Novation Holdings Inc. · OTC:NOHO
Novation — NovaStar Financial — 2005 FBR Investor Conference
17 slides from Novation's conference presentation, Nov 28, 2005
Slide 1: NovaStar Financial
NovaStar Financial (NYSE-NFI) www.novastarmortgage.com 2005 FBR Investor Conference November 30, 2005 Exhibit 99
Slide 2: Safe Harbor Statement
Safe Harbor Statement Certain matters discussed in this presentation may constitute forward-looking statements within the meaning of the federal securities laws. Forward looking statements are those that predict or describe future events and that do not relate solely to historical matters. Forward l
Slide 3: Mortgage Banking
Mortgage Banking
Slide 4: Production
Production 2,358 2,779 1,948 - 1,000 1,500 2,000 2,500 3,000 Q3 '03 Q4 '03 Q1 '04 Q2 '04 Q3 '04 Q4 '04 Q1 '05 Q2 '05 Q3 '05 Production up 14% Yr/Yr, up 18% Sequentially
Slide 5: Cost of Production
Cost of Production 2,779 - 1,000 1,500 2,000 2,500 3,000 Q3 '03 Q4 '03 Q1 '04 Q2 '04 Q3 '04 Q4 '04 Q1 '05 Q2 '05 Q3 '05 2.00% 2.10% 2.20% 2.30% 2.40% 2.50% 2.60% 2.70% 2.80% 2.90% Production COP
Slide 6: Production: Credit Characteristics
Production Credit Characteristics Weighted Avg. FICO Weighted Avg. LTV 77.4 79.6 82.4 82.7 82.4 82.4 82.1 81.6 82.3 75.0 76.0 77.0 78.0 79.0 80.0 81.0 82.0 83.0 84.0 85.0
Slide 7: Spreads
Spreads - 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 Q3 '03 Q4 '03 Q1 '04 Q2 '04 Q3 '04 Q4 '04 Q1 '05 Q2 '05 Q3 '05 2-year Swap WAC 7.8 % 1.9 % 7.6 %* 4.3 % 586 bps 326 bps *Excluding MTA
Slide 8: Mortgage Banking Environment
Mortgage Banking Environment • Origination activity has moderated since August peak as coupons have risen • Profit margins on newly originated loans are relatively thin • Increasing revenue and continued cost reduction will continue to be a primary focus in 2006
Slide 9: Portfolio Management
Portfolio Management
Slide 10: Portfolio ROA
Portfolio ROA - 10.0 20.0 30.0 40.0 50.0 60.0 70.0 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% Net Interest Income ROA
Slide 11: Portfolio Net Interest Income
Portfolio Net Interest Income - 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 - 10.0 20.0 30.0 40.0 50.0 60.0 70.0 Avg. Assets Under Mgmt. Net Interest Income
Slide 12: Effect of HPA on Portfolio LTV
Effect of HPA on Portfolio LTV* Loans with MI and Loans with Original LTV<= 60% Loans without MI and Original LTV >60% Remaining Loan Balance 7,922 6,143 Initial Average LTV after MI 55% 85% Average Age (years) 1.03 0.98 HPA Increase 10.8% 10.6% Estimated Current LTV after MI 44.2% 74.6% *Estimates
Slide 13: Portfolio trends
Portfolio trends • Better credit from strength of housing market • Faster prepayments – borrowers looking to monetize increase in home value • Returns on investments in new loans remain relatively low at market prices
Slide 14: Dividends
Dividends Dividend Carry-over Analysis (In millions) Estimated 2004 REIT taxable income through Sept. 30, 2005 $ Less: 2005 dividend declarations applied to 2005 taxable income (32) Estimated 2005 REIT taxable income remaining to be distributed $
Slide 15: Questions
Questions
Slide 16: Appendix
Appendix
Slide 17: Cost of Wholesale Production
Cost of Wholesale Production Cost of Wholesale Production (dollars in thousands) General and administrative expenses $ 172,685 $ 157,130 $ 55,887 $ 54,597 Mortgage portfolio management general and administrative expenses (11,928) (5,424) (4,174) (1,820) Branch operations general and administrative e