Impac posts 2010 net earnings of US$10.3M, compared with 2009 earnings of US$3.4M, due to start-up of mortgage lending services, creation of integrated services platform, expansion into northwestern U.S.

Michelle Rivera

IRVINE, California , March 31, 2011 (press release) – Impac Mortgage Holdings, Inc. (NYSE Amex: IMH), a Maryland corporation, or the "Company," reports net earnings for the year ended 2010 of $10.3 million, or $1.24 per diluted common share, as compared to net earnings of $3.4 million, or $0.44 per diluted common share for the year ended 2009.

Recent Business Developments

During 2010, Impac Mortgage Holdings, Inc., through its wholly owned subsidiary Integrated Real Estate Service Corp., continued to provide mortgage and real estate services, and continued to assist in the management of the long-term mortgage portfolio, including the residual interests in securitizations. In the third quarter of 2010, the Company, through its wholly owned subsidiary Excel Mortgage Servicing, Inc. (Excel), re-entered the mortgage banking market and started funding residential mortgage loans.

As part of the initiative to re-enter the mortgage lending market, the Company has completed the following:

-- With respect to new warehouse facilities: -- Obtained its first warehouse facility since 2008 to fund residential mortgage loans;

-- Increased warehouse funding capacity to $42.0 million as of December 31, 2010;

-- Obtained preliminary term sheets from lenders for a potential total warehouse funding capacity of $160 million as of March 25, 2011.

-- Acquired controlling interest in a mortgage banking firm, AmeriHome Mortgage Corporation (AmeriHome), giving the Company ability to (i) originate, sell to and service for Fannie Mae and Freddie Mac loans, (ii) originate Federal Housing Authority (FHA) government loans and (iii) issue and service Ginnie Mae securities;

-- Through Excel, obtained approval to directly originate FHA loans as a HUD mortgagee and approval to originate, sell and service Fannie Mae loans; and

-- Funded $20.7 million in residential mortgage loans in 2010.

By obtaining its first warehouse facility since 2008, the Company has been able to start originating and funding mortgages in 2010 through its wholly owned subsidiary, Excel, under the "Impac Mortgage" brand name. The mortgage lending activities include the origination, funding and selling of loans. During 2010, the Company funded $20.7 million, sold $17.4 million and brokered $20.1 million of loans as compared to a minimal amount of loans brokered in 2009.

In March 2011, Excel expanded into the pacific northwest of the U.S. by opening a regional production office in Lake Oswego, Oregon, along with other offices throughout Oregon, Washington, and Idaho. Excel hired an experienced senior management team along with regional sales and operational staff for those offices. With this regional production office, Excel has a mortgage origination presence throughout the West Coast and in the Midwest and has plans to open a Gulf Coast regional office in Baton Rouge, Louisiana.

The Company was also successful in fully satisfying the $6.6 million outstanding balance of its last remaining significant obligation associated with the previously discontinued non-conforming residential lending operations. The full satisfaction of this obligation results in the termination of all associated covenants, conditions and restrictions.

In 2009, the Company created an integrated services platform to provide solutions to the mortgage and real estate markets. In 2010, the Company has further developed and enhanced its integrated services platform in providing services to investors, portfolio managers, servicers and individual borrowers primarily by focusing on loss mitigation and performance of our own long-term mortgage portfolio. The development of these business activities focuses on vertical integration of a centralized platform to operate synergistically to maximize revenues and profits. During 2010, the Company has expanded the mortgage and real estate service revenues by 33% to $56.4 million in 2010 from $42.3 million in 2009.

Although the Company intends to expand its portfolio loss mitigation and real estate services to more third parties in the marketplace, the revenues from these business activities have historically been generated from the Company's long-term mortgage portfolio.

Through loss mitigation efforts, the Company has been able to improve the performance of its long-term mortgage portfolio by reducing the 60 or more days delinquent loans to $2.4 billion, or 21.3%, at December 31, 2010 from $3.1 billion, or 25.0%, at December 31, 2009.

Selected Financial Results for 2010

Continuing Operations

-- Earnings from continuing operations of $7.6 million for the year ended December 31, 2010, compared to $8.3 million for 2009.

-- Net interest income of $5.7 million for the year ended December 31, 2010, compared to $9.8 million for 2009.

-- Non-interest income--net trust assets of $4.3 million for the year ended December 31, 2010, compared to $13.0 million for 2009.

-- Mortgage and real estate services fees of $56.4 million for the year ended December 31, 2010, compared to $42.3 million for 2009.

Discontinued Operations

-- Earnings from discontinued operations (net of tax) of $2.2 million for the year ended December 31, 2010, compared to $2.3 million for 2009.

Continuing Operations

At December 31, 2010, cash within our continuing operations decreased to $11.5 million from $25.7 million at December 31, 2009. The primary sources of cash between periods were $56.4 million in fees generated from the mortgage and real estate fee-based businesses and $11.2 million from residual interests in securitizations. Offsetting the sources of cash were operating expenses totaling $61.4 million and $23.8 million in payments on the notes payable, net of proceeds received from issuance of structured debt agreement.

Since our consolidated and unconsolidated securitization trusts are nonrecourse, we have netted trust assets and liabilities to present the Company's interest in these trusts more simply, which are considered our residual interests in securitizations. For unconsolidated securitizations our residual interests represent the fair value of investment securities available-for-sale. For consolidated securitizations, our residual interests are represented by the fair value of securitized mortgage collateral and real estate owned, offset by the fair value of securitized mortgage borrowings and net derivative liabilities. We receive cash flows from our residual interests in securitizations to the extent they are available after required distributions to bondholders and maintaining overcollateralization levels within the trusts. The estimated fair value of the residual interests, represented by the difference in the fair value of trust assets and trust liabilities, was $26.4 million at December 31, 2010, compared to $23.0 million at December 31, 2009. The increase in residual fair value in 2010 was primarily due to decreased loss assumptions for single-family collateral and investor yield requirements.

2010 Year End Earnings Conference Call

The Company has announced a conference call and live web cast on Friday, April 1, 2011 at 9:00 a.m. Pacific Time (12:00 p.m. Eastern Time). We will discuss our year end 2010 financial results, followed by a question and answer session. If you would like to participate in the conference call, you may listen by dialing (866) 838 - 8084, conference ID number 52619998, or access the web cast via our web site at http://ir.impaccompanies.com. To participate in the conference call, dial in fifteen minutes prior to the scheduled start time. The call will also be archived through April 8, 2011. To listen to the archived call dial (800) 642-1687 or (706) 645-9291, conference call ID number 52619998. The conference call will also be archived on the Company's web site at http://ir.impaccompanies.com. You can subscribe to receive instant notification of news releases, events, presentations, and daily stock quotes by using our e-mail alert feature located at the web site under 'Receive Email Alerts'.

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