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The accompanying Unaudited Condensed Consolidated Financial Statements (the “financial statements”) of M/I Homes, Inc. and its subsidiaries (the “Company”) and notes thereto have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. The financial statements include the accounts of the Company. All intercompany transactions have been eliminated. Results for the interim period are not necessarily indicative of results for a full year, including as a result of the novel coronavirus (COVID-19) pandemic which has disrupted, and is expected to continue to disrupt, our business. In the opinion of management, the accompanying financial statements reflect all adjustments (all of which are normal and recurring in nature) necessary for a fair presentation of financial results for the interim periods presented. These financial statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”).

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during that period. Actual results could differ from these estimates and have a significant impact on the financial condition and results of operations and cash flows. With regard to the Company, estimates and assumptions are inherent in calculations relating to valuation of inventory and investment in unconsolidated joint ventures, property and equipment depreciation, valuation of derivative financial instruments, accounts payable on inventory, accruals for costs to complete inventory, accruals for warranty claims, accruals for self-insured general liability claims, litigation, accruals for health care and workers’ compensation, accruals for guaranteed or indemnified loans, stock-based compensation expense, income taxes, and contingencies. Items that could have a significant impact on these estimates and assumptions include the risks and uncertainties listed in “Item 1A. Risk Factors” in Part I of our 2019 Form 10-K and in “Item 1A. Risk Factors” in Part II of this Quarterly Report on Form 10-Q, as the same may be updated from time to time in our subsequent filings with the SEC.

Reclassifications

As a result of the Company's change in reportable segments during the second quarter of 2019, the Company recast certain prior year amounts in the condensed consolidated financial statements to conform with the new presentation (see Note 11). These reclassifications had no impact on the Company's results of operations.

Subsequent Events

Beginning in the latter portion of the first quarter of 2020, the United States was severely impacted by the novel coronavirus (COVID-19) pandemic. While the response to the COVID-19 outbreak continues to rapidly evolve, it has led to quarantines, “stay-at-home” orders, social distancing guidelines and similar mandates across the country that have significantly disrupted activities in large segments of the economy. Because all of the states in which we operate (other than Michigan) recognize housing constructions and mortgage services as essential businesses, most of our communities remain open for continued construction of homes and sales by appointment. Although we continue to build and sell homes in these markets, traffic and sales have slowed significantly, home cancellations have increased significantly and our construction and home delivery cycles have been negatively impacted as well. We expect that the COVID-19 pandemic will negatively impact our business, results of operations, financial condition and/or cash flows in the second quarter of 2020 and subsequent reporting periods.  However, the future impacts of COVID-19 on our results of operations, financial condition, and cash flows are contingent upon the duration and severity of the outbreak, as well as the extent of the associated decline in economic activity and timing of the subsequent recovery. Further discussion of the potential impacts on our business, results of operations, financial condition and cash flows from the COVID-19 pandemic is provided below under Part II, Item 1A “Risk Factors.”

Recently Adopted Accounting Standards

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to estimate credit losses. ASU 2016-13 is effective for our fiscal year beginning January 1, 2020. Subsequent to the issuance of ASU 2016-13, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses (“ASU 2018-19”) in November 2018,

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ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments (“ASU 2019-04”), in April 2019, and ASU No. 2019-05, Financial Instruments-Credit Losses (Topic 326) Targeted Transition Relief (“ASU 2019-05”) in May 2019. These ASUs do not change the core principle of the guidance in ASU 2016-13. Instead these amendments are intended to clarify and improve operability of certain topics included within the credit losses standard. These ASUs will have the same effective date and transition requirements as ASU 2016-13. The adoption of ASU 2016-13 on January 1, 2020 did not have a material impact on our consolidated financial statements and disclosures.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). ASU 2018-13 modifies the disclosure requirements for fair value measurements and removes the requirement to disclose (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (2) the policy for timing of transfers between levels, and (3) the valuation processes for Level 3 fair value measurements. ASU 2018-13 requires disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For all entities, ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Our adoption of ASU 2018-13 on January 1, 2020 did not have a material impact on our consolidated financial statements and disclosures.

In March 2020, the FASB issued ASU No. 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 is intended to provide temporary optional expedients and exceptions to the US GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This guidance was effective beginning March 12, 2020 and can be applied prospectively through December 31, 2022. The adoption of this guidance did not have a material impact on our consolidated financial statements and disclosures.

Impact of New Accounting Standards

In March 2020, the FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments (“ASU 2020-03”). ASU 2020-03 improves and clarifies various financial instruments topics, including the current expected credit losses (CECL) standard issued in 2016 (described above). ASU 2020-03 includes seven different issues that describe the areas of improvement and the related amendments to GAAP that are intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments have different effective dates. We are currently evaluating the effect of adopting this new accounting guidance, but do not expect adoption will have a material impact on our consolidated financial statements and disclosures.

Significant Accounting Policies

We believe that there have been no significant changes to our significant accounting policies during the quarter ended March 31, 2020 as compared to those disclosed in our 2019 Form 10-K.

Inventory

Inventory is recorded at cost, unless events and circumstances indicate that the carrying value of the land is impaired, at which point the inventory is written down to fair value (see Note 4 to our financial statements for additional details relating to our procedures for evaluating our inventories for impairment). Inventory includes the costs of land acquisition, land development and home construction, capitalized interest, real estate taxes, direct overhead costs incurred during development and home construction, and common costs that benefit the entire community, less impairments, if any.

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A summary of the Company’s inventory as of March 31, 2020 and December 31, 2019 is as follows:

(In thousands)	March 31, 2020				December 31, 2019
Single-family lots, land and land development costs	$	837,686			$	858,065
Land held for sale	1,164				5,670
Homes under construction	829,230				756,998
Model homes and furnishings - at cost (less accumulated depreciation: March 31, 2020 - $13,265;    December 31, 2019 - $12,723)	95,548				98,777
Community development district infrastructure	12,914				13,531
Land purchase deposits	31,705				28,532
Consolidated inventory not owned	14,284				7,934
Total inventory	$	1,822,531			$	1,769,507

Single-family lots, land and land development costs include raw land that the Company has purchased to develop into lots, costs incurred to develop the raw land into lots, and lots for which development has been completed, but which have not yet been used to start construction of a home.

Homes under construction include homes that are in various stages of construction. As of March 31, 2020 and December 31, 2019, we had 1,322 homes (with a carrying value of $255.1 million) and 1,459 homes (with a carrying value of $304.0 million), respectively, included in homes under construction that were not subject to a sales contract.

Model homes and furnishings include homes that are under construction or have been completed and are being used as sales models. The amount also includes the net book value of furnishings included in our model homes. Depreciation on model home furnishings is recorded using an accelerated method over the estimated useful life of the assets, which is typically three years.

We own lots in certain communities in Florida that have Community Development Districts (“CDDs”). The Company records a liability for the estimated developer obligations that are probable and estimable and user fees that are required to be paid or transferred at the time the parcel or unit is sold to an end user.  The Company reduces this liability at the time of closing and the transfer of the property.  The Company recorded a $12.9 million and $13.5 million liability related to these CDD bond obligations as of March 31, 2020 and December 31, 2019, respectively, along with the related inventory infrastructure.

Land purchase deposits include both refundable and non-refundable amounts paid to third party sellers relating to the purchase of land. On an ongoing basis, the Company evaluates the land option agreements relating to the land purchase deposits. In the period during which the Company makes the decision not to proceed with the purchase of land under an agreement, the Company expenses any deposits and accumulated pre-acquisition costs relating to such agreement.

Capitalized Interest

The Company capitalizes interest during land development and home construction.  Capitalized interest is charged to land and housing costs and expensed as the related inventory is delivered to a third party.  The summary of capitalized interest for the three months ended March 31, 2020 and 2019 is as follows:

	Three Months Ended March 31,
(In thousands)	2020				2019
Capitalized interest, beginning of period	$	21,607			$	20,765
Interest capitalized to inventory	7,162				6,134
Capitalized interest charged to land and housing costs and expenses	(6,570		)		(5,393		)
Capitalized interest, end of period	$	22,199			$	21,506
Interest incurred	$	11,862			$	12,926

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Investment in Joint Venture Arrangements

In order to minimize our investment and risk of land exposure in a single location, we have periodically partnered with other land developers or homebuilders to share in the land investment and development of a property through joint ownership and development agreements, joint ventures, and other similar arrangements. As of March 31, 2020 and December 31, 2019, our investment in such joint venture arrangements totaled $40.3 million and $37.9 million, respectively, and was reported as Investment in Joint Venture Arrangements on our Unaudited Condensed Consolidated Balance Sheets. The $2.4 million increase during the three-month period ended March 31, 2020 was driven primarily by our cash contributions to our joint venture arrangements during the first quarter of 2020 of $6.5 million, offset, in part, by lot distributions from our joint venture arrangements of $3.7 million.

The majority of our investment in joint venture arrangements for both March 31, 2020 and December 31, 2019 consisted of joint ownership and development agreements for which a special purpose entity was not established (“JODAs”). In these JODAs, we own the property jointly with partners which are typically other builders, and land development activities are funded jointly until the developed lots are subdivided for separate ownership by the partners in accordance with the JODA and the approved site plan. As of March 31, 2020 and December 31, 2019, the Company had $38.1 million and $35.5 million, respectively, invested in JODAs.

The remainder of our investment in joint venture arrangements was comprised of joint venture arrangements where a special purpose entity was established to own and develop the property. For these joint venture arrangements, we generally enter into limited liability company or similar arrangements (“LLCs”) with the other partners. These entities typically engage in land development activities for the purpose of distributing or selling developed lots to the Company and its partners in the LLC. As of March 31, 2020 and December 31, 2019, the Company had $2.2 million and $2.4 million, respectively, of equity invested in LLCs. The Company’s percentage of ownership in these LLCs as of both March 31, 2020 and December 31, 2019 ranged from 25% to 74%.

We use the equity method of accounting for investments in LLCs and other joint venture arrangements, including JODAs, over which we exercise significant influence but do not have a controlling interest. Under the equity method, our share of the LLCs’ earnings or loss, if any, is included in our Unaudited Condensed Consolidated Statements of Income. The Company’s equity in the income relating to earnings from its LLCs was less than $0.1 million for the period ending March 31, 2020 and its equity in loss was $0.1 million for the period ending March 31, 2019. Our share of the profit relating to lots we purchase from our LLCs is deferred until homes are delivered by us and title passes to a homebuyer.

We believe that the Company’s maximum exposure related to its investment in these joint venture arrangements as of March 31, 2020 was the amount invested of $40.3 million, which is reported as Investment in Joint Venture Arrangements on our Unaudited Condensed Consolidated Balance Sheets. We expect to invest further amounts in these joint venture arrangements as development of the properties progresses.

The Company assesses its investments in unconsolidated LLCs for recoverability on a quarterly basis. See Note 4 to our financial statements for additional details relating to our procedures for evaluating our investments for impairment.

Variable Interest Entities

With respect to our investments in these LLCs, we are required, under ASC 810-10, Consolidation (“ASC 810”), to evaluate whether or not such entities should be consolidated into our consolidated financial statements. We initially perform these evaluations when each new entity is created and upon any events that require reconsideration of the entity. See Note 1, “Summary of Significant Accounting Policies - Variable Interest Entities” in the Company’s 2019 Form 10-K for additional information regarding the Company’s methodology for evaluating entities for consolidation.

Land Option Agreements

In the ordinary course of business, the Company enters into land option or purchase agreements for which we generally pay non-refundable deposits. Pursuant to these land option agreements, the Company provides a deposit to the seller as consideration for the right to purchase land at different times in the future, usually at predetermined prices.  In accordance with ASC 810, we analyze our land option or purchase agreements to determine whether the corresponding land sellers are variable interest entities (“VIEs”) and, if so, whether we are the primary beneficiary, as further described in Note 1, “Summary of Significant Accounting Policies - Land Option Agreements” in the Company’s 2019 Form 10-K. If we are deemed to be the primary beneficiary of the VIE, we will consolidate the VIE in our consolidated financial statements and reflect such assets and liabilities in our Consolidated Inventory not Owned in our Unaudited Condensed Consolidated Balance Sheets. At both March 31, 2020 and December 31, 2019, we

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concluded that we were not the primary beneficiary of any VIEs from which we are purchasing land under option or purchase agreements.

There are three measurement input levels for determining fair value: Level 1, Level 2, and Level 3. Fair values determined by Level 1 inputs utilize quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Fair values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

Assets Measured on a Recurring Basis

The Company measures both mortgage loans held for sale and interest rate lock commitments (“IRLCs”) at fair value. Fair value measurement results in a better presentation of the changes in fair values of the loans and the derivative instruments used to economically hedge them.

In the normal course of business, our financial services segment enters into contractual commitments to extend credit to buyers of single-family homes with fixed expiration dates.  The commitments become effective when the borrowers “lock-in” a specified interest rate within established time frames.  Market risk arises if interest rates move adversely between the time of the “lock-in” of rates by the borrower and the sale date of the loan to an investor.  To mitigate the effect of the interest rate risk inherent in providing rate lock commitments to borrowers, the Company enters into optional or mandatory delivery forward sale contracts to sell whole loans and mortgage-backed securities to broker/dealers.  The forward sale contracts lock in an interest rate and price for the sale of loans similar to the specific rate lock commitments.  The Company does not engage in speculative trading or derivative activities.  Both the rate lock commitments to borrowers and the forward sale contracts to broker/dealers or investors are undesignated derivatives, and accordingly, are marked to fair value through earnings.  Changes in fair value measurements are included in earnings in the accompanying statements of income.

The fair value of mortgage loans held for sale is estimated based primarily on published prices for mortgage-backed securities with similar characteristics.  To calculate the effects of interest rate movements, the Company utilizes applicable published mortgage-backed security prices, and multiplies the price movement between the rate lock date and the balance sheet date by the notional loan commitment amount.  The Company applies a fallout rate to IRLCs when measuring the fair value of rate lock commitments.  Fallout is defined as locked loan commitments for which the Company does not close a mortgage loan and is based on management’s judgment and company experience.

The Company sells loans on a servicing released or servicing retained basis and receives servicing compensation.  Thus, the value of the servicing rights included in the fair value measurement is based upon contractual terms with investors and depends on the loan type. Mortgage servicing rights (Level 3 financial instruments as they are measured using significant unobservable inputs such as mortgage prepayment rates, discount rates and delinquency rates) are periodically evaluated for impairment. The amount of impairment is the amount by which the mortgage servicing rights, net of accumulated amortization, exceed their fair value. Impairment, if any, is recognized through a valuation allowance and a reduction of revenue. The carrying value and fair value of mortgage servicing rights was $10.4 million and $9.4 million, respectively, at March 31, 2020. Therefore, the Company recorded a valuation allowance and impairment related to our mortgage servicing rights of $1.0 million for the quarter ended March 31, 2020. This decrease in value of our mortgage servicing rights was caused by the disruption in the mortgage industry as a result of the COVID-19 pandemic. At December 31, 2019, the carrying value and fair value of our mortgage servicing rights were both $9.6 million.

The fair value of the Company’s forward sales contracts to broker/dealers solely considers the market price movement of the same type of security between the trade date and the balance sheet date.  The market price changes are multiplied by the notional amount of the forward sales contracts to measure the fair value.

Interest Rate Lock Commitments. IRLCs are extended to certain home-buying customers who have applied for a mortgage loan and meet certain defined credit and underwriting criteria. Typically, the IRLCs will have a term of less than six months; however, in certain markets, the term could extend to nine months.

Some IRLCs are committed to a specific third-party investor through the use of whole loan delivery commitments matching the exact terms of the IRLC loan. Uncommitted IRLCs are considered derivative instruments and are fair value adjusted, with the resulting gain or loss recorded in current earnings.

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Forward Sales of Mortgage-Backed Securities. Forward sales of mortgage-backed securities (“FMBSs”) are used to protect uncommitted IRLC loans against the risk of changes in interest rates between the lock date and the funding date. FMBSs related to uncommitted IRLCs are classified and accounted for as non-designated derivative instruments and are recorded at fair value, with gains and losses recorded in current earnings.

Mortgage Loans Held for Sale. Mortgage loans held for sale consists primarily of single-family residential loans collateralized by the underlying property.  Generally, all of the mortgage loans and related servicing rights are sold to third-party investors shortly after origination.  During the period between when a loan is closed and when it is sold to an investor, the interest rate risk is covered through the use of a whole loan contract or by FMBSs.

The table below shows the notional amounts of our financial instruments at March 31, 2020 and December 31, 2019:

Description of Financial Instrument (in thousands)	March 31, 2020				December 31, 2019
Whole loan contracts and related committed IRLCs	$	980			$	1,445
Uncommitted IRLCs	158,153				87,340
FMBSs related to uncommitted IRLCs	137,000				88,000
Whole loan contracts and related mortgage loans held for sale	4,085				6,125
FMBSs related to mortgage loans held for sale	145,000				144,000
Mortgage loans held for sale covered by FMBSs	145,338				144,411

The following table sets forth the amount of (loss) gain recognized, within our revenue in the Unaudited Condensed Consolidated Statements of Income, on assets and liabilities measured on a recurring basis for the three months ended March 31, 2020 and 2019:

	Three Months Ended March 31,
Description (in thousands)	2020				2019
Mortgage loans held for sale	$	3,739			$	(1,363	)
Forward sales of mortgage-backed securities	(6,580		)		1,934
Interest rate lock commitments	2,383				(42		)
Whole loan contracts	54				14
Total (loss) gain recognized	$	(404	)		$	543

The following tables set forth the fair value of the Company’s derivative instruments and their location within the Unaudited Condensed Consolidated Balance Sheets for the periods indicated (except for mortgage loans held for sale which are disclosed as a separate line item):

Asset Derivatives

Liability Derivatives

March 31, 2020

March 31, 2020

Description of Derivatives

Balance Sheet Location

Fair Value (in thousands)

Balance Sheet Location

Fair Value (in thousands)

Forward sales of mortgage-backed securities

Other assets

$

—

Other liabilities

$

6,916

Interest rate lock commitments

Other assets

3,095

Other liabilities

—

Whole loan contracts

Other assets

—

Other liabilities

20

Total fair value measurements

$

3,095

$

6,936

Asset Derivatives

Liability Derivatives

December 31, 2019

December 31, 2019

Description of Derivatives

Balance Sheet Location

Fair Value (in thousands)

Balance Sheet Location

Fair Value (in thousands)

Forward sales of mortgage-backed securities

Other assets

$

—

Other liabilities

$

336

Interest rate lock commitments

Other assets

654

Other liabilities

—

Whole loan contracts

Other assets

—

Other liabilities

16

Total fair value measurements

$

654

$

352

Assets Measured on a Non-Recurring Basis

Inventory. The Company assesses inventory for recoverability on a quarterly basis based on the difference in the carrying value of the inventory and its fair value at the time of the evaluation. Determining the fair value of a community’s inventory involves a number of variables, estimates and projections, which are Level 3 measurement inputs. See Note 1, “Summary of Significant Accounting Policies - Inventory” in the Company’s 2019 Form 10-K for additional information regarding the Company’s methodology for determining fair value.

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The Company uses significant assumptions to evaluate the recoverability of its inventory, such as estimated average selling price, construction and development costs, absorption rate (reflecting any product mix change strategies implemented or to be implemented), selling strategies, alternative land uses (including disposition of all or a portion of the land owned), or discount rates. Changes in these assumptions could materially impact future cash flow and fair value estimates and may lead the Company to incur additional impairment charges in the future. Our analysis is conducted only if indicators of a decline in value of our inventory exist, which include, among other things, declines in gross margin on sales contracts in backlog or homes that have been delivered, slower than anticipated absorption pace, declines in average sales price or high incentive offers by management to improve absorptions, declines in margins regarding future land sales, or declines in the value of the land itself as a result of third party appraisals. If communities are not recoverable based on the estimated future undiscounted cash flows, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. During the three months ended March 31, 2020 and 2019, the Company did not record any impairment charges on its inventory.

Investment in Unconsolidated Joint Ventures.  We evaluate our investments in unconsolidated joint ventures for impairment on a quarterly basis based on the difference in the investment’s carrying value and its fair value at the time of the evaluation. If the Company has determined that the decline in value is other than temporary, the Company would write down the value of the investment to its estimated fair value. Determining the fair value of investments in unconsolidated joint ventures involves a number of variables, estimates and assumptions, which are Level 3 measurement inputs. See Note 1, “Summary of Significant Accounting Policies - Investment in Unconsolidated Joint Ventures,” in the Company’s 2019 Form 10-K for additional information regarding the Company’s methodology for determining fair value. Because of the high degree of judgment involved in developing these assumptions, it is possible that changes in these assumptions could materially impact future cash flow and fair value estimates of the investments which may lead the Company to incur additional impairment charges in the future. During the three months ended March 31, 2020 and 2019, the Company did not record any impairment charges on its investments in unconsolidated joint ventures.

Financial Instruments

Counterparty Credit Risk. To reduce the risk associated with losses that would be recognized if counterparties failed to perform as contracted, the Company limits the entities with whom management can enter into commitments. This risk of accounting loss is the difference between the market rate at the time of non-performance by the counterparty and the rate to which the Company committed.

The following table presents the carrying amounts and fair values of the Company’s financial instruments at March 31, 2020 and December 31, 2019. The objective of the fair value measurement is to estimate the price at which an orderly transaction to sell the asset or transfer the liability would take place between market participants at the measurement date under current market conditions.

		March 31, 2020								December 31, 2019
(In thousands)	Fair Value Hierarchy	Carrying Amount				Fair Value				Carrying Amount				Fair Value
Assets:
Cash, cash equivalents and restricted cash	Level 1	$	21,184			$	21,184			$	6,083			$	6,083
Mortgage loans held for sale	Level 2	156,208				156,208				155,244				155,244
Interest rate lock commitments	Level 2	3,095				3,095				654				654
Liabilities:
Notes payable - homebuilding operations	Level 2	6,900				6,900				66,000				66,000
Notes payable - financial services operations	Level 2	145,055				145,055				136,904				136,904
Notes payable - other	Level 2	7,546				7,008				5,828				5,286
Senior notes due 2021 (a)	Level 2	—				—				300,000				299,250
Senior notes due 2025 (a)	Level 2	250,000				225,000				250,000				261,563
Senior notes due 2028 (a)	Level 2	400,000				336,000				—				—
Whole loan contracts for committed IRLCs and mortgage loans held for sale	Level 2	20				20				16				16
Forward sales of mortgage-backed securities	Level 2	6,916				6,916				336				336

(a)	Our senior notes are stated at the principal amount outstanding which does not include the impact of premiums, discounts, and debt issuance costs that are amortized to interest cost over the respective terms of the notes.

The following methods and assumptions were used by the Company in estimating its fair value disclosures of financial instruments at March 31, 2020 and December 31, 2019:

Cash, Cash Equivalents and Restricted Cash. The carrying amounts of these items approximate fair value because they are short-term by nature.

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Mortgage Loans Held for Sale, Forward Sales of Mortgage-Backed Securities, Commitments to Extend Real Estate Loans, Whole loan Contracts for Committed IRLCs and Mortgage Loans Held for Sale, Senior Notes due 2021, Senior Notes due 2025 and  Senior Notes due 2028. The fair value of these financial instruments was determined based upon market quotes at March 31, 2020 and December 31, 2019. The market quotes used were quoted prices for similar assets or liabilities along with inputs taken from observable market data by correlation. The inputs were adjusted to account for the condition of the asset or liability.

Notes Payable - Homebuilding Operations. The interest rate available to the Company during the quarter ended March 31, 2020 under the Company’s $500 million unsecured revolving credit facility, dated July 18, 2013, as amended (the “Credit Facility”), fluctuated daily with the one-month LIBOR rate plus a margin of 250 basis points, and thus the carrying value is a reasonable estimate of fair value. See Note 8 to our financial statements for additional information regarding the Credit Facility.

Notes Payable - Financial Services Operations. M/I Financial, LLC (“M/I Financial”) is a party to two credit agreements: (1) a $125 million secured mortgage warehousing agreement, dated June 24, 2016, as amended (the “MIF Mortgage Warehousing Agreement”); and (2) a $65 million mortgage repurchase agreement, dated October 30, 2017, as amended (the “MIF Mortgage Repurchase Facility”). For each of these credit facilities, the interest rate is based on a variable rate index, and thus their carrying value is a reasonable estimate of fair value. The interest rate available to M/I Financial during the first quarter of 2020 fluctuated with LIBOR. See Note 8 to our financial statements for additional information regarding the MIF Mortgage Warehousing Agreement and the MIF Mortgage Repurchase Facility.

Notes Payable - Other. The estimated fair value was determined by calculating the present value of the future cash flows using the Company’s current incremental borrowing rate.

In the ordinary course of business, M/I Financial, a 100%-owned subsidiary of M/I Homes, Inc., enters into agreements that provide a limited-life guarantee on loans sold to certain third-party purchasers of its mortgage loans that M/I Financial will repurchase a loan if certain conditions occur, primarily if the mortgagor does not meet the terms of the loan within the first six months after the sale of the loan. Loans totaling approximately $44.6 million and $48.1 million were covered under these guarantees as of March 31, 2020 and December 31, 2019, respectively.  The decrease in loans covered by these guarantees from December 31, 2019 is a result of a change in the mix of investors and their related purchase terms.  A portion of the revenue paid to M/I Financial for providing the guarantees on these loans was deferred at March 31, 2020, and will be recognized in income as M/I Financial is released from its obligation under the guarantees. The risk associated with the guarantees above is offset by the value of the underlying assets.

M/I Financial has received inquiries concerning underwriting matters from purchasers of its loans regarding certain loans totaling approximately $0.6 million at both March 31, 2020 and December 31, 2019.

M/I Financial has also guaranteed the collectability of certain loans to third party insurers (U.S. Department of Housing and Urban Development and U.S. Veterans Administration) of those loans for periods ranging from five to thirty years. As of both March 31, 2020 and December 31, 2019, the total of all loans indemnified to third party insurers relating to the above agreements was $1.0 million. The maximum potential amount of future payments is equal to the outstanding loan value less the value of the underlying asset plus administrative costs incurred related to foreclosure on the loans, should this event occur.

The Company recorded a liability relating to the guarantees described above totaling $0.5 million at both March 31, 2020 and December 31, 2019, which is management’s best estimate of the Company’s liability with respect to such guarantees.

Warranty

We use subcontractors for nearly all aspects of home construction. Although our subcontractors are generally required to repair and replace any product or labor defects, we are, during applicable warranty periods, ultimately responsible to the homeowner for making such repairs. As such, we record warranty reserves to cover our exposure to the costs for materials and labor not expected to be covered by our subcontractors to the extent they relate to warranty-type claims. Warranty reserves are established by charging cost of sales and crediting a warranty reserve for each home delivered.  The amounts charged are estimated by management to be adequate to cover expected warranty-related costs under the Company’s warranty programs. Warranty reserves are recorded for warranties under our Home Builder’s Limited Warranty (“HBLW”) and our transferable structural warranty in Other Liabilities on the Company’s Unaudited Condensed Consolidated Balance Sheets.

The warranty reserves for the HBLW are established as a percentage of average sales price and adjusted based on historical payment patterns determined, generally, by geographic area and recent trends. Factors that are given consideration in determining the

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HBLW reserves include: (1) the historical range of amounts paid per average sales price on a home; (2) type and mix of amenity packages added to the home; (3) any warranty expenditures not considered to be normal and recurring; (4) timing of payments; (5) improvements in quality of construction expected to impact future warranty expenditures; and (6) conditions that may affect certain projects and require a different percentage of average sales price for those specific projects. Changes in estimates for warranties occur due to changes in the historical payment experience and differences between the actual payment pattern experienced during the period and the historical payment pattern used in our evaluation of the warranty reserve balance at the end of each quarter. Actual future warranty costs could differ from our current estimated amount.

Our warranty reserves for our transferable structural warranty programs are established on a per-unit basis. While the structural warranty reserve is recorded as each house is delivered, the sufficiency of the structural warranty per unit charge and total reserve is re-evaluated on an annual basis, with the assistance of an actuary, using our own historical data and trends, industry-wide historical data and trends, and other project specific factors. The reserves are also evaluated quarterly and adjusted if we encounter activity that is inconsistent with the historical experience used in the annual analysis. These reserves are subject to variability due to uncertainties regarding structural defect claims for products we build, the markets in which we build, claim settlement history, insurance and legal interpretations, among other factors.

Our warranty reserve amounts are based upon historical experience and geographic location. While we believe that our warranty reserves are sufficient to cover our projected costs, there can be no assurances that historical data and trends will accurately predict our actual warranty costs.

A summary of warranty activity for the three months ended March 31, 2020 and 2019 is as follows:

	Three Months Ended March 31,
(In thousands)	2020				2019
Warranty reserves, beginning of period	$	26,420			$	26,459
Warranty expense on homes delivered during the period	3,421				2,840
Changes in estimates for pre-existing warranties	(21		)		178
Settlements made during the period	(3,780		)		(4,257		)
Warranty reserves, end of period	$	26,040			$	25,220

We have received claims related to stucco installation from homeowners in certain of our communities in our Tampa and Orlando, Florida markets and have been named as a defendant in legal proceedings initiated by certain of such homeowners. These claims primarily relate to homes built prior to 2014 which have second story elevations with frame construction.

During the three month period ended March 31, 2020, we did not record any additional warranty charges or receive any additional recoveries for stucco-related repair costs. At March 31, 2020, the remaining reserve for (1) homes in our Florida communities that we have identified as needing repair but have not yet completed the repair and (2) estimated repair costs for homes in our Florida communities that we have not yet identified as needing repair but that may require repair in the future included within our warranty reserve was $4.4 million. We believe that this amount is sufficient to cover both known and estimated future repair costs as of March 31, 2020. Our remaining stucco-related reserve is gross of any recoveries. Stucco-related recoveries are recorded in the period the reimbursement is received.

Our review of the stucco-related issues in our Florida communities is ongoing. Our estimate of future costs of stucco-related repairs is based on our judgment, various assumptions and internal data. Due to the degree of judgment and the potential for variability in our underlying assumptions and data, as we obtain additional information, we may revise our estimate, including to reflect additional estimated future stucco-related repairs costs, which revision could be material.

We continue to investigate the extent to which we may be able to further recover a portion of our stucco repair and claims handling costs from other sources, including our direct insurers, the subcontractors involved with the construction of the homes and their insurers. As of March 31, 2020, we are unable to estimate any additional amount that we believe is probable of recovery from these sources and, as noted above, we have not recorded a receivable for recoveries nor included an estimated amount of recoveries in determining our stucco-related warranty reserve.

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Performance Bonds and Letters of Credit

At March 31, 2020, the Company had outstanding approximately $237.8 million of completion bonds and standby letters of credit, some of which were issued to various local governmental entities that expire at various times through November 2027. Included in this total are: (1) $165.8 million of performance and maintenance bonds and $52.2 million of performance letters of credit that serve as completion bonds for land development work in progress; (2) $13.7 million of financial letters of credit, of which $13.2 million represent deposits on land and lot purchase agreements; and (3) $6.1 million of financial bonds.

Land Option Contracts and Other Similar Contracts

At March 31, 2020, the Company also had options and contingent purchase agreements to acquire land and developed lots with an aggregate purchase price of approximately $720.9 million. Purchase of properties under these agreements is contingent upon satisfaction of certain requirements by the Company and the sellers.

Legal Matters

In addition to the legal proceedings related to stucco, the Company and certain of its subsidiaries have been named as defendants in certain other legal proceedings which are incidental to our business. While management currently believes that the ultimate resolution of these other legal proceedings, individually and in the aggregate, will not have a material effect on the Company’s financial position, results of operations and cash flows, such legal proceedings are subject to inherent uncertainties. The Company has recorded a liability to provide for the anticipated costs, including legal defense costs, associated with the resolution of these other legal proceedings. However, the possibility exists that the costs to resolve these legal proceedings could differ from the recorded estimates and, therefore, have a material effect on the Company’s net income for the periods in which they are resolved. At March 31, 2020 and December 31, 2019, we had $0.9 million and $0.7 million reserved for legal expenses, respectively.

Goodwill represents the excess of the purchase price paid over the fair value of the net assets acquired and liabilities assumed in business combinations. In connection with the Company’s acquisition of the homebuilding assets and operations of Pinnacle Homes in Detroit, Michigan in March of 2018, the Company recorded goodwill of $16.4 million, which is included as Goodwill in our Consolidated Balance Sheets. This amount was based on the estimated fair values of the acquired assets and liabilities at the date of the acquisition in accordance with ASC 350.

In accordance with ASC 350, the Company analyzes goodwill for impairment on an annual basis (or more often if indicators of impairment exist). The Company performs a qualitative assessment to determine whether the existence of events or circumstances leads to a determination that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment indicates that it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount, then a quantitative assessment is performed to determine the reporting unit’s fair value. If the reporting unit’s carrying value exceeds its fair value, then an impairment loss is recognized for the amount of the excess of the carrying amount over the reporting unit’s fair value. The Company performed its annual goodwill impairment analysis during the fourth quarter of 2019, and as no indicators for impairment existed at December 31, 2019, no impairment was recorded. As a result of the temporary shut-down of our Detroit operations due to COVID-19 (as the state of Michigan does not deem housing construction an essential business), we performed a goodwill impairment analysis of our Detroit reporting unit and determined no impairment existed at March 31, 2020. However, we will continue to monitor the fair value of the reporting unit in future periods if conditions worsen, operations are not permitted to re-open, or other events occur that could impact the fair value of the reporting unit.

Notes Payable - Homebuilding

The Credit Facility provides an aggregate commitment amount of $500 million, including a $125 million sub-facility for letters of credit. The Credit Facility expires on July 18, 2021. Interest on amounts borrowed under the Credit Facility is payable at a rate which is adjusted daily and is equal to the sum of the one-month LIBOR rate plus a margin of 250 basis points. The margin is subject to adjustment in subsequent quarterly periods based on the Company’s leverage ratio. The Credit Facility also contains certain financial covenants. At March 31, 2020, the Company was in compliance with all financial covenants of the Credit Facility.

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The available amount under the Credit Facility is computed in accordance with a borrowing base, which is calculated by applying various advance rates for different categories of inventory, and totaled $626.6 million of availability for additional senior debt at March 31, 2020. As a result, the full $500 million commitment amount of the Credit Facility was available, less any borrowings and letters of credit outstanding. At March 31, 2020, there were $6.9 million of borrowings outstanding and $65.8 million of letters of credit outstanding, leaving net remaining borrowing availability of $427.3 million.

The Company’s obligations under the Credit Facility are guaranteed by all of the Company’s subsidiaries, with the exception of subsidiaries that are primarily engaged in the business of mortgage financing, title insurance or similar financial businesses relating to the homebuilding and home sales business, certain subsidiaries that are not 100%-owned by the Company or another subsidiary, and other subsidiaries designated by the Company as Unrestricted Subsidiaries (as defined in Note 12 to our financial statements), subject to limitations on the aggregate amount invested in such Unrestricted Subsidiaries in accordance with the terms of the Credit Facility and the indentures for the Company’s $400.0 million aggregate principal amount of 4.95% Senior Notes due 2028 (the “2028 Senior Notes”) and the Company’s $250.0 million aggregate principal amount of 5.625% Senior Notes due 2025 (the “2025 Senior Notes”). The guarantors for the Credit Facility (the “Guarantor Subsidiaries”) are the same subsidiaries that guarantee the 2028 Senior Notes and the 2025 Senior Notes.

The Company’s obligations under the Credit Facility are general, unsecured senior obligations of the Company and the Guarantor Subsidiaries and rank equally in right of payment with all our and the Guarantor Subsidiaries’ existing and future unsecured senior indebtedness. Our obligations under the Credit Facility are effectively subordinated to our and the Guarantor Subsidiaries’ existing and future secured indebtedness with respect to any assets comprising security or collateral for such indebtedness.

Notes Payable — Financial Services

The MIF Mortgage Warehousing Agreement is used to finance eligible residential mortgage loans originated by M/I Financial. The MIF Mortgage Warehousing Agreement provides for a maximum borrowing availability of $125 million, which increased to $160 million from September 25, 2019 to October 15, 2019 and from November 15, 2019 to February 4, 2020 (periods of increased volume of mortgage originations). The MIF Mortgage Warehousing Agreement expires on June 19, 2020. Interest on amounts borrowed under the MIF Mortgage Warehousing Agreement is payable at a per annum rate equal to the floating LIBOR rate plus a spread of 200 basis points. The MIF Mortgage Warehousing Agreement also contains certain financial covenants. At March 31, 2020, M/I Financial was in compliance with all financial covenants of the MIF Mortgage Warehousing Agreement.

The MIF Mortgage Repurchase Facility is used to finance eligible residential mortgage loans originated by M/I Financial. The MIF Repurchase Facility provides for a mortgage repurchase facility with a maximum borrowing availability of $65 million. The MIF Mortgage Repurchase Facility expires on October 26, 2020. M/I Financial pays interest on each advance under the MIF Mortgage Repurchase Facility at a per annum rate equal to the floating LIBOR rate plus 175 or 200 basis points depending on the loan type. The MIF Mortgage Repurchase Facility also contains certain financial covenants. At March 31, 2020, M/I Financial was in compliance with all financial covenants of the MIF Mortgage Repurchase Facility.

At March 31, 2020 and December 31, 2019, M/I Financial’s total combined maximum borrowing availability under the two credit facilities was $190.0 million and $225.0 million, respectively. At March 31, 2020 and December 31, 2019, M/I Financial had $145.1 million and $136.9 million outstanding on a combined basis under its credit facilities, respectively.

Senior Notes

On January 22, 2020, the Company issued $400.0 million aggregate principal amount of the 2028 Senior Notes. The 2028 Senior Notes bear interest at a rate of 4.95% per year, payable semiannually in arrears on February 1 and August 1 of each year (commencing on August 1, 2020), and mature on February 1, 2028. We may redeem all or any portion of the 2028 Senior Notes on or after February 1, 2023 at a stated redemption price, together with accrued and unpaid interest thereon. The redemption price will initially be 103.713% of the principal amount outstanding, but will decline to 102.475% of the principal amount outstanding if redeemed during the 12-month period beginning on February 1, 2024, will further decline to 101.238% of the principal amount outstanding if redeemed during the 12-month period beginning on February 1, 2025 and will further decline to 100.000% of the principal amount outstanding if redeemed on or after February 1, 2026, but prior to maturity.

The Company used a portion of the net proceeds from the issuance of the 2028 Senior Notes to redeem all $300 million aggregate principal amount of its then outstanding 6.75% Senior Notes due 2021 (the “2021 Senior Notes”) at 100.000% of the principal amount outstanding, plus accrued and unpaid interest thereon, on January 22, 2020.

As of both March 31, 2020 and December 31, 2019, we had $250.0 million of our 2025 Senior Notes outstanding. The 2025 Senior Notes bear interest at a rate of 5.625% per year, payable semiannually in arrears on February 1 and August 1 of each year, and mature on August 1, 2025. We may redeem all or any portion of the 2025 Senior Notes on or after August 1, 2020 at a stated

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redemption price, together with accrued and unpaid interest thereon. The redemption price will initially be 104.219% of the principal amount outstanding, but will decline to 102.813% of the principal amount outstanding if redeemed during the 12-month period beginning on August 1, 2021, will further decline to 101.406% of the principal amount outstanding if redeemed during the 12-month period beginning on August 1, 2022 and will further decline to 100.000% of the principal amount outstanding if redeemed on or after August 1, 2023, but prior to maturity.

The 2028 Senior Notes and the 2025 Senior Notes contain certain covenants, as more fully described and defined in the indenture governing the 2028 Senior Notes and the indenture governing the 2025 Senior Notes, which limit the ability of the Company and the restricted subsidiaries to, among other things: incur additional indebtedness; make certain payments, including dividends, or repurchase any shares, in an aggregate amount exceeding our “restricted payments basket”; make certain investments; and create or incur certain liens, consolidate or merge with or into other companies, or liquidate or sell or transfer all or substantially all of our assets. These covenants are subject to a number of exceptions and qualifications as described in the indenture governing the 2028 Senior Notes and the indenture governing the 2025 Senior Notes. As of March 31, 2020, the Company was in compliance with all terms, conditions, and covenants under the indentures.

The 2028 Senior Notes and the 2025 Senior Notes are fully and unconditionally guaranteed jointly and severally on a senior unsecured basis by the Guarantor Subsidiaries. The 2028 Senior Notes and the 2025 Senior Notes are general, unsecured senior obligations of the Company and the Guarantor Subsidiaries and rank equally in right of payment with all our and the Guarantor Subsidiaries’ existing and future unsecured senior indebtedness.  The 2028 Senior Notes and the 2025 Senior Notes are effectively subordinated to our and the Guarantor Subsidiaries’ existing and future secured indebtedness with respect to any assets comprising security or collateral for such indebtedness.

The indenture governing our 2028 Senior Notes and the indenture governing the 2025 Senior Notes limit our ability to pay dividends on, and repurchase, our common shares and any of our preferred shares then outstanding to the amount of the positive balance in our “restricted payments basket,” as defined in the indentures. In each case, the “restricted payments basket” is equal to $125.0 million plus (1) 50% of our aggregate consolidated net income (or minus 100% of our aggregate consolidated net loss) from October 1, 2015, excluding income or loss from Unrestricted Subsidiaries, plus (2) 100% of the net cash proceeds from either contributions to the common equity of the Company after December 1, 2015 or the sale of qualified equity interests after December 1, 2015, plus other items and subject to other exceptions. The positive balance in our restricted payments basket was $276.3 million at March 31, 2020 and $264.5 million at December 31, 2019. The determination to pay future dividends on, or make future repurchases of, our common shares will be at the discretion of our board of directors and will depend upon our results of operations, financial condition, capital requirements and compliance with debt covenants, and other factors deemed relevant by our board of directors.

Notes Payable - Other

The Company had other borrowings, which are reported in Notes Payable - Other in our Unaudited Condensed Consolidated Balance Sheets, totaling $7.5 million and $5.8 million as of March 31, 2020 and December 31, 2019, respectively, which are comprised of notes payable acquired in the normal course of business.

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The table below presents a reconciliation between basic and diluted weighted average shares outstanding, net income, and basic and diluted income per share for the three months ended March 31, 2020 and 2019:

	Three Months Ended
	March 31,
(In thousands, except per share amounts)	2020				2019
NUMERATOR
Net income	$	31,746			$	17,723
DENOMINATOR
Basic weighted average shares outstanding	28,478				27,498
Effect of dilutive securities:
Stock option awards	310				244
Deferred compensation awards	221				228
Diluted weighted average shares outstanding	$	29,009			$	27,970
Earnings per common share:
Basic	$	1.11			$	0.64
Diluted	$	1.09			$	0.63
Anti-dilutive equity awards not included in the calculation of diluted earnings per common share	211				606

During the three months ended March 31, 2020 and 2019, the Company recorded a tax provision of $9.6 million and $5.8 million, respectively, which reflects income tax expense related to the periods’ income before income taxes. The effective tax rate for the three months ended March 31, 2020 and 2019 was 23.2% and 24.5%, respectively. During the quarter ended March 31, 2020, we recorded a $0.4 million tax benefit related to the retroactive reinstatement of energy efficient homes tax credits and a $0.4 million increase in tax benefit from equity compensation taken during the quarter ended March 31, 2020.

The Company had $0.5 million of state NOL carryforwards, net of the federal benefit, at March 31, 2020. Our state NOLs may be carried forward from one to 15 years, depending on the tax jurisdiction, with $0.4 million expiring between 2022 and 2027 and $0.1 million expiring between 2028 and 2032, absent sufficient state taxable income.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act was signed into law (the “CARES Act”). The CARES Act includes several significant business tax provisions including modifications for net operating losses, credit for prior-year minimum tax liability and limitations on business interest and charitable contributions. The CARES Act also provides for an employee retention credit and technical corrections regarding qualified improvement property. We are assessing the tax impact of the CARES Act as it relates to the Company.

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The Company’s chief operating decision makers evaluate the Company’s performance in various ways, including: (1) the results of our individual homebuilding operating segments and the results of our financial services operations; (2) the results of our homebuilding reportable segments; and (3) our consolidated financial results.

In accordance with ASC 280, Segment Reporting (“ASC 280”), we have identified each homebuilding division as an operating segment and have elected to aggregate our operating segments into separate reportable segments as they share similar aggregation characteristics prescribed in ASC 280 in the following regards: (1) long-term economic characteristics; (2) historical and expected future long-term gross margin percentages; (3) housing products, production processes and methods of distribution; and (4) geographical proximity.

During 2019, we decided to wind down our Washington D.C. operations, which was substantially complete by December 31, 2019. As a result, during the second quarter of 2019, we re-evaluated our reportable segments and elected to aggregate our Charlotte and Raleigh, North Carolina operating segments into our existing Southern region based on the aggregation criteria described above. As a result of this re-evaluation, we determined that our reportable segments are: Northern homebuilding; Southern homebuilding; and financial services operations. All prior year segment information has been recast to conform with this new presentation. The change in the reportable segments has no effect on the Company's condensed consolidated balance sheets, statement of income or statement of cash flows for the periods presented.

The homebuilding operating segments that comprise each of our reportable segments are as follows:

Northern	Southern
Chicago, Illinois	Orlando, Florida
Cincinnati, Ohio	Sarasota, Florida
Columbus, Ohio	Tampa, Florida
Indianapolis, Indiana	Austin, Texas
Minneapolis/St. Paul, Minnesota	Dallas/Fort Worth, Texas
Detroit, Michigan	Houston, Texas
	San Antonio, Texas
	Charlotte, North Carolina
	Raleigh, North Carolina

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The following table shows, by segment: revenue, operating income and interest expense for the three months ended March 31, 2020 and 2019, as well as the Company’s income before income taxes for such periods:

	Three Months Ended March 31,
(In thousands)	2020				2019
Revenue:
Northern homebuilding	$	240,270			$	200,362
Southern homebuilding	323,866				268,964
Financial services (a)	13,467				11,783
Total revenue	$	577,603			$	481,109
Operating income:
Northern homebuilding (b)	$	20,881			$	16,535
Southern homebuilding	28,857				17,594
Financial services (a)	6,362				5,695
Less: Corporate selling, general and administrative expense	(10,096		)		(9,432		)
Total operating income (b)	$	46,004			$	30,392
Interest expense:
Northern homebuilding	$	1,811			$	2,481
Southern homebuilding	2,158				3,568
Financial services (a)	731				743
Total interest expense	$	4,700			$	6,792
Equity in (income) loss from joint venture arrangements	(52		)		121
Income before income taxes	$	41,356			$	23,479

(a)	Our financial services operational results should be viewed in connection with our homebuilding business as its operations originate loans and provide title services primarily for our homebuying customers, with the exception of an immaterial amount of mortgage refinancing.

(b)	Includes $0.4 million of acquisition-related charges taken during the three months ended March 31, 2019 as a result of our acquisition of Pinnacle Homes in Detroit, Michigan on March 1, 2018.

The following tables show total assets by segment at March 31, 2020 and December 31, 2019:

	March 31, 2020
(In thousands)	Northern				Southern				Corporate, Financial Services and Unallocated				Total
Deposits on real estate under option or contract	$	4,407			$	27,298			$	—			$	31,705
Inventory (a)	821,291				969,535				—				1,790,826
Investments in joint venture arrangements	1,688				38,618				—				40,306
Other assets	26,571				52,959			(b)	256,596				336,126
Total assets	$	853,957			$	1,088,410			$	256,596			$	2,198,963

	December 31, 2019
(In thousands)	Northern				Southern				Corporate, Financial Services and Unallocated				Total
Deposits on real estate under option or contract	$	3,655			$	24,877			$	—			$	28,532
Inventory (a)	783,972				957,003				—				1,740,975
Investments in joint venture arrangements	1,672				36,213				—				37,885
Other assets	21,564				52,662			(b)	223,976				298,202
Total assets	$	810,863			$	1,070,755			$	223,976			$	2,105,594

(a)	Inventory includes single-family lots, land and land development costs; land held for sale; homes under construction; model homes and furnishings; community development district infrastructure; and consolidated inventory not owned.

(b)	Includes development reimbursements from local municipalities.

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The Company’s obligations under the 2028 Senior Notes and the 2025 Senior Notes are not guaranteed by all of the Company’s subsidiaries and, therefore, the Company has disclosed condensed consolidating financial information in accordance with SEC Regulation S-X Rule 3-10, Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered. The Guarantor Subsidiaries of the 2028 Senior Notes and the 2025 Senior Notes are the same.

The following condensed consolidating financial information includes balance sheets, statements of income and cash flow information for M/I Homes, Inc. (the parent company and the issuer of the aforementioned guaranteed notes), the Guarantor Subsidiaries, collectively, and for all other subsidiaries and joint ventures of the Company (the “Unrestricted Subsidiaries”), collectively. Each Guarantor Subsidiary is a direct or indirect 100%-owned subsidiary of M/I Homes, Inc. and has fully and unconditionally guaranteed the (1) 2028 Senior Notes on a joint and several senior unsecured basis and (2) 2025 Senior Notes on a joint and several senior unsecured basis.

There are no significant restrictions on the parent company’s ability to obtain funds from its Guarantor Subsidiaries in the form of a dividend, loan, or other means.

As of March 31, 2020, each of the Company’s subsidiaries is a Guarantor Subsidiary, with the exception of subsidiaries that are primarily engaged in the business of mortgage financing, title insurance or similar financial businesses relating to the homebuilding and home sales business, certain subsidiaries that are not 100%-owned by the Company or another subsidiary, and other subsidiaries designated by the Company as Unrestricted Subsidiaries, subject to limitations on the aggregate amount invested in such Unrestricted Subsidiaries in accordance with the terms of the Credit Facility and the indenture governing the 2028 Senior Notes and the indenture governing the 2025 Senior Notes.

In the condensed financial tables presented below, the parent company presents all of its 100%-owned subsidiaries as if they were accounted for under the equity method. All applicable corporate expenses have been allocated appropriately among the Guarantor Subsidiaries and Unrestricted Subsidiaries.

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UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF INCOME

		Three Months Ended March 31, 2020
(In thousands)		M/I Homes, Inc.			Guarantor Subsidiaries			Unrestricted Subsidiaries			Eliminations			Consolidated
Revenue		$	—		$	564,136		$	13,467		$	—		$	577,603
Costs and expenses:
Land and housing		—			460,924			—			—			460,924
General and administrative		—			26,563			7,284			—			33,847
Selling		—			36,828			—			—			36,828
Equity in income from joint venture arrangements		—			—			(52		)	—			(52		)
Interest		—			3,969			731			—			4,700
Total costs and expenses		—			528,284			7,963			—			536,247
Income before income taxes		—			35,852			5,504			—			41,356
Provision for income taxes		—			8,581			1,029			—			9,610
Equity in subsidiaries		31,746			—			—			(31,746		)	—
Net income		$	31,746		$	27,271		$	4,475		$	(31,746	)	$	31,746

		Three Months Ended March 31, 2019
(In thousands)		M/I Homes, Inc.			Guarantor Subsidiaries			Unrestricted Subsidiaries			Eliminations			Consolidated
Revenue		$	—		$	469,326		$	11,783		$	—		$	481,109
Costs and expenses:
Land and housing		—			388,467			—			—			388,467
General and administrative		—			24,433			6,266			—			30,699
Selling		—			31,551			—			—			31,551
Equity in loss from joint venture arrangements		—			—			121			—			121
Interest		—			6,049			743			—			6,792
Total costs and expenses		—			450,500			7,130			—			457,630
Income before income taxes		—			18,826			4,653			—			23,479
Provision for income taxes		—			4,755			1,001			—			5,756
Equity in subsidiaries		17,723			—			—			(17,723		)	—
Net income		$	17,723		$	14,071		$	3,652		$	(17,723	)	$	17,723

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UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET
		March 31, 2020
(In thousands)		M/I Homes, Inc.			Guarantor Subsidiaries			Unrestricted Subsidiaries			Eliminations			Consolidated
ASSETS:
Cash, cash equivalents and restricted cash		$	—		$	486		$	22,856		$	(2,158	)	$	21,184
Mortgage loans held for sale		—			—			156,208			—			156,208
Inventory		—			1,822,531			—			—			1,822,531
Property and equipment - net		—			20,372			674			—			21,046
Investment in joint venture arrangements		—			38,077			2,229			—			40,306
Operating lease right-of-use assets		—			16,700			3,375			—			20,075
Deferred income tax asset		—			9,540			—			—			9,540
Investment in subsidiaries		959,789			—			—			(959,789		)	—
Intercompany assets		717,921			—			—			(717,921		)	—
Goodwill		—			16,400			—			—			16,400
Other assets		1,182			71,741			18,750			—			91,673
TOTAL ASSETS		$	1,678,892		$	1,995,847		$	204,092		$	(1,679,868	)	$	2,198,963
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Accounts payable		$	—		$	151,591		$	823		$	(2,158	)	$	150,256
Customer deposits		—			45,099			—			—			45,099
Operating lease liabilities		—			16,700			3,375			—			20,075
Intercompany liabilities		—			715,527			2,394			(717,921		)	—
Other liabilities		—			107,214			10,728			—			117,942
Community development district obligations		—			12,914			—			—			12,914
Obligation for consolidated inventory not owned		—			14,284			—			—			14,284
Notes payable bank - homebuilding operations		—			6,900			—			—			6,900
Notes payable bank - financial services operations		—			—			145,055			—			145,055
Notes payable - other		—			7,546			—			—			7,546
Senior notes due 2025 - net		247,222			—			—			—			247,222
Senior notes due 2028 - net		393,989			—			—			—			393,989
TOTAL LIABILITIES		641,211			1,077,775			162,375			(720,079		)	1,161,282
SHAREHOLDERS’ EQUITY		1,037,681			918,072			41,717			(959,789		)	1,037,681
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	1,678,892		$	1,995,847		$	204,092		$	(1,679,868	)	$	2,198,963

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CONDENSED CONSOLIDATING BALANCE SHEET
		December 31, 2019
(In thousands)		M/I Homes, Inc.			Guarantor Subsidiaries			Unrestricted Subsidiaries			Eliminations			Consolidated
ASSETS:
Cash, cash equivalents and restricted cash		$	—		$	219		$	11,589		$	(5,725	)	$	6,083
Mortgage loans held for sale		—			—			155,244			—			155,244
Inventory		—			1,769,507			—			—			1,769,507
Property and equipment - net		—			21,372			746			—			22,118
Investment in joint venture arrangements		—			35,391			2,494			—			37,885
Operating lease right-of-use assets		—			15,689			2,726			—			18,415
Deferred income tax asset		—			9,631			—			—			9,631
Investment in subsidiaries		928,942			—			—			(928,942		)	—
Intercompany assets		619,204			—			—			(619,204		)	—
Goodwill		—			16,400			—			—			16,400
Other assets		1,411			56,134			12,766			—			70,311
TOTAL ASSETS		$	1,549,557		$	1,924,343		$	185,565		$	(1,553,871	)	$	2,105,594
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Accounts payable		$	—		$	130,136		$	615		$	(5,725	)	$	125,026
Customer deposits		—			34,462			—			—			34,462
Intercompany liabilities		—			618,946			258			(619,204		)	—
Operating lease liabilities		—			15,691			2,724			—			18,415
Other liabilities		—			141,015			6,922			—			147,937
Community development district obligations		—			13,531			—			—			13,531
Obligation for consolidated inventory not owned		—			7,934			—			—			7,934
Notes payable bank - homebuilding operations		—			66,000			—			—			66,000
Notes payable bank - financial services operations		—			—			136,904			—			136,904
Notes payable - other		—			5,828			—			—			5,828
Senior notes due 2021 - net		298,988			—			—			—			298,988
Senior notes due 2025 - net		247,092			—			—			—			247,092
TOTAL LIABILITIES		546,080			1,033,543			147,423			(624,929		)	1,102,117
SHAREHOLDERS’ EQUITY		1,003,477			890,800			38,142			(928,942		)	1,003,477
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	1,549,557		$	1,924,343		$	185,565		$	(1,553,871	)	$	2,105,594

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UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
	Three Months Ended March 31, 2020
(In thousands)	M/I Homes, Inc.			Guarantor Subsidiaries			Unrestricted Subsidiaries			Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities	$	1,850		$	(26,758	)	$	1,581		$	(900	)	$	(24,227	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	—			(440		)	(11		)	—			(451		)
Return of capital from unconsolidated joint ventures	—			—			363			—			363
Intercompany investing	(96,955		)	—			—			96,955			—
Investments in and advances to joint venture arrangements	—			(6,451		)	(7		)	—			(6,458		)
Net cash (used in) provided by investing activities	(96,955		)	(6,891		)	345			96,955			(6,546		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of senior notes due 2021	(300,000		)	—			—			—			(300,000		)
Proceeds from issuance of senior notes due 2028	400,000			—			—			—			400,000
Proceeds from bank borrowings - homebuilding operations	—			194,300			—			—			194,300
Principal repayments of bank borrowings - homebuilding operations	—			(253,400		)	—			—			(253,400		)
Net proceeds from bank borrowings - financial services operations	—			—			8,151			—			8,151
Proceeds from notes payable - other and CDD bond obligations	—			1,718			—			—			1,718
Intercompany financing	—			91,298			2,090			(93,388		)	—
Repurchase of common shares	(1,912		)	—			—			—			(1,912		)
Dividends paid	—			—			(900		)	900			—
Debt issue costs	(6,165		)	—			—						(6,165		)
Proceeds from exercise of stock options	3,182			—			—			—			3,182
Net cash provided by (used in) financing activities	95,105			33,916			9,341			(92,488		)	45,874
Net increase in cash, cash equivalents and restricted cash	—			267			11,267			3,567			15,101
Cash, cash equivalents and restricted cash balance at beginning of period	—			219			11,589			(5,725		)	6,083
Cash, cash equivalents and restricted cash balance at end of period	$	—		$	486		$	22,856		$	(2,158	)	$	21,184

	Three Months Ended March 31, 2019
(In thousands)	M/I Homes, Inc.			Guarantor Subsidiaries			Unrestricted Subsidiaries			Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities	$	4,180		$	(72,925	)	$	50,292		$	(4,180	)	$	(22,633	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	—			(427		)	(33		)	—			(460		)
Intercompany Investing	(1,458		)	—			—			1,458			—
Investments in and advances to joint venture arrangements	—			(5,928		)	(113		)	—			(6,041		)
Net cash (used in) provided by investing activities	(1,458		)	(6,355		)	(146		)	1,458			(6,501		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bank borrowings - homebuilding operations	—			218,100			—			—			218,100
Principal repayments of bank borrowings - homebuilding operations	—			(116,700		)	—			—			(116,700		)
Net repayments of bank borrowings - financial services operations	—			—			(49,142		)	—			(49,142		)
Intercompany financing	—			(792		)	2,250			(1,458		)	—
Repurchase of common shares	(5,150		)	—			—			—			(5,150		)
Dividends paid	—			—			(4,180		)	4,180			—
Proceeds from exercise of stock options	2,428			—			—			—			2,428
Net cash (used in) provided by financing activities	(2,722		)	100,608			(51,072		)	2,722			49,536
Net increase (decrease) in cash, cash equivalents and restricted cash	—			21,328			(926		)	—			20,402
Cash, cash equivalents and restricted cash balance at beginning of period	—			5,554			15,975			—			21,529
Cash, cash equivalents and restricted cash balance at end of period	$	—		$	26,882		$	15,049		$	—		$	41,931

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On August 14, 2018, the Company announced that its Board of Directors authorized a share repurchase program (the “2018 Share Repurchase Program”) pursuant to which the Company may purchase up to $50 million of its outstanding common shares through open market transactions, privately negotiated transactions or otherwise in accordance with all applicable laws. During the first quarter of 2020, the Company repurchased 0.1 million outstanding common shares at an aggregate purchase price of $1.9 million under the 2018 Share Repurchase Program. As of March 31, 2020, the Company has repurchased 1.4 million outstanding common shares at an aggregate purchase price of $32.8 million under the 2018 Share Repurchase Program and $17.2 million remains available for repurchases under the 2018 Share Repurchase Program. The timing, amount and other terms and conditions of any additional repurchases under the 2018 Share Repurchase Program will be determined by the Company’s management at its discretion based on a variety of factors, including the market price of the Company’s common shares, corporate considerations, general market and economic conditions and legal requirements. The 2018 Share Repurchase Program does not have an expiration date and the Board may modify, discontinue or suspend it at any time.

Revenue and the related profit from the sale of a home and revenue and the related profit from the sale of land to third parties are recognized in the financial statements on the date of closing if delivery has occurred, title has passed to the buyer, all performance obligations (as defined below) have been met, and control of the home or land is transferred to the buyer in an amount that reflects the consideration we expect to be entitled to in exchange for the home or land. If not received immediately upon closing, cash proceeds from home closings are held in escrow for the Company’s benefit, typically for up to three days, and are included in Cash, cash equivalents and restricted cash on the Condensed Consolidated Balance Sheets.

Sales incentives vary by type of incentive and by amount on a community-by-community and home-by-home basis. The costs of any sales incentives in the form of free or discounted products and services provided to homebuyers are reflected in Land and housing costs in the Condensed Consolidated Statements of Income because such incentives are identified in our home purchase contracts with homebuyers as an intrinsic part of our single performance obligation to deliver and transfer title to their home for the transaction price stated in the contracts. Sales incentives that we may provide in the form of closing cost allowances are recorded as a reduction of housing revenue at the time the home is delivered.

We record sales commissions within Selling expenses in the Condensed Consolidated Statements of Income when incurred (i.e., when the home is delivered) as the amortization period is generally one year or less and therefore capitalization is not required as part of the practical expedient for incremental costs of obtaining a contract.

Contract liabilities include customer deposits related to sold but undelivered homes. Substantially all of our home sales are scheduled to close and be recorded to revenue within one year from the date of receiving a customer deposit. Contract liabilities expected to be recognized as revenue, excluding revenue pertaining to contracts that have an original expected duration of one year or less, is not material.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. All of our home purchase contracts have a single performance obligation as the promise to transfer the home is not separately identifiable from other promises in the contract and, therefore, not distinct. Our performance obligation, to deliver the agreed-upon home, is generally satisfied in less than one year from the original contract date. Deferred revenue resulting from uncompleted performance obligations existing at the time we deliver new homes to our homebuyers is not material.

Although our third party land sale contracts may include multiple performance obligations, the revenue we expect to recognize in any future year related to remaining performance obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less, is not material. We do not disclose the value of unsatisfied performance obligations for land sale contracts with an original expected duration of one year or less.

We recognize the majority of the revenue associated with our mortgage loan operations when the mortgage loans are sold and/or related servicing rights are sold to third party investors or retained and managed under a third party sub-service arrangement. The revenue recognized is reduced by the fair value of the related guarantee provided to the investor. The fair value of the guarantee is recognized in revenue when the Company is released from its obligation under the guarantee (note that guarantees are excluded from the scope of ASC 606, Revenue from Contracts with Customers). We recognize financial services revenue associated with our title operations as homes are delivered, closing services are rendered, and title policies are issued, all of which generally occur simultaneously as each home is delivered. All of the underwriting risk associated with title insurance policies is transferred to third-party insurers.

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The following table presents our revenues disaggregated by revenue source:

	Three Months Ended March 31,
(Dollars in thousands)	2020				2019
Housing	$	559,449			$	466,308
Land sales	4,687				3,018
Financial services (a)	13,467				11,783
Total revenue	$	577,603			$	481,109

(a)

Revenues include hedging losses of $3.6 million and $3.4 million for the three months ended March 31, 2020 and 2019, respectively. Hedging gains and losses do not represent revenues recognized from contracts with customers. Revenues for the first quarter of 2020 also include a $1.0 million impairment charge on our mortgage serving rights recorded as a reduction to revenue. This impairment charge was caused by the disruption in the mortgage industry as a result of the COVID-19 pandemic.

Refer to Note 11 for presentation of our revenues disaggregated by geography. As our homebuilding operations accounted for over 98% of our total revenues for the three months ended March 31, 2020 and 2019, with most of those revenues generated from home purchase contracts with customers, we believe the disaggregation of revenues as disclosed above and in Note 11 fairly depict how the nature, amount, timing and uncertainty of cash flows are affected by economic factors.

At our 2018 Annual Meeting of Shareholders, our shareholders approved the M/I Homes, Inc. 2018 Long-Term Incentive Plan (the “2018 LTIP”), an equity compensation plan. The 2018 LTIP is administered by the Compensation Committee of our Board of Directors. Under the 2018 LTIP, the Company is permitted to grant (1) nonqualified stock options to purchase common shares, (2) incentive stock options to purchase common shares, (3) stock appreciation rights, (4) restricted common shares, (5) other stock-based awards (awards that are valued in whole or in part by reference to, or otherwise based on, the fair market value of the common shares), and (6) cash-based awards to its officers, employees, non-employee directors and other eligible participants. Subject to certain adjustments, the 2018 LTIP authorizes awards to officers, employees, non-employee directors and other eligible participants for up to 2,250,000 common shares, of which 1,189,010 remain available for grant at March 31, 2020.

The 2018 LTIP replaced the M/I Homes, Inc. 2009 Long-Term Incentive Plan (the “2009 LTIP”), which was terminated immediately following our 2018 Annual Meeting of Shareholders. Awards outstanding under the 2009 LTIP Plan remain in effect in accordance with their respective terms.

Stock Options

On February 18, 2020, the Company awarded certain of its employees 424,500 (in the aggregate) nonqualified stock options at an exercise price of $42.23 (the closing price of our common shares on the New York Stock Exchange on such date) and a fair value of $12.65 that vest ratably over a five-year period. Total stock-based compensation expense related to stock option awards that has been charged against income relating to the 2018 LTIP was $1.0 million for both the three months ended March 31, 2020 and 2019.  As of March 31, 2020, there was a total of $12.1 million of unrecognized compensation expense related to unvested stock option awards that will be recognized as stock-based compensation expense as the awards vest over a weighted average period of 2.3 years.

Performance Share Unit Awards

On February 18, 2020, February 19, 2019 and February 15, 2018, the Company awarded its executive officers (in the aggregate) a target number of performance share units (“PSU’s”) equal to 45,771, 53,692 and 46,444 PSU’s, respectively. Each PSU represents a contingent right to receive one common share of the Company if vesting is satisfied at the end of a three-year performance period (the “Performance Period”). The ultimate number of PSU’s that will vest and be earned, if any, after the completion of the Performance Period, is based on (1) (a) the Company’s cumulative pre-tax income from operations, excluding extraordinary items, as defined in the underlying award agreements with the executive officers, over the Performance Period (weighted 80%) (the “Performance Condition”), and (b) the Company’s relative total shareholder return over the Performance Period compared to the total shareholder return of a peer group of other publicly-traded homebuilders (weighted 20%) (the “Market Condition”) and (2) the participant’s continued employment through the end of the Performance Period, except in the case of termination due to death, disability or retirement or involuntary termination without cause by the Company. The number of PSU’s that vest may increase by up to 50% from the target number based on levels of achievement of the above criteria as set forth in the applicable award agreements and decrease to zero if the Company fails to meet the minimum performance levels for both of the above criteria. If the Company achieves the minimum performance levels for both of the above criteria, 50% of the target number of PSU’s will vest and be earned. Any portion of PSU’s that does not vest at the end of the Performance Period will be forfeited. Additionally, the PSU’s have no dividend or voting rights during the Performance Period.

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The grant date fair value of the portion of the PSU’s subject to the Performance Condition and the Market Condition component was $42.23 and $37.51 for the 2020 PSU’s, respectively, $27.62 and $32.52 for the 2019 PSU’s, respectively, $31.93 and $33.57 for the 2018 PSU’s, respectively. In accordance with ASC 718, for the portion of the PSU’s subject to a Market Condition, stock-based compensation expense is derived using the Monte Carlo simulation methodology and is recognized ratably over the service period regardless of whether or not the attainment of the Market Condition is probable. Therefore, the Company recognized less than $0.1 million in stock-based compensation expense during the first quarter of 2020 related to the Market Condition portion of the 2020, 2019 and 2018 PSU awards. There was a total of $0.3 million of unrecognized stock-based compensation expense related to the Market Condition portion of the 2020, 2019 and 2018 PSU awards as of March 31, 2020.

For the portion of the PSU’s subject to the Performance Condition, we recognize stock-based compensation expense on a straight-line basis over the Performance Period based on the probable outcome of the related Performance Condition. Otherwise, stock-based compensation expense recognition is deferred until probability is attained and a cumulative stock-based compensation expense adjustment is recorded and recognized ratably over the remaining service period. The Company reassesses the probability of the satisfaction of the Performance Condition on a quarterly basis, and stock-based compensation expense is adjusted based on the portion of the requisite service period that has passed. As of March 31, 2020, the Company had not recognized any stock-based compensation expense related to the Performance Condition portion of the 2020 or the 2019 PSU awards. If the Company achieves the minimum performance levels for the Performance Conditions to be met for the 2020 and the 2019 PSU awards, the Company would record unrecognized stock-based compensation expense of $1.3 million as of March 31, 2020, for which $0.3 million would be immediately recognized had attainment been probable at March 31, 2020. The Company recognized less than $0.1 million of stock-based compensation expense related to the Performance Condition portion of the 2018 PSU awards during the first quarter of 2020 based on the probability of attaining the performance condition. The Company has $0.1 million of unrecognized stock-based compensation expense for the 2018 PSU awards as of March 31, 2020.

•	Information Relating to Forward-Looking Statements;

•	Application of Critical Accounting Estimates and Policies;

•	Results of Operations;

•	Discussion of Our Liquidity and Capital Resources;

•	Summary of Our Contractual Obligations;

•	Discussion of Our Utilization of Off-Balance Sheet Arrangements; and

•	Impact of Interest Rates and Inflation.

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•	New contracts increased 27% to 2,089 - an all-time quarterly record for the Company

•	Homes delivered increased 26% to a first quarter record 1,495 homes

•	Number of homes in backlog at March 31, 2020 increased 23% to a first quarter record 3,265

•	Total sales value in backlog increased 22% to $1.3 billion - an all-time quarterly record for the Company

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•	Revenue increased 20% to a first quarter record $577.6 million

•	Income before income taxes increased 76% to a first quarter record $41.4 million

•	Net income increased 79% to a first quarter record $31.7 million

•	Number of active communities at March 31, 2020 increased 4% to a first quarter record 223

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•	managing our land spend and inventory levels;

•	maintaining a strong balance sheet and liquidity levels;

•	expanding the availability of our more affordable Smart Series homes; and

•	emphasizing customer service, product quality and design, and premier locations.

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(a)	Our financial services operational results should be viewed in connection with our homebuilding business as its operations originate loans and provide title services primarily for our homebuying customers, with the exception of a small amount of mortgage refinancing.

(b)	Includes $0.4 million of acquisition-related charges taken during the three months ended March 31, 2019 as a result of our acquisition of Pinnacle Homes in Detroit, Michigan on March 1, 2018.

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(a)	Inventory includes single-family lots; land and land development costs; land held for sale; homes under construction; model homes and furnishings; community development district infrastructure; and consolidated inventory not owned.

(b)	Includes development reimbursements from local municipalities.

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(a)	Includes the effect of total homebuilding selling, general and administrative expense for the region as disclosed in the first table set forth in this “Outlook” section.

(b)	Includes $0.4 million of acquisition-related charges taken during the three months ended March 31, 2019 as a result of our acquisition of Pinnacle Homes in Detroit, Michigan on March 1, 2018.

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(a)

The available amount under the Credit Facility is computed in accordance with the borrowing base calculation under the Credit Facility, which applies various advance rates for different categories of inventory and totaled $626.6 million of availability for additional senior debt at March 31, 2020. As a result, the full $500 million commitment amount of the facility was available, less any borrowings and letters of credit outstanding. There were $6.9 million of borrowings outstanding and $65.8 million of letters of credit outstanding at March 31, 2020, leaving $427.3 million available. The Credit Facility has an expiration date of July 18, 2021.

(b)

The available amount is computed in accordance with the borrowing base calculations under the MIF Mortgage Warehousing Agreement and the MIF Mortgage Repurchase Facility, each of which may be increased by pledging additional mortgage collateral.  The maximum aggregate commitment amount of M/I Financial’s warehousing agreements as of March 31, 2020 was $190 million. The MIF Mortgage Warehousing Agreement has an expiration date of June 19, 2020 and the MIF Mortgage Repurchase Facility has an expiration date of October 26, 2020.

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