Impac Mortgage Holdings Inc. (NYSE MKT:IMH) Q1 2019 Earnings Conference Call Transcript

May 10, 2019 • 09:00 am ET


Impac Mortgage Holdings Inc. (NYSE MKT:IMH) Q1 2019 Earnings Conference Call Transcript


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Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Impac Mortgage First Quarter 2019 Holdings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions)

I'd now like to introduce Mr. Justin Moisio, SVP, Investor Relations. Sir, please begin.

Justin Moisio

Thank you, and good morning, everyone. Thank you for joining Impac Mortgage Holdings first quarter 2019 financial results. During this call, we will make projections or other forward-looking statements in regards to, but not limited to, GAAP and taxable earnings, cash flows, interest rate risk and market risk exposure, mortgage production and general market conditions. I'd like to refer you to the business risk factors in our most recently filed Form 10-K under the Securities and Exchange Act of 1934. These documents contain and identify important factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements. This presentation, including any outlook or guidance, is effective as of the date given and we expressly disclaim any duty to update the information herein.

I would like to get started by introducing George Mangiaracina, Chairman and CEO of Impac Mortgage Holdings.

George A. Mangiaracina

Thank you, Justin. Good morning and welcome to Impac's 2019 first quarter's earning call. Joining me on the call this morning are our CFO, Brian Kuelbs; COO, Rian Furey; Legal Counsel, Nima Vahdat; our Head of Financial Reporting, Jon Gloeckner; and our Chief Accounting Officer, Paul Licon.

During our year end earnings call conducted on March 15th, we provided our detailed view regarding the state of the residential mortgage market and also a comprehensive update on the strategic direction and progress of the Company. Given the compressed time frame and the cadence between the year end and first quarter earnings calls, we'll provide just a brief update today on developments over the last six weeks before turning the call over to focus in greater detail on our financial results and origination activities.

First quarters are historically challenging for residential mortgage origination. The first quarter of 2019 was no exception with respect to the effects of seasonality on origination volume. However, during the first quarter of 2019, treasury and mortgage markets continued their directional rally that began in October of 2018. The Federal Reserve signaled a less hawkish tone, messaging to be data dependent and patient in 2019 after the last 25 basis point increase in December raised the target range for its benchmark funds rate to 2.5%. By the end of March, 10-year treasury rates have declined by over 75 basis points from October 5 and by 25 basis points from year end levels. Mortgages outperformed treasuries in the first quarter. Primary 30-year fixed rate mortgage dropped 50 basis points from 4.5% to 4%, a monthly payment savings for a borrower of approximately $90 a month or $1,100 a year based on our average conventional loan size of $310,000.

While we tend