THORNBURG MORTGAGE REPORTS $0.25 EPS IN Q2 AND DECLARES $0.23 PER SHARE DIVIDEND
SANTA FE, N.M.--(BUSINESS WIRE)--July 15, 1999--
Q2 Results Substantially Improved Over Q1, Reflecting
Improved Portfolio Yields, Reduced Prepayment Activity, Asset Growth
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-- Q2 EPS of $0.25 up 79% from $0.14 in Q1 99
-- Q2 net interest income is $9.1 million
-- Portfolio margin improves for third consecutive quarter to 0.82%
-- Acquired $831 million of new assets in Q2, increasing total to
$4.6 billion
-- Correspondent lending business has a strong start
-- Credit quality remains excellent
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Thornburg Mortgage Asset Corporation (NYSE: TMA), a leading high
quality mortgage portfolio lender, today reported net income of $7.0
million, or $0.25 per common share, for the second quarter ended June
30, 1999.
This compares to net income of $7.5 million, or $0.27 per common
share for the year-ago quarter. Earnings per share for the second
quarter were up 79% from the first quarter of this year. The company
had 21,490,000 average common shares outstanding during the quarter
ended June 30, 1999, and 21,796,000 average common shares outstanding
during the quarter ended June 30, 1998.
The company also announced that its board of directors declared a
second quarter dividend of $0.23 per common share, payable on August
18, 1999 to shareholders of record on July 30, 1999. This marks the
company's 24th consecutive quarterly dividend.
Larry A. Goldstone, president and chief operating officer of
Thornburg Mortgage Asset Corporation, said, "As anticipated, our
second quarter results were much improved from the previous quarter. A
steeper yield curve and increased mortgage interest rates slowed
mortgage prepayment activity in the period, boosting portfolio yields
and spreads. Additionally, our investment and reinvestment activity
during the quarter was very strong. We acquired $831 million of new
assets during the quarter, increasing total assets to $4.6 billion, up
from $4.0 billion last quarter. In keeping with our conservative
investment policies, we anticipate maintaining a similar level of
assets through year end."
The company's portfolio margin improved to 0.82% in the second
quarter from 0.63% in the first quarter of 1999, marking the company's
third consecutive quarterly improvement in portfolio spreads. Net
interest income improved to $9.1 million in the second quarter, up
from $6.6 million in the first quarter of 1999, reflecting a
significant decline in the cost of funds to an average of 5.35% from
5.56%. The portfolio yield averaged 5.73% for the second quarter,
compared to 5.69% in the first quarter. This yield improvement was due
to a decline in the second quarter portfolio prepayment rate to 26%
Constant Prepayment Rate (CPR) from 29% CPR in the previous quarter.
Goldstone continued: "Looking ahead, we expect to continue
benefiting from declining prepayments that are likely to result from
today's higher mortgage interest rates. While there is no way to
predict mortgage prepayment rates for the balance of the year, we
believe that the economic incentive to refinance an adjustable-rate
mortgage is not as attractive as it was a few months ago. As a result,
we anticipate a strong second half of the year, setting the stage for
a solid year in 2000."
Commenting on the company's successful launch of its
correspondent lending business on May 15, Goldstone said, "We are very
encouraged by the response we have received from lenders as we enter
this business. By the end of the quarter, the company had either
funded or received commitments to buy $12 million in newly originated
loans. Significantly, approximately 60% of those loans are eligible to
be securitized by FNMA, which will allow us to eliminate our credit
exposure on those products.
During the quarter Thornburg Mortgage completed its second loan
securitization, a $275 million transaction in which 98% of the loans
were wrapped to a AAA-rating - backed by AMBAC. All of the securitized
loans were retained in the company's portfolio. Credit quality remains
excellent, with 96% of the company's portfolio continuing to be rated
AA or better.
The company's book value declined modestly in the second quarter,
to $12.25 per common share from $12.53 per common share at March 31,
1999. However, book value excludes the appreciated value of many of
the company's hedging transactions, which if included would fully
offset the decline in reported book value. |
