discontinued operations had a net loss of $(9.0) million or $(1.15) per diluted share for the third quarter 2012. This loss was primarily due to the Company taking a charge of $6.1 million during the third quarter of this year, as a result of its intentions to settle two of its remaining legacy lawsuits.
Given our significant lending and securitization volumes completed by the previously discontinued mortgage lending operations in years prior to 2008, we, like others, have been sued, sometimes alongside dozens of other co-defendants. We have diligently defended each, sometimes at considerable expense, because, we believed that the Company ultimately had, in most cases, much less exposure, if any, from these claims, and had hoped to end them in a manner where we could preserve as much shareholder value as possible.Management believes it is in the best interest of the shareholders to settle these lawsuits rather than be faced with the uncertainty of any court rulings, the exorbitant cost in terms of legal fees, the time involved and the distractions these suits create in defending them. It is also important to note that the terms of the settlements have been structured in a manner to minimize impact to our cash flows. The legal settlement charge will result in the Company reporting a consolidated net loss of approximately $(2.3) million or $(0.29) per share in the third quarter of 2012, as compared to net earnings of $4.2 million in the second quarter of 2012. Excluding the legal settlement charge, the third quarter 2012 results would be consistent with the second quarter 2012.
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