THORNBURG MORTGAGE TO PURCHASE FIRST ARIZONA SAVINGS
SANTA FE, N.M.--(BUSINESS WIRE)--Jan. 5, 2000--
Federal Thrift Charter Will Give Thornburg Nationwide
Direct Lending Authority To Become a Leading Low-Cost
Mortgage Provider to High Quality Borrowers
Thornburg Mortgage Inc. (NYSE: TMA), a leading high quality mortgage portfolio lender, Wednesday announced that it has signed an agreement to purchase FASLA Holding Co., whose principal holding is First Arizona Savings, a privately held Phoenix-based community bank with six retail branch offices and $138 million in assets.
First Arizona's federal thrift charter will provide Thornburg Mortgage the lending license it needs to become a mortgage originator and achieve its goal of becoming a nationwide, low-cost provider of mortgage loans to high-quality retail borrowers.
Currently, Thornburg Mortgage's primary focus is on acquiring single-family mortgage loans and securities, financing them at interest rates below those mortgage yields and generating profits based on the interest spread.
With First Arizona's federal charter, Thornburg will now have the ability to originate loans and create a unique proprietary retail direct lending business via the Internet and telemarketing. Thornburg Mortgage will continue to securitize and hold the majority of its loans in portfolio, with a new emphasis on building long-term customer relationships.
"By obtaining the regulatory authority to originate mortgages directly, this acquisition will add a significant new dimension to the unique competitive advantages that put Thornburg Mortgage in a league of its own," said Larry A. Goldstone, president and chief operating officer of Thornburg Mortgage Inc.
"No other mortgage portfolio lender has the same combination of REIT tax status, high quality asset portfolio, technology, and low-cost operating structure.
"We believe that combining these characteristics with nationwide loan originations will enable Thornburg Mortgage to efficiently participate in all aspects of the mortgage lending process - from loan origination and acquisition to securitization and portfolio management."
"This acquisition is a cost-effective means for us to establish our presence in the mortgage origination market and develop a direct lending business, which we believe has the potential to develop into an additional profit center for Thornburg Mortgage," he continued.
"In sum, the purchase of First Arizona offers us significant strategic advantages while having a negligible impact on our earnings due to its small relative size."
Subject to regulatory approval, Thornburg Mortgage expects to acquire First Arizona Savings for a purchase price of approximately $15 million. SAMCO Capital Markets acted as financial advisor to FASLA Holdings and First Arizona Savings. The transaction is expected to close by mid-2000, or as soon as regulatory approval can be obtained.
According to the purchase agreement, First Arizona would become a qualified taxable REIT subsidiary of Thornburg Mortgage and would continue to operate as a retail community bank, providing a full range of financial products and services, including local residential real estate mortgage loans.
Goldstone added, "First Arizona's strong management team shares our operating philosophy of conservative, high credit quality lending. We are pleased to partner with a first-rate institution that has a high credit quality loan portfolio, solid earnings and an excellent local franchise."
Thornburg Mortgage Inc. is a high quality mortgage portfolio lending institution that invests in a portfolio of highly rated ARM securities and high-quality ARM loans. Like most lending institutions, the company generates income both from its direct investment in these assets and the difference between the yield on its assets and the cost of its borrowings.
Thornburg Mortgage's objective is to grow earnings per share by expanding its presence in the high credit quality ARM securities and loan markets. As a real estate investment trust, Thornburg Mortgage distributes the majority of its income to shareholders in the form of dividends. The company had 21,490,000 shares outstanding as of Sept. 30, 1999.
Thornburg Mortgage is one of the Thornburg Companies, which include Thornburg Investment Management, a company with $2.6 billion under management in 10 mutual funds and additional private accounts, and Thornburg Foundation Realty, a REIT formed to facilitate and expand charitable donations of interests in real estate. |
