It's all about respect. John Robbins, the chief executive officer of AmNet Mortgage Inc. (Nasdaq: AMNT), says he decided to move his whole mortgage bank from the American Stock Exchange to Nasdaq, because Nasdaq had more cachet with his investors.
"Not to say anything against AMEX, but as we went out and talked to investors, we found that there was this sort of pecking order with the New York Stock Exchange and Nasdaq at the top," he said.
AmNet's stock, which had been listed under the symbol INV with the American Stock Exchange, began trading under the AMNT banner on Nasdaq on Wednesday.
"This milestone is a testament to our financial strength and strong value proposition," said Robbins. "We believe that we will gain greater visibility for our company's stock on Nasdaq and attract a broader range of investors."
AmNet and its subsidiaries, primarily American Mortgage Network, posted $208,000 in net income on $27.6 million in revenues for the quarter ended June 30, compared with $9.5 million in net income on $34.3 million in revenues for the like quarter last year.
For the six months ended June 30, the company posted a loss of $5.46 million on $43.4 million in revenues, compared with $21.7 million in net income on $61.8 million in revenues for the comparable period in 2003.
Robbins said he expects to break even for the next few quarters until AmNet is firmly established. Already, he says the firm had grown from 25th in the country on the basis of wholesale mortgage lending in mid-2003 to 17th by mid-2004.
The company was not profitable during the first half of the year, but Robbins said that is because AmNet has grown so quickly. It has added offices around the country at the rate of about one per month for nearly three years, and has 30 offices today. "About 10 of these are mature branches. The others are still growing," he said.
Robbins said he plans to keep the company at about 30 offices so it is not in danger of becoming too big too quickly.
AmNet originates loans for the national mortgage broker community through its network of branches and business-to-business over the Internet. AmNet has loan production offices in Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Minnesota, Nevada, New Jersey, New York, North Carolina, Ohio, Oregon, Rhode Island, Texas, Virginia and Washington.
Clay Strittmatter, AmNet senior vice president of finance, said for the first half of the year, AmNet posted a pre-tax loss on the mortgage origination side of its business of about $4.44 million, compared with $16.7 million in positive pre-tax net mortgage origination income last year. Strittmatter said such fluctuations are common in a young firm of this type and are no cause for concern.
Robbins said market consolidations have posed challenges for his industry, but emphasized that he is very comfortable about how his company is situated.
Average loan fundings per workday were $33.7 million in August compared to $29.7 million in July. That was compared with $44.6 million in average loan fundings per day in August and $65.1 million in July 2003.
"Daily loan funding volume rose in August driven primarily by a healthy purchase market and lower interest rates," said Robbins. "While there was a month-over-month decline in both existing and new home sales, home purchases remain at high levels. Our goal going forward is to increase sales penetration and market share growth throughout our existing branching system. At the same time, we continue to focus on efficiencies so that loans are produced at a low cost."
AmNet reported that it funded $742 million in home mortgages in August, up from $623 million in July. That compares to funding $936 million in August 2003 and $1.4 billion for July.
Robbins said he recently rolled out a sub-prime lending arm to serve those with less than stellar credit. He said he would eventually like to see these loans account for about 20 percent of AmNet's business.
"We need time for this sub-prime business to take effect," Robbins said.
AmNet Mortgage grew out of what was American Residential Investment Trust. Robbins said mortgage real estate investment trusts made sense in 1997, but were already falling out of favor as the economy was softening two years later.
"It was an extraordinarily difficult REIT environment, so we decided it would better if we transitioned into a mortgage bank," Robbins said.