Novation Holdings Inc. · OTC:NOHO
Novation — Novastar Financial — Q2 2007 Earnings Presentation
19 slides from Novation's earnings presentation, Aug 13, 2007
Slide 1: NovaStar Financial 2007 Second Quarter Earnings Conference Call
NovaStar Financial (NYSE-NFI) 2007 Second Quarter Earnings Conference Call August 13, 2007
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding management's beliefs, estimates, projections, and assumptions with respect to, among other things, our future operations, busine
Slide 3: Q2 Earnings Review
Q2 Earnings Review Greg Metz, CFO
Slide 4: Second Quarter Earnings and Production Summary
(In thousands, except per share data) (Unaudited) Earnings (GAAP) Net (loss) income available to common EPS available to common (diluted) Retum on average common equity Mortgage Banking - Lending & Originations Nonconforming loan production Cost of production “See appendix ta this presentation for c
Slide 5: Loan Sales, Portfolio Management and Common Stock Data
(in thousands, except per share data) Second Quarier (Unaudited) 2007 2006 Change Loan Sales and Securitizations Nonprime whole loan sales $ 170439 § 434065 61% (Loss) gain on nonprime whole loan sales amy 5,997 Mortgage loans securitized treated as sale 1,400,000 1,711,844 18% (Loss) gain on sale (
Slide 6: Portfolio Review
Portfolio Review Residual Securities $(23) mil impairment Trading securities financed with CDO debt $ (31) mil mark-to-market on assets $ 23 mil mark-to-market on liabilities $(8) net change Trading securities (pre-CDO) $(9) mil mark-to-market On-balance sheet securitizations 2006-1 $(14) mil provis
Slide 7: Mortgage Portfolio Management
Mortgage Portfolio Management
Slide 8: Income Statement
Interest income Interest expense Net interest income before provision for credit losses Provision for credit losses Losses on sales of mortgage assets Fair value adjustment Valuation adjustment on mortgage loans - HFS Premiums for mortgage loan insurance Fee income Gains (losses) on derivative instr
Slide 9: Income Statement (continued)
Interest income Interest expense Net interest income before provision for credit losses Provision for credit losses Losses on sales of mortgage assets Fair value adjustment Valuation adjustment on mortgage loans - HES Premiums for mortgage loan insurance Fee income Gains (losses) on derivative instr
Slide 10: Convertible Preferred
Convertible Preferred Initial Investment On July 16, 2007, MassMutual and Jefferies Capital Partners each paid $24.4 million for 9% Series D-1 convertible preferred stock with a total face value of $52.5 million Convertible into 1.875 million shares of common at any time, at the option of the holder
Slide 11: Shareholder Rights Offering and Backstop
Shareholder Rights Offering and Backstop Proposed $101.2 million Rights Offering is expected to commence promptly after there is an effective registration statement filed with the SEC with respect to the offering The Series D-2 Preferred shares will rank pari passu with the Series D-1 Preferred shar
Slide 12: Shareholder Rights Offering and Backstop
Shareholder Rights Offering and Backstop Common shareholders and Series D-1 will receive a non- transferable Right to purchase their pro-rata share of Series D-2 preferred offered in the Rights Offering Subscribers, other than MassMutual and Jefferies Capital Partners, who exercise their Rights in f
Slide 13: Mortgage Banking Review
Mortgage Banking Review Lance Anderson, President & COO
Slide 14: Origination Environment
Origination Environment Fewer competitors exist today as many have closed their doors Fewer products available to borrowers Illiquid whole-loan market Guidelines have tightened and rates are higher for most originators Expect lower origination activity in the third quarter
Slide 15: Production (000's)
Production (000's) 4,200,000 4,100,000 4,000,000 09,000 09,000 700,000 00,000 00,000 409,000 00,000 200,000 Po Zz == ia an Feb Mar Apr == 2005 2006 2007 May Jun Jul Aug Sep Oct Nov Dec
Slide 16: Production by Channel
278.848 83,7936 — 186,984 195,965 158,01 January February March Api May Wholesale m Correspondent GRetail June Jy
Slide 17: NovaStar Mortgage Banking Outlook
NovaStar Mortgage Banking Outlook Secondary markets have uncertainty Expect third quarter volume substantially below that of the second quarter The wholesale channel will be affected more than the retail channel Cost to fund a loan will rise with lower volume
Slide 18: Questions
Questions
Slide 19: Reconciliation of GAAP G&A Expenses to Cost of Loan Production
————E———_ INovastrFrareial re. Recerelation cf GAAP General ad Adiristrative Expenses to Coste Lean Predustin (alas in thousand, xc lon producten 2 a penartan [Me sowing tabs a recnetaon of overheat cnt ineutedin cur cost efprduhnto gener and lsrnsratve expences, presatedn sorta wh arcoirtig pci one