Impac Mortgage Holdings Inc. reported a quarterly loss of more than $1 billion — completely wiping out shareholder equity.
The Irvine, Calif.-based company announced today a third quarter loss of $1.2 billion. Earnings worsened from an $0.2 billion loss during the prior quarter and an $0.1 billion loss a year earlier.
The real estate investment trust attributed much of the loss to a $789.4 million provision for loan losses and a $137.6 million a mark-to-market loss on the fair value of derivatives.
“Conditions in the secondary markets, which dramatically worsened during the third quarter, continue to be depressed as investor concerns over credit quality and a weakening of the United States housing market remain high,” Impac explained. “As a result, the capital markets remain very volatile and illiquid and, have effectively been unavailable to the company.”
As a result of the massive loss, total stockholder equity stood at a negative $493.3 million as of Sept. 30, 2007, according to supplemental earnings data.
“Based on projected prepayment and loan loss assumptions and barring any unanticipated events, we believe that our projected total annual gross cash flows should provide sufficient liquidity to meet our projected overhead of the operations beginning in the second quarter 2008,” Impac Chairman and Chief Executive Officer Joseph R. Tomkinson said in the statement. “Once operating expenses are in line with projected cash flows our goal is to employ free cash flows to rebuild out organization though alternative investments and/or strategic opportunities.”
Impac has reduced its reverse repurchase lines of credit from $924.0 million on Sept. 30 to around $337.0 million on Dec. 18, Tomkinson continued. One of two facilities is expected to be wound down entirely over the next 90 days while the company says it is working with the lender on the other “to reduce its exposure by aggressively refinancing loans or selling off individual loans or pools of loans.”
Retail conforming originations were $0.3 billion during the latest period, compared to $0.1 billion for the second quarter — which only reflected originations since May, when the operation was acquired, the report said.
