Thornburg Mortgage Reports Record 1997 Income and Fourth Quarter Results
SANTA FE, N.M.--(BUSINESS WIRE)--Jan. 15, 1998--Thornburg Mortgage Asset
Corp. (NYSE:TMA - news) today reported record earnings for the year
ended Dec. 31, 1997 of $41,402,000, or $1.95 per common share
(18,047,955 average common shares outstanding), a 61% increase over the
$25,737,000 reported for the year ended Dec. 31, 1996, and a 13%
increase over the $1.73 per common share (14,873,700 average common
shares outstanding) reported for the same period.
Earnings for the fourth quarter ended Dec. 31, 1997 totaled $10,851,000,
or $0.46 per share, compared to $7,409,000, or $0.46 per share, reported
for the fourth quarter of 1996. The company had 19,860,096 and
16,207,446 average common shares outstanding for each quarter,
respectively.
Commenting on the results, Larry A. Goldstone, president of the company,
said, ''We were very pleased with the record level of earnings reported
for 1997. Profits rose sharply over the prior year and were
approximately four times 1995's results. We were particularly pleased
with our operating results given the interest rate challenges evident
during the fourth quarter.
''The funding and asset acquisition strategies the company has
consistently executed over the past several years have minimized the
adverse impact of interest rates. Further, as interest rates have
fallen, we believe the company's dividend yield is even more attractive
relative to alternative investment opportunities.''
The company continued to acquire attractively priced ARM securities for
its portfolio as total assets grew to a record $4.7 billion at December
31, 1997. From a credit quality perspective, approximately 95% of the
portfolio is AA-rated or better. Overhead expenses, as a percentage of
average assets, declined in the fourth quarter to 0.18%, compared to
0.24% in the fourth quarter of 1996 and 0.21% in the third quarter of
1997.
The ARM loan acquisition program, which was initiated in the third
quarter, is progressing at a prudent pace as ARM loans held totaled $120
million at year end. Also during the quarter, the company completed its
first ARM loan securitization transaction of $100 million.
During the fourth quarter, the net interest margin on an annualized
basis declined to 1.08% from 1.28% for the previous quarter. Four
factors influenced this decline. First, the spread between the six-month
LIBOR index and one-year Treasury bill yield averaged a negative 0.40%
during the quarter. Over the past five years, this relationship averaged
a negative 0.04%.
Those portfolio assets with yields which are tied to Treasury bill rates
and funded with LIBOR-based borrowings, which accounted for
approximately 50% of total earning assets, experienced a narrowing in
their spread, which in turn contributed to a decline in the net interest
margin.
The second factor was that portfolio prepayments rose as 30 year fixed
mortgage rates declined to levels which encouraged refinancing of
adjustable-rate mortgages. Accordingly, the portfolio prepayment rate
averaged 26% for the fourth quarter, up from 23% in the third quarter.
Two remaining factors also affected net interest income. The retirement
of $62 million of ARM securities reduced interest income by
approximately $465,000 and year-end interest rate pressures increased
the cost of financing a portion of the company's portfolio by
approximately $390,000.
If the fourth quarter net interest margin was adjusted to eliminate this
$855,000 in incremental interest costs, it would have equaled 1.16%.
These two factors were offset by the opportunistic sale of $81 million
of below-average yielding assets, which produced a net gain of $829,000,
and by a reduction in operating expenses from the third quarter of
$110,000.
Commenting further, Mr. Goldstone said, ''All told, we were extremely
proud of what the company accomplished in 1997 and consider it a very
successful year. We look forward to and will strive to achieve an even
better year in 1998 despite the challenges we are facing at the start of
this new year.'' |
