Novation Holdings Inc. · OTC:NOHO
Novation — Novastar Financial — Q4 2005 Earnings Presentation
26 slides from Novation's earnings presentation, Feb 28, 2006
Slide 1: NovaStar Financial 2005 Fourth Quarter Earnings Conference Call
NovaStar Financial (NYSE-NFI) www.novastarmortgage.com 2005 Fourth Quarter Earnings Conference Call February 28, 2006
Slide 2: Safe Harbor Statement
Safe Harbor Statement Certain matters discussed in this release 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-looking st
Slide 3: Opening Comments
Opening Comments Scott Hartman, CEO
Slide 4: Summary of Key Performance Metrics
Summary of Key Performance Metries (in thousands, except per share data) (Unaudited) Earnings (GAAP) Net Income available to common EPS available to common (diluted) Retum on average equity Retum on average common equity REIT Taxable Income & Dividends Est. REIT taxable income Est. REIT taxable inco
Slide 5: Fourth Quarter
Fourth Quarter (Unaudited) 2005 2004 Mortgage Banking - Lending & Originations Nonconforming loan production $2,198,339 $2,235,029 Cost of wholesale praduction* 232% 2.66% Portfolio Management - Asset Performance Portfolio loans under management $13,987,730 $12,130,182 Portfolio net interest income
Slide 6: Historical EPS and Dividends
Historical EPS and Dividends
Slide 7: 2006 Dividend Guidance
2006 Dividend Guidance 2006 Common Dividend of at Least $5.60 per Share
Slide 8: Book Value per Diluted Share
Book Value per Diluted Share $15.08 50.0% 45.0% 40.0% 36.0% 30.0% 26.0% 2002 2003 2004 2006 [=a B00K Value per Diluted share —Return on Comman Equity + 20.0% Return on Equity
Slide 9: Mortgage Banking
Mortgage Banking
Slide 10: Production
Production Production down 2% Yr/Yr, down 21% Sequentially
Slide 11: Production: Credit Characteristics
Production Credit Characteristics
Slide 12: Spreads
Spreads *Excluding MTA 7.6 % 2.2 % 540 bps 327 bps 8.1 %* 4.8 %
Slide 13: Mortgage Lending Financials
Mortgage Lending Financials
Slide 14: Mortgage Banking Environment
Mortgage Banking Environment Intensely competitive Pricing at or below cost to originate Smaller players won’t survive Volumes flat to down for many Many are originating and “hoping” to make money Race to lower costs (continues from 2005) Whole loan prices seem like they are recovering a little, but
Slide 15: Portfolio Management
Portfolio Management
Slide 16: Portfolio Rollforward
Portfolio Rollforward (In $000's) Assets Underlying Portfolio - Q3 '05 $14,094,048 Loan Originations 2,198,339 Portfolio run-off (principle paydown, loss) (1,883,821) Whole Loan Sales (420,836) Assets Underlying Portfolio - Q4 '05 $ 13,987,730
Slide 17: Net Interest Income and ROA
No VASTAR: 700 2.50% 600 2.00% 2 00 an em : g # 202 1.00% Ez = 200 = 0.50% 100 : 0.00% Dec-03 Mar04 Jun-04 Sep-04 Dec-04 Mar0S Jun-05 Sep-05 Dec-05 [=a Net Interest Income ——ROA
Slide 18: Portfolio Net Interest Income
Portfolio Net Interest Income
Slide 19: Static Pool Delinquency Trends
Static Pool Delinquency Trends
Slide 20: Static Pool Cumulative Losses
Static Pool Cumulative Losses
Slide 21: Portfolio Segment Financials
Portfolio Segment Financials
Slide 22: Portfolio trends
Portfolio trends Size of portfolio should be relatively stable over the next year Over time, ROA’s should come down to a normalized range of 1.00% to 1.25% Made a conscious decision to include more MI in 2005 deals due to expected slowdown in housing price appreciation
Slide 23: Questions
Questions
Slide 24: Appendix
Appendix
Slide 25: Consolidated Financials
CCongolicsted Rrancials Fertha Three Worthe Ended Dao, 21,2005 Lnsucted Mortgage Pertfaio —Mortgage Lean ranch Management Lending _ Serving _QperaiensEinations Total Interest home § asset eae F Pow tame res Interest Emperce 3455 22798 2 (4083) "2270 Nat terest come Bore Credit Losses 528 Bal i ‘40s
Slide 26: Cost of Wholesale Production
Cost of Wholesale Production