<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the quarterly period ended: September 30, 2000
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the transition period from__________________to____________________
Commission File Number: 1-13485
AMERICAN RESIDENTIAL INVESTMENT TRUST, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Maryland 33-0741174
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
445 Marine View Avenue, Suite 230
Del Mar, California 92014
(Address of principal executive offices) (Zip Code)
</TABLE>
(858) 350-5000
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[X] YES [ ] NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock ($0.01) 8,055,500 as of November 13, 2000
1
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets at September 30, 2000 and December 31, 1999 3
Consolidated Statements of Operations and Comprehensive Income (Loss) for the
three months ended September 30, 2000 and September 30, 1999 and for the nine
months ended September 30, 2000 and September 30, 1999 4
Consolidated Statements of Cash Flows for the nine months ended September 30, 2000 and
September 30, 1999 5
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures about Market Risk 19
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 19
Item 2. Changes in Securities and Use of Proceeds 19
Item 3. Defaults Upon Senior Securities 19
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
American Residential Investment Trust, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
ASSETS
September 30, 2000 December 31, 1999
------------------ -----------------
(unaudited)
<S> <C> <C>
Cash and cash equivalents $ 15,445 $ 8,550
Mortgage loans held-for-investment, net, pledged -- 126,216
Bond collateral, mortgage loans, net 915,044 1,153,731
Bond collateral, real estate owned 6,824 5,187
Retained interest in securitization 3,812 6,610
Interest rate cap agreements 1,332 1,556
Accrued interest receivable, net 6,735 9,665
Due from affiliate 407 394
Investment in American Residential Holdings, Inc. 1,194 881
Other assets 356 552
----------- -----------
$ 951,149 $ 1,313,342
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Short-term debt $ 5,337 $ 119,003
Long-term debt, net 863,666 1,103,258
Accrued interest payable 299 619
Due to affiliate 979 597
Accrued expenses and other liabilities 70 176
Management fees payable 298 418
Accrued dividends -- 2,417
----------- -----------
Total liabilities 870,649 1,226,488
Stockholders' Equity:
Preferred stock, par value $0.01 per share; 1,000 shares
authorized; no shares issued and outstanding -- --
Common stock, par value $0.01 per share; 25,000,000 shares
authorized; 8,055,500 shares issued and outstanding 81 81
Additional paid-in-capital 109,271 109,271
Accumulated other comprehensive loss -- (2,500)
Accumulated deficit (28,852) (19,998)
----------- -----------
Total stockholders' equity 80,500 86,854
----------- -----------
$ 951,149 $ 1,313,342
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
American Residential Investment Trust, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income (Loss), unaudited
(in thousands, except per share data)
<TABLE>
<CAPTION>
For the For the
Three Months Ended Three Months Ended
September 30, 2000 September 30, 1999
------------------ ------------------
<S> <C> <C>
Interest income:
Mortgage assets $ 19,780 $ 21,940
Cash and investments 226 505
Interest rate cap and floor agreement expense (131) (385)
-------- --------
Total interest income 19,875 22,060
Interest expense 16,925 14,159
-------- --------
Net interest spread 2,950 7,901
Premium amortization 2,500 4,853
-------- --------
Net interest income 450 3,048
Provision for loan losses 2,396 804
-------- --------
Net interest income (loss) after provision for loan losses (1,946) 2,244
-------- --------
Other operating income:
Management fee income 69 136
Equity in income of American Residential
Holdings, Inc. 8 47
Gain on sale of mortgage backed securities -- 30
Prepayment penalty income 929 1,176
-------- --------
Total other operating income 1,006 1,389
-------- --------
Net operating income (loss) (940) 3,633
Other expenses:
Loss on sale of real estate owned, net 340 222
Loss on loan sales 167 --
Management fees 919 1,063
General and administrative expenses 365 182
-------- --------
Total other expenses 1,791 1,467
-------- --------
Income (loss) before impairment on retained interest in securitization (2,731) 2,166
-------- --------
Impairment on retained interest in securitization 4,702 --
-------- --------
Net income (loss) (7,433) 2,166
-------- --------
Other comprehensive income (loss)
Unrealized holding losses arising during the period -- (107)
Reclassification adjustment for loss included in net income 3,650 --
-------- --------
Other comprehensive income (loss) 3,650 (107)
-------- --------
Comprehensive income (loss) (3,783) 2,059
======== ========
Net income (loss) per share of common stock - basic and diluted (0.92) 0.27
Dividends per share of common stock for the related period 0.20 0.27
</TABLE>
<TABLE>
<CAPTION>
For the For the
Nine Months Ended Nine Months Ended
September 30, 2000 September 30, 1999
------------------ ------------------
<S> <C> <C>
Interest income:
Mortgage assets $ 67,103 $ 51,890
Cash and investments 647 3,094
Interest rate cap and floor agreement expense (473) (1,710)
-------- --------
Total interest income 67,277 53,274
Interest expense 53,704 31,847
-------- --------
Net interest spread 13,573 21,427
Premium amortization 8,436 12,589
-------- --------
Net interest income 5,137 8,838
Provision for loan losses 3,892 2,708
-------- --------
Net interest income (loss) after provision for loan losses 1,245 6,130
-------- --------
Other operating income:
Management fee income 267 350
Equity in income of American Residential
Holdings, Inc. 313 128
Gain on sale of mortgage backed securities -- 30
Prepayment penalty income 2,800 2,681
-------- --------
Total other operating income 3,380 3,189
-------- --------
Net operating income (loss) 4,625 9,319
Other expenses:
Loss on sale of real estate owned, net 1,107 105
Loss on loan sales 167 --
Management fees 3,017 2,375
General and administrative expenses 1,264 1,033
-------- --------
Total other expenses 5,555 3,513
-------- --------
Income (loss) before impairment on retained interest in securitization (930) 5,806
-------- --------
Impairment on retained interest in securitization 4,702 --
-------- --------
Net income (loss) (5,632) 5,806
-------- --------
Other comprehensive income (loss)
Unrealized holding losses arising during the period (1,150) (402)
Reclassification adjustment for loss included in net income 3,650 --
-------- --------
Other comprehensive income (loss) 2,500 (402)
-------- --------
Comprehensive income (loss) (3,132) 5,404
======== ========
Net income (loss) per share of common stock - basic and diluted (0.70) 0.72
Dividends per share of common stock for the related period 0.60 0.72
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
American Residential Investment Trust, Inc. and Subsidiaries
Consolidated Statements of Cash Flows, unaudited
(in thousands)
<TABLE>
<CAPTION>
For the For the
Nine Months Ended Nine Months Ended
September 30, 2000 September 30, 1999
------------------ ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (5,632) $ 5,806
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Amortization of mortgage assets premiums 8,436 12,589
Amortization of interest rate cap agreements 778 625
Amortization of CMO capitalized costs 783 272
Amortization of CMO premium (117) (119)
Provision for loan losses 3,892 2,708
Equity in income of American Residential Holdings, Inc. (313) (128)
Decrease in deposits to retained interest in securitization 596 (855)
Impairment loss on retained interest in securitization 4,702 --
Loss on sale of real estate owned 1,107 105
Loss on loan sales 167 --
Gain on sale of mortgage securities -- (30)
Decrease (increase) in accrued interest receivable 4,390 (1,343)
(Increase) decrease in other assets 196 (230)
Increase in due from affiliate (13) (17)
Decrease in accrued interest payable (320) (630)
(Increase) decrease in accrued expenses and management fees payable (226) 294
Increase in due to affiliate 382 152
--------- ---------
Net cash provided by operating activities 18,808 19,199
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for interest rate cap agreements (554) (443)
Purchase of mortgage loans held-for-investment (622) (864,265)
Sale of mortgage loans held-for-investment 66,525 3,428
Principal payments on mortgage loans held-for-investment 1,962 27,513
Principal payments on bond collateral 273,821 151,424
Proceeds from sale of mortgage securities -- 3,225
Proceeds from sale of real estate owned 6,518 4,149
--------- ---------
Net cash provided by (used in) investing activities 347,650 (674,969)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of CMO bonds 56,210 958,319
Decrease in net borrowings from short-term debt (113,666) (166,214)
Increase in net borrowings from long-term debt -- 7,054
Dividends paid (5,639) (4,834)
Payments on long-term debt (296,252) (155,006)
Increase in capitalized costs (216) (3,353)
--------- ---------
Net cash provided by (used in) financing activities (359,563) 635,966
Net increase (decrease) in cash and cash equivalents 6,895 (19,804)
Cash and cash equivalents at beginning of period 8,550 34,645
--------- ---------
Cash and cash equivalents at end of period $ 15,445 $ 14,841
========= =========
</TABLE>
5
<PAGE> 6
American Residential Investment Trust, Inc. and Subsidiaries
Consolidated Statements of Cash Flows, unaudited, continued
(in thousands)
<TABLE>
<CAPTION>
For the For the
Nine Months Ended Nine Months Ended
September 30, 2000 September 30, 2000
------------------ ------------------
<S> <C> <C>
Supplemental information - interest paid $ 46,656 $ 31,668
======== =========
Non-cash transactions:
Decrease in accumulated other comprehensive income $ -- $ (402)
======== =========
Transfers from mortgage loans held-for-investment to bond collateral $ 58,279 $ 664,006
======== =========
Transfers from bond collateral to real estate owned $ 10,722 $ 8,007
======== =========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE> 7
AMERICAN RESIDENTIAL INVESTMENT TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES
Basis of Financial Statement Presentation
The interim financial statements included herein have been prepared by American
Residential Investment Trust, Inc., ("AmRIT" or the "Company") without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission
("SEC"). Certain information and footnote disclosures, normally included in
financial statements prepared in accordance with generally accepted accounting
principles, have been condensed or omitted pursuant to such SEC rules and
regulations. These financial statements should be read in conjunction with the
audited financial statements and notes thereto included in the Company's latest
Annual Report. In the opinion of management, all adjustments, including normal
recurring adjustments necessary to present fairly the consolidated financial
position of the Company with respect to the interim financial statements and the
results of the operations for the interim period ended September 30, 2000, have
been included. Certain reclassifications may have been made to prior interim
period amounts to conform to the current presentation. The results of operations
for interim periods are not necessarily indicative of results for the full year.
New Accounting Standards
In March 2000, the Financial Accounting Standards Board, ("FASB") issued
Interpretation No. 44, "Accounting for Certain Transactions involving Stock
Compensation," an interpretation of Accounting Principles Board, ("APB") Opinion
No. 25. FASB Interpretation No. 44 clarifies certain issues related to the
application of APB Opinion 25 and is effective July 1, 2000, with certain
conclusions covering specific events that occurred either after December 15,
1998 or January 12, 2000. FASB Interpretation No. 44 is not expected to have a
material effect on the Company's financial position or results of operations.
In June 2000, the FASB issued Statement of Financial Accounting Standards No.
138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities, an amendment of FASB Statement No. 133," (Statement 138). Statement
138 addresses a limited number of issues causing implementation difficulties for
numerous entities that are required to apply Statement 133.
Statement 133, as amended by SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133," and Statement 138, continues to be effective for all fiscal
quarters of all fiscal years beginning after June 15, 2000. The Company has
determined there is no material impact from adopting Statement 133.
In September 2000, the FASB issued Statement of Financial Accounting Standards
No. 140, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities," (Statement 140). Statement 140 replaces FASB
Statement of Financial Accounting Standards No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities,"
(Statement 125). It revises the standards for accounting for securitizations and
other transfers of financial assets and collateral and requires certain
disclosures, but it carries over most of Statement 125's provisions without
reconsideration. Statement 140 provides accounting and reporting standards for
transfers and servicing of financial assets and extinguishments of liabilities.
Those standards are based on consistent application of a financial-components
approach that focuses on control. Under that approach, after a transfer of
financial assets, an entity recognizes the financial and servicing assets it
controls and the liabilities it has incurred, derecognizes financial assets when
control has been surrendered and derecognizes liabilities when extinguished.
Statement 140 provides consistent standards for distinguishing transfers of
financial assets that are sales from transfers that are secured borrowings.
In addition to replacing Statement 125 and rescinding FASB Statement of
Financial Accounting Standards
7
<PAGE> 8
No. 127, " Deferral of the Effective Date of Certain Provisions of FASB
Statement No. 125," Statement 140 carries forward the actions taken by Statement
125.
Statement 140 is effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after March 31, 2001. Statement 140 is
effective for recognition and reclassification of collateral and for disclosures
relating to securitization transactions and collateral for fiscal years ending
after December 15, 2000. Disclosures about securitization and collateral
accepted need not be reported for period sending on or before December 15, 2000,
for which financial statements are presented for comparative purposes.
Statement 140 is to be applied prospectively with certain exceptions. Other than
those exceptions, earlier or retroactive application of its accounting
provisions is not permitted.
NOTE 2. INCOME (LOSS) PER SHARE
The following table illustrates the computation of basic and diluted income
(loss) per share (in thousands, except share and per share data):
<TABLE>
<CAPTION>
For the For the
Three Months Three Months
Ended Ended
September 30, 2000 September 30, 1999
------------------ ------------------
<S> <C> <C>
Numerator:
Numerator for basic income (loss) per share net earnings $ (7,433) $ 2,166
Denominator:
Denominator for basic income (loss) per share - weighted average
number of common shares outstanding during the period 8,055,500 8,055,500
Incremental common shares attributable to exercise of
outstanding options -- 16,068
----------- ----------
Denominator for diluted income (loss) per share 8,055,500 8,071,568
Basic and diluted income (loss) per share $ (0.92) $ 0.27
</TABLE>
<TABLE>
<CAPTION>
For the For the
Nine Months Nine Months
Ended Ended
September 30, 2000 September 30, 1999
------------------ ------------------
<S> <C> <C>
Numerator:
Numerator for basic income (loss) per share net earnings $ (5,632) $ 5,806
Denominator:
Denominator for basic income (loss) per share - weighted average
number of common shares outstanding during the period 8,055,500 8,055,500
Incremental common shares attributable to exercise of
outstanding options -- 3,302
----------- ----------
Denominator for diluted income (loss) per share 8,055,500 8,058,802
Basic and diluted income (loss) per share $ (0.70) $ 0.72
</TABLE>
For the three and nine months ended September 30, 2000 and 1999 there were
1,036,100 and 1,021,000 options, respectively, that were antidilutive and,
therefore, not included in the calculations above.
NOTE 3. MORTGAGE LOANS HELD FOR INVESTMENT, NET, PLEDGED
At September 30, 2000 there were no mortgage loans held for investment
outstanding. At December 31, 1999, mortgage loans held for investment consisted
of the following (dollars in thousands):
<TABLE>
<CAPTION>
December 31, 1999
-----------------
<S> <C>
Mortgage loans held-for-investment,
principal $ 122,036
Unamortized premium 4,343
Allowance for loan losses (163)
---------
$ 126,216
=========
</TABLE>
On January 28, 2000, the Company sold $66.0 million in mortgage loans
held-for-investment back to the originator that sold these loans to the Company
during the fourth quarter of 1999. Certain irregularities
8
<PAGE> 9
were discovered during the Company's routine post-funding quality control review
related to underwriting compliance and loan documents. The buyback was pursuant
to certain representations and warranty obligations of the originator related to
underwriting criteria and regulatory compliance.
NOTE 4. BOND COLLATERAL, MORTGAGE LOANS, NET
AmRIT has pledged mortgage loans as collateral in order to secure
long-term-debt. Bond collateral consists primarily of adjustable-rate,
conventional, 30-year mortgage loans secured by first liens on one- to
four-family residential properties. All bond collateral is pledged to secure
repayment of the related long-term-debt obligation. All principal and interest
(less servicing and related fees) on the bond collateral is remitted to a
trustee and is available for payment on the long-term-debt obligation. The
obligations under the long-term-debt are payable solely from the bond collateral
and are otherwise non-recourse to AmRIT.
The components of the bond collateral at September 30, 2000 and December 31,
1999 are summarized as follows (dollars in thousands):
<TABLE>
<CAPTION>
REMIC CMO/REMIC CMO CMO CMO/FASIT
2000-2 1999-A 1999-2 1999-1 1998-1 TOTAL
Securitization Securitization Securitization Securitization Securitization Bond Collateral
-------------- -------------- -------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
At September 30, 2000
Mortgage loans $ 54,006 $ 260,616 $ 333,479 $ 130,826 $ 106,189 $ 885,116
Unamoritized premium 1,959 9,232 12,826 6,248 4,840 35,105
Allowance for loan losses (105) (284) (1,034) (1,838) (1,916) (5,177)
--------- --------- --------- --------- ----------- -----------
$ 55,860 $ 269,564 $ 345,271 $ 135,236 $ 109,113 $ 915,044
========= ========= ========= ========= =========== ===========
Weighted average net coupon 9.11% 9.44% 8.97% 10.00% 11.42% 9.56%
AT DECEMBER 31, 1999
Mortgage loans $ 319,606 $ 385,795 $ 200,884 $ 210,584 $ 1,116,869
Unamoritized premium 12,227 14,284 8,622 6,279 41,412
Allowance for loan losses (298) (332) (1,443) (2,477) (4,550)
--------- --------- --------- ----------- -----------
$ 331,535 $ 399,747 $ 208,063 $ 214,386 $ 1,153,731
========= ========= ========= =========== ===========
Weighted average net coupon 9.39% 9.03% 8.91% 10.15% 9.32%
</TABLE>
The company maintains an allowance for losses on mortgage loans
held-for-investment and bond collateral, mortgage loans at an amount which it
believes is sufficient to provide adequate protection against losses in the
mortgage loan portfolio.
NOTE 5. BOND COLLATERAL, REAL ESTATE OWNED
The Company owned 102 properties and 68 properties as of September 30, 2000 and
December 31, 1999, respectively. Upon transfer of the loans to real estate
owned, the Company recorded a corresponding charge against the allowance for
loan losses to write-down the real estate owned to fair value less estimated
cost of disposal. At September 30, 2000 and December 31, 1999 real estate owned
totaled approximately $6.8 million and $5.2 million, respectively.
NOTE 6. SHORT-TERM DEBT
At September 30, 2000, there were no mortgage loan reverse repurchase agreements
outstanding. At December 31, 1999, the Company had approximately $119.0 million
of mortgage loan reverse repurchase agreements outstanding, with a borrowing
rate of 6.05%. The highest month end balance and the average
9
<PAGE> 10
balance outstanding during the nine months ended September 30, 2000 were
approximately $57.6 million and $25.6 million, respectively. The highest month
end balance and the average balance outstanding during the twelve months ended
December 31, 1999 were approximately $119.0 million and $12.6 million,
respectively. The remaining maturity was one day for both 2000 and 1999.
At December 31, 1999, the mortgage loan reverse repurchase agreements had the
following characteristics (dollars in thousands):
<TABLE>
<CAPTION>
December 31, 1999
--------------------------------------------------
Repurchase Underlying Interest Rate
Liability Collateral (per annum)
---------- ---------- -------------
<S> <C> <C> <C>
Bear Stearns $119,003 $ 122,017 6.05%
-------- ----------- ----
$119,003 $ 122,017 6.05%
-------- ----------- ----
</TABLE>
Additionally, in conjunction with the 1999-A securitization, Eagle 2 received
financing from Greenwich Capital Financial Products, Inc. ("GCFP"). The
financing agreement was entered into on August 26, 1999 with a maturity date of
February 26, 2001. AmRIT has guaranteed the payment and performance when due of
all obligations of Eagle 2 to GCFP under the financing agreement. The Investor
Certificate for 1999-A is pledged as collateral for this debt. At September 30,
2000, the balance of the short-term debt was approximately $5.3 million. At
December 31, 1999, financing from GCFP was approximately $6.1 million and
classified as long-term debt.
NOTE 7. LONG-TERM DEBT, NET
During the second quarter of 2000, AmRIT, through its wholly-owned subsidiary,
Eagle, conveyed an interest in approximately $56.2 million of mortgage loans to
Countrywide Home Loans, Inc. in exchange for a specified cash sum and certain
REMIC securities. Under generally accepted accounting principles, the
transaction was treated as an issuance of Long-Term Debt, Series 2000-2, secured
by the mortgage loans. The Series 2000-2 Long-Term Debt consists of five
classes, each of which bears interest at an adjustable rate. The stated maturity
for the Series 2000-2 Long-Term Debt is June 25, 2031, however, since the
maturity of the debt is directly affected by the rate of principal repayments of
the related mortgage loans, the actual maturity is likely to occur earlier than
stated maturity.
The components of the long-term-debt at September 30, 2000 and December 31,
1999, along with selected other information are summarized below (dollars in
thousands):
<TABLE>
<CAPTION>
CMO/REMIC CMO/REMIC CMO CMO CMO/FASIT
2000-2 1999-A 1999-2 1999-1 1998-1 TOTAL
DOLLARS IN THOUSANDS SECURITIZATION SECURITIZATION SECURITIZATION SECURITIZATION SECURITIZATION LONG-TERM DEBT
-------------------- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
AT SEPTEMBER 30, 2000
Long-Term debt $ 54,006 $ 254,629 $ 325,894 $ 128,073 $ 103,712 $ 866,314
CMO premium, net -- -- -- -- 119 119
Capitalized costs on
long-term debt (196) (25) (1,457) (877) (212) (2,767)
=========== =========== =========== =========== =========== ===========
Total Long-Term debt $ 53,810 $ 254,604 $ 324,437 $ 127,196 $ 103,619 $ 863,666
=========== =========== =========== =========== =========== ===========
Weighted average financing rates 7.01% 6.79% 6.98% 6.97% 7.63% 7.01%
AT DECEMBER 31, 1999
Long-Term debt $ 317,057 $ 376,855 $ 198,228 $ 208,120 $ 1,100,260
CMO premium, net -- -- -- 237 237
Capitalized costs on
long-term debt (30) (1,679) (1,299) (329) (3,337)
=========== =========== =========== =========== ===========
Total Long-Term debt $ 317,027 $ 375,176 $ 196,929 $ 208,028 $ 1,097,160
=========== =========== =========== =========== ===========
Weighted average financing rates 5.57% 6.11% 5.94% 5.98% 5.90%
</TABLE>
10
<PAGE> 11
NOTE 8. SUBSEQUENT EVENTS
On October 19, 2000, the Company declared a $0.20 per share dividend payable on
November 7, 2000 to shareholders of record as of October 31, 2000.
11
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The statements contained in this Form 10-Q that are not purely historical are
forward looking statements, including statements regarding the Company's
expectations, hopes, beliefs, intentions, or strategies regarding the future.
Statements which use the words "expects", "will", "may", "anticipates", "seeks"
and derivatives of such words are forward looking statements. These forward
looking statements, including statements regarding changes in the Company's
future income, mortgage asset portfolio, direct origination business,
financings, ways the Company may seek to grow income, income levels, the
Company's belief regarding future prepayment rates and future borrowing costs,
and the effect on the Company's interest income, interest expense and operating
performance of changes in interest rates are based on information available to
the Company on the date hereof, and the Company assumes no obligation to update
any such forward looking statement. It is important to note that the Company's
actual results could differ materially from those in such forward looking
statements. Among the factors that could cause actual results to differ
materially are the factors set forth in this item 2 under the heading "Business
Risks". In particular, the Company's future income could be affected by interest
rate increases, high levels of prepayments, mortgage loan defaults, reductions
in the value of retained interest in securitizations, and inability to acquire
or finance new mortgage assets.
OVERVIEW
The Company's revenue primarily consists of interest income generated from its
mortgage assets and its cash and investment balances (collectively, "earning
assets"), management fees, prepayment penalty income and income from equity in
income of American Residential Holdings, Inc.
The Company funds its acquisitions of earning assets with both its equity
capital and with borrowings. For that portion of the Company's earning assets
funded with equity capital ("equity-funded lending"), net interest income is
derived from the average yield on earning assets. Due to the adjustable-rate
nature of the majority of its earning assets, the Company expects that income
from this source will tend to increase as interest rates rise and will tend to
decrease as interest rates fall, but only after the expiration of any initial
fixed teaser periods and then only periodically once or twice each year.
For that portion of the Company's earning assets funded with borrowings ("spread
lending"), the resulting net interest income is a function of the volume of
spread lending and the difference between the Company's average yield on earning
assets and the cost of borrowed funds. Income from spread lending will decrease
following an increase in short term interest rates due to increases in borrowing
costs but a lag in adjustments to the earning asset yields. Yields on adjustable
rate loans generally adjust based on a short term interest rate index, but the
majority of the Company's earning assets are adjustable rate loans which are
subject to an initial fixed teaser period of two years, and then adjust
periodically every six months. Income from spread lending will generally
increase following a decrease in short-term interest rates due to decreases in
borrowing costs but a lag in adjustments to the earning asset yields.
The Company's primary expenses, beside its borrowing costs, are amortization of
loan purchase premiums, provision for loan losses, losses on sale of real estate
owned ("REO"), management and administrative expenses and interest rate cap and
floor agreement expenses. Provision for loan losses represent the Company's best
estimate of expenses related to loan defaults. Losses on real estate owned are
related to seasoning of the mortgage portfolio and expected increases in the
number of loans which become real estate owned. Premiums are amortized using the
interest method over their estimated lives. Management fees and administrative
costs are generally based on the size of the earning asset portfolio, and to a
lesser degree, the level of loan purchase activity. Interest rate cap and floor
agreement costs are based on size of the portfolio subject to gap risk and the
market prices for interest rate cap agreements.
The Company may seek to generate growth in net income in a variety of ways,
including through (i) changing the mix of mortgage asset types among the earning
assets and lowering premiums paid in an effort to improve returns and reduce the
Company's sensitivity to prepayments, issuing new common stock
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and increasing the size of the earning assets, and (ii) increasing the
efficiency with which the Company uses its equity capital over time by
maintaining the Company's use of debt when prudent and by issuing subordinated
debt, preferred stock or other forms of debt and equity. The primary strategy to
change the composition of mortgage assets and to lower premiums on newly
acquired mortgage assets is for the company to establish its own direct mortgage
origination capability. The Company is in the process of establishing the
required infrastructure and has signed an exclusive three year agreement with
Lender Live. Lender Live is an on-line processing company providing a mortgage
banking `out source' solution to various financial institutions. The company
expects to purchase mortgages from these financial institutions while Lender
Live processes such loans according to the Company's underwriting criteria. The
company expects to begin originating loans in 2001. There can be no assurance,
however, that the Company's efforts will be successful or that the Company will
increase or maintain its income level.
RESULTS OF OPERATIONS
NINE MONTH RESULTS
For the nine months ended September 30, 2000, the Company generated a net loss
of approximately $5.6 million and net loss per share of common stock diluted of
$0.70 compared to the nine months ended September 30, 1999 when the Company
generated net income of approximately $5.8 million and net income per share of
common stock diluted of $0.72.
Mortgage asset interest income increased approximately $15.2 million to
approximately $67.1 million for the nine months ended September 30, 2000 from
approximately $51.9 million for the nine months ended September 30, 1999. This
increase was primarily due to a higher average balance of mortgage assets during
the nine month period ending September 30, 2000 than the similar period ending
September 30, 1999.
The increase in mortgage asset interest income was offset by an increase of
approximately $21.9 million in interest expense to approximately $53.7 million
for the nine months ended September 30, 2000 from approximately $31.8 million
for the nine months ended September 30, 1999. Interest expense was higher
between the nine months ended September 30, 2000 and 1999 due to the larger
average borrowing and an increase in borrowing rates. A majority of the
Company's borrowing rates are based upon a spread over the one-month London
InterBank Offered Rate ("LIBOR"). One month LIBOR rates steadily increased
between September of 1999 and September of 2000. These increases have closely
corresponded to increases in the Federal Funds rate as set by the Federal Open
Market Committee headed by Alan Greenspan.
Net interest income decreased $3.7 million to approximately $5.1 million for the
nine months ended September 30, 2000 from approximately $8.8 million for the
nine months ended September 30, 1999 due to the decrease in net interest spread,
offset by lower premium amortization expense. Premium amortization expense
represents the amortization of purchase premiums paid for mortgage loans
acquired in excess of the par value of the loans. Premium amortization expense
was approximately $8.4 million for the nine months ended September 30, 2000 and
approximately $12.6 million for the nine months ended September 30, 1999. Lower
premium amortization expense was substantially due to a reduction in the
unamortized premium on the CMO/FASIT 1998-1 portfolio ($1.4 million for the nine
months ended September 30, 2000, compared to $10.6 million for the nine months
ended September 30, 1999), offset by higher amortization associated with
mortgage loans purchased in the second half of 1999.
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The following chart represents constant repayment rates ("CPRs"):
<TABLE>
<CAPTION>
As of September 30, 2000 As of September 30, 1999
--------------------------------- ----------------------------------
Three Six Life- Three Six Life-
Months Months Time Months Months Time
----------- --------- ---------- ---------- ----------- ----------
Bond collateral:
<S> <C> <C> <C> <C> <C> <C>
CMO/FASIT 1998-1 52.5% 52.8% 44.2% 44.3% 41.7% 30.8%
CMO 1999-1 46.3% 50.1% 32.7% 17.6% - 18.8%
CMO 1999-2 19.4% 19.0% 15.8% - - 1.3%
CMO/REMIC 1999-A 25.0% 24.9% 19.9% - - 13.1%
</TABLE>
At September 30, 2000, unamortized premiums as a percentage of the remaining
principal amount of bond collateral, mortgage loans were 3.78%, as compared to
4.81% at September 30, 1999.
Net interest income, after provision for loan losses, decreased $4.9 million
from approximately $6.1 million for the nine months ended September 30, 1999 to
approximately $1.2 million for the nine months ended September 30, 2000, due
primarily to the decrease in net interest income discussed above and higher
provisions for loan losses. Loan loss provisions increased $1.2 million from
approximately $2.7 million for the nine months ended September 30, 1999 to
approximately $3.9 million for the nine months ended September 30, 2000. The
increases are related to seasoning of the mortgage portfolio and expected
increases in the number of loans in foreclosure which are likely to result in a
loss to the Company. The Company feels current loan loss provisions are adequate
for future losses on all seriously delinquent loans in the portfolio.
During the nine months ended September 30, 2000, other operating income
increased $191,000 over the nine months ended September 30, 1999, primarily due
to an increase of $119,000 in prepayment penalties related to a higher average
balance of mortgage assets during the nine month period ending September 30,
2000 than the similar period ending September 30, 1999. Also contributing to
this increase is the increase of approximately $185,000 in equity in income of
American Residential Holdings, Inc. primarily due to increases in interest
income from CMO's partially offset by a decrease in management fee income as a
result of fewer funds under management.
For the nine months ended September 30, 2000, other expenses increased $2.0
million over the nine months ended September 30, 1999. Losses on the sale of
real estate owned by the Company increased by $1.0 million and are primarily
related to seasoning of the mortgage portfolio and expected increases in the
number of loans which become REO. Management fees increased $642,000 as a result
of an increase in the average size of mortgage assets from the same period
ending September 30, 1999. Management fee expense is based upon a percentage of
the mortgage asset portfolio. General and administrative expenses increased
$231,000 from the nine months ended September 30, 1999 to the nine months ended
September 30, 2000. This increase was primarily due to an increase in personnel
cost of approximately $127,000 as a result of the need for additional resources
for mortgage asset management.
In September 2000, the Company incurred a $4.7 million impairment charge related
to its retained interest in a REMIC securitization (the "Residual"). Generally
accepted accounting principles (GAAP) require that any decline in residual asset
value that is other than temporary be reflected through the Company's current
period income statement. Decreases in interest spreads, along with higher than
anticipated loan prepayment rates, caused the impairment. The loans backing the
Residual were purchased, securitized in a REMIC and sold in June of 1998. There
are no other retained interests in securitizations owned by the Company.
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THREE MONTH RESULTS
For the three months September 30, 2000, the Company generated a net loss of
approximately $7.4 million and a net loss per share of common stock diluted of
$0.92 compared to the three months ended September 30, 1999 when the Company
generated net income of approximately $2.2 million and net income per share of
common stock diluted of $0.27.
The decrease in mortgage asset interest income of $2.1 million to approximately
$19.8 million for the three months ended September 30, 2000 from approximately
$21.9 million for the three months ended September 30, 1999 was primarily due to
a decrease in the Company's average balance of mortgage assets held during the
three month period.
Interest expense increased $2.7 million to approximately $16.9 million for the
three months ended September 30, 2000 from approximately $14.2 million for the
three months ended September 30, 1999. Interest expense was higher between the
three months ended September 30, 2000 and 1999 due to an increase in borrowing
rates partially offset by a decrease in the level of borrowing.
Net interest income decreased $2.6 million to approximately $400,000 for the
three months ended September 30, 2000 from approximately $3.0 million for the
three months ended September 30, 1999 due to the decrease in net interest spread
as discussed above, partially offset by the decrease in premium amortization.
Premium amortization expense was approximately $2.5 million for the three months
ended September 30, 2000 and approximately $4.9 million for the three months
ended September 30, 1999. Lower premium amortization expense is primarily due to
a $12.3 million write-down in the unamortized premium on the bond collateral
December 31, 1999 as a result of increased levels of prepayments in the fourth
quarter of 1999 on the CMO/FASIT segment of Bond Collateral.
Net interest income, after provision for loan losses, decreased $4.1 million
from approximately $2.2 million for the three months ended September 30, 1999 to
a loss of approximately $1.9 million for the three months ended September 30,
2000 due primarily to the decline in net interest spread caused by a smaller
portfolio and higher borrowing rates, discussed above.
During the three months ended September 30, 2000, other operating income
decreased $383,000 over the three months September 30, 1999, primarily due to a
decrease of $247,000 in prepayment penalty income due to the decreasing size of
the mortgage loan portfolio and the proportion of loans with prepayment
penalties.
For the three months ended September 30, 2000, other expenses increased $324,000
over the three months ended September 30, 1999. Losses on sales of REO
properties increased $118,000 over the three months ended September 30, 1999,
primarily related to seasoning of the mortgage portfolio and expected increases
in the number of loans which become REO. A loss on loan sale of $167,000 was a
result of the Company's decision to sell under performing loans which were not
securitized. Management fees decreased $144,000 as a result of a decrease in the
size of mortgage assets. General and administrative expenses increased $183,000
from the three months ended September 30, 1999 to the three months ended
September 30, 2000 primarily due to development of loan origination capacity,
$93,000 and personnel costs of $49,000.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended September 30, 2000, net cash provided by operating
activities was approximately $18.8 million. The difference between net cash
provided by operating activities and the net loss of approximately $5.6 million
was primarily the result of amortization of mortgage asset premiums, impairment
loss in retained interest in securitization, provision for loan losses, losses
on real estate owned and a decrease in accrued interest receivable. Both
amortization of mortgage premium and provisions for loan losses are non-cash
charges. Accrued interest receivable increased cash flow during the first nine
months of 2000 due to the mortgage asset portfolio decreasing approximately
$366.1 million from December 31, 1999 to September 30, 2000. The primary uses of
cash that lowered amounts available to
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fund operations included; losses on real estate owned as a result of seasoning
of the mortgage portfolio and expected increases in the number of loans which
become REO; an increase in equity in income of American Residential Holdings,
Inc. and a decrease in accrued interest payable due to the decrease of
approximately $119.0 million from December 31, 1999 to September 30, 2000 in
reverse repurchase agreements.
Net cash provided by investing activities for the nine months ended September
30, 2000 was approximately $347.7 million. Net cash used for the nine months
ended September 30, 2000 was positively affected by the sale of mortgage loans
held-for-investment of approximately $66.5 million, principal payments of
approximately $275.8 million and proceeds from the sale of real estate owned of
approximately $6.5 million. Uses of cash consisted of the purchase of mortgage
loans held-for-investment of $622,000, and the purchase of interest rate cap
agreements of $554,000.
For the nine months ended September 30, 2000, net cash used in financing
activities was approximately $359.6 million, primarily due to payments on
long-term debt of approximately $296.3 million and payments on short-term debt
of approximately $113.7 million. Net cash used in financing was further reduced
by the payment of dividends of approximately $5.6 million. Net cash used in
financing activities was positively affected by the issuance of CMO bonds of
approximately $56.2 million.
During the nine months ended September 30, 1999, net cash provided by operating
activities was approximately $19.2 million. The difference between net cash
provided by operating activities and the net income of approximately $5.8
million was primarily the result of amortization of mortgage asset premiums and
provisions for loan losses. Both amortization of mortgage asset premiums and
provisions for loan losses are non-cash charges. The primary uses of cash that
lowered amounts not available to fund operations included an increase in accrued
interest receivable and deposits to the retained interest in securitization.
For the nine months ended September 30, 1999, net cash used in investing
activities was approximately $675.0 million, primarily due to mortgage loans
purchased of approximately $864.3 million offset by principal payments of
mortgage assets of approximately $178.9 million and proceeds from the sale of
real estate owned of approximately $4.1 million.
For the nine months ended September 30, 1999, net cash provided by financing
activities was approximately $636.0 million, primarily due to the issuance of
CMO bonds of $958.3 million offset by payments on short term debt of
approximately $166.2 million and long-term debt of approximately $155.0 million.
BUSINESS RISKS
INTEREST RATE INCREASES MAY REDUCE INCOME FROM OPERATIONS
The majority of the Company's mortgage loans have a repricing frequency of two
years or less, while substantially all of the Company's borrowings have a
repricing frequency of one month or less. Consequently increases in (short-term)
interest rates may significantly influence the Company's net interest spread.
While increases in short-term interest rates will increase the yields on a
portion of the Company's adjustable-rate mortgage loans, rising short-term rates
will also increase the cost of all borrowings by the Company. Spread compression
also adversely impacts the value of the Company's retained interest in
securitization. The amount of mismatch between the potential re-pricing of
assets and the re-pricing of borrowings is typically referred to as `gap' risk.
The Company mitigates its gap risk by purchasing interest rate hedges (referred
to as `caps'), however potential income from these hedges only partially offsets
the adverse impact of rising borrowing costs.
Spread compression over the past year, caused by a 125 basis point increase in
borrowing rates from 5.75% in September of 1999 to 7.00% in September of 2000
not offset by a corresponding increase in asset yields, and a decline in the
size of the portfolio have reduced the level of interest income and operating
cash flow available to fund new portfolio asset acquisitions. Asset yields are
expected to increase
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by mid-2001 when the rates on the majority of the Company's mortgage loans are
expected to contractually increase, with a corresponding widening of the net
interest margin (the spread between asset yields and borrowing rates). However,
with limited cash flow available to fund new portfolio acquisitions and the
Company's desire to deploy capital to build its mortgage loan origination
capability, it is likely that the portfolio size will continue to decline,
unless the Company obtains new equity capital. Consequently, spread compression
and decreases in the size of the mortgage portfolio may continue to negatively
impact the Company's financial condition and results of operations.
BORROWER DEFAULTS MAY DECREASE VALUE OF MORTGAGE ASSETS AND REDUCE OPERATING
INCOME
During the time the Company holds mortgage loans held-for-investment, bond
collateral or retained interests in securitizations it is subject to credit
risks, including risks of borrower defaults, bankruptcies and special hazard
losses that are not covered by standard hazard insurance (such as those
occurring from earthquakes or floods). In the event of a default on any mortgage
loan held by the Company, or on mortgages underlying a retained interest in a
securitization, the Company will bear the risk of loss of interest and principal
to the extent of any deficiency between the value of the secured property and
the amount owing on the mortgage loan, less any payments from an insurer or
guarantor. Although the Company has established an allowance for mortgage loan
losses, there can be no assurance that any allowance for mortgage loan losses
which is established will be sufficient to offset losses on mortgage loans in
the future.
The vast majority of mortgage loans owned by the Company are non-conforming,
sub-prime, loans. Credit risks associated with non-conforming mortgage loans,
especially sub-prime mortgage loans, may be greater than those associated with
mortgage loans that conform to Fannie Mae ("FNMA") and Freddie Mac ("FHLMC")
guidelines. The principal difference between sub-prime mortgage loans and
conforming mortgage loans typically include one or more of the following: worse
credit and income histories of the mortgagors, higher loan-to-value ratios,
reduced or alternative documentation required for approval of the mortgagors,
different types of properties securing the mortgage loans, higher loan sizes and
the mortgagor's non-owner occupancy status with respect to the mortgaged
property. As a result of these and other factors, the interest rates charged on
non-conforming mortgage loans are often higher than those charged for conforming
mortgage loans. The combination of different underwriting criteria and higher
rates of interest may lead to higher delinquency rates and/or credit losses for
non-conforming as compared to conforming mortgage loans and thus require high
loan loss allowances.
INABILITY TO ACQUIRE MORTGAGE ASSETS
The size of the Company's portfolio and resulting net interest income will
depend, in part, on the Company's ability to acquire mortgage assets on
acceptable terms and at favorable spreads over the Company's borrowing costs.
There can be no assurance that the Company will be able to replenish the
mortgage asset portfolio as prepayments occur.
To the extent that the Company is unable to invest in a sufficient amount of
mortgage loans meeting its criteria, the Company's results of operations could
be materially adversely affected.
The Company's ability to acquire mortgage assets is dependent on the level of
operating cash flow available for investment in new mortgage assets. Provisions
in certain long term debt agreements require the Company maintain or achieve
predetermined over-collateralization levels, which is the difference between the
par balance of the mortgage loan collateral and the long term debt (bond)
balance. Increases in over-collateralization requirements are triggered by
various measurements such as the gross interest spread of the pool and the
percentage of defaults on the mortgage collateral. In the event that increases
to over-collateralization targets are required, the increases are achieved by
the bond trustee applying some or all of the interest spread cash collected on
the mortgages directly to bond liabilities, thereby reducing the Company's
outstanding debt and increasing the Company's over-collateralization account, or
equity in the loan pool. As such, this operating cash flow would not be
available to acquire new mortgage assets, until such time that
over-collateralization requirements decline.
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The Company is also dependent on the availability of financing to fund mortgage
asset acquisitions. There can be no assurances that the Company's current
short-term financing facilities will be renewed or replaced, or that additional
long-term financing will be available.
In acquiring mortgage assets, the Company will compete with numerous other
financial institutions. The effect of the existence of these competitors may be
to increase competition for the available supply of suitable mortgage assets or
drive up the prices for mortgage assets available for purchase by the Company.
HIGH LEVELS OF MORTGAGE ASSET PREPAYMENTS WILL REDUCE OPERATING INCOME
High levels of prepayments of mortgage assets purchased with a premium by the
Company can impair the value of mortgage assets and thus the level of
amortization of capitalized premiums.
Mortgage asset prepayment rates generally increase when new mortgage loan
interest rates fall below the current interest rates on mortgage loans.
Prepayment experience also may be affected by the expiration of prepayment
penalty clauses, the ability of the borrower to obtain a more favorable mortgage
loan, geographic location of the property securing the adjustable-rate mortgage
loans, the assumability of a mortgage loan, conditions in the housing and
financial markets and general economic conditions. The Company experienced high
levels of prepayments in 1999 and for the first nine months of 2000 on its
CMO/FASIT segment of its mortgage loan portfolio due principally to the fact
that the underlying adjustable-rate loans were subject to their first initial
interest rate adjustment (after being fixed for the first two years), prepayment
penalty clauses have expired and borrowers were able to secure more favorable
rates by refinancing. Because this portfolio was purchased at a large premium,
and the Company expected prepayment rates to continue at high levels into 2000,
the Company took an impairment adjustment in December 1999 to recognize the
impact of rapid repayments on that portfolio. The Company experienced similarly
high prepayments on loans underlying its retained interest in securitization
which was also purchased at relatively large premiums. In the third quarter of
2000 the Company took an impairment charge of approximately $4.7 million on its
retained interest in securitization.
Based on smaller purchase premiums and projected prepayments on its mortgage
asset portfolio, the Company believes that its remaining capitalized premiums
can be amortized over the remaining life of the mortgages such that a sufficient
gross yield can be maintained on the portfolio. However, there can be no
assurance that the Company will experience prepayment rates sufficient to avoid
further impairment write downs. Accordingly, the Company's financial condition
and results of operations could be materially adversely affected.
As of September 30, 2000 approximately 73% of the mortgage loan portfolio had
prepayment penalty clauses, with a weighted average of 16 months remaining
before prepayment penalties expire. Prepayment penalty clauses serve as a
deterrent to early prepayments and the penalties collected help to offset the
premium amortization expense. However, prepayment penalty fees may be in an
amount which is less than the figure which would fully compensate the Company
for its remaining capitalized premiums, and prepayment penalty provisions may
expire before the prepayment occurs.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to a variety of risks including changes in interest rates
which offset the return of its investments and the cost of its debt. At
September 30, 2000, there have not been any
material changes in interest rate risk as reported by the Company in its Annual
Report on Form 10-K for the year ended December 31, 1999.
PART II. OTHER INFORMATION
Item. 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits
*3.1 Articles of Amendment and Restatement of the Registrant
*3.2 Amended and Restated Bylaws of the Registrant
27. Financial Data Schedule
* Incorporated by reference to Registration Statement on
Form S-11 (File No. 333-33679)
(b) Reports on Form 8-K
None.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized
AMERICAN RESIDENTIAL INVESTMENT TRUST, INC.
Dated: November 13, 2000 By: /s/ Judith A. Berry
---------------------------------
Judith A. Berry,
Executive Vice President
Chief Financial Officer
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