THORNBURG MORTGAGE REPORTS 4Q EPS OF $0.28, UP 16.7 PERCENT; DECLARES $0.25 4Q DIVIDEND
SANTA FE, N.M.--(BUSINESS WIRE)--Jan. 25, 2001--
-- FY '00 EPS of $1.05; up 19.3 percent year-over-year
-- 4Q '00 EPS of $0.28; up 16.7 percent year-over-year and 12.0
percent over 3Q '00
-- 4Q book value of $11.67; up 9.7 percent over 3Q '00
-- Thornburg Mortgage Home Loans, Inc. initiates lending activity
in 10 states
Thornburg Mortgage, Inc. (NYSE: TMA) reported net income for the year ended Dec. 31, 2000 of $29,165,000, or $1.05 per common share, compared to $25,584,000, or $0.88 per common share in 1999.
For the fourth quarter, net income totaled $7,669,000, or $0.28 per common share, compared to $6,797,000, or $0.24 per common share, for the same period last year. On a per common share basis, net income for the year 2000 increased by 19.3 percent over 1999. Net income for the fourth quarter increased 16.7 percent as compared to the fourth quarter of 1999.
Taxable earnings for the year and the quarter were $1.07 and $0.28 per common share, respectively, compared to $0.99 and $0.27 per common share for the year and fourth quarter in 1999.
Simultaneous with the earnings announcement, the company's board of directors declared a dividend of $0.25 per common share, payable on Feb. 20, 2001 to shareholders of record on Feb. 8, 2001 for the quarter ended Dec. 31, 2000. This was unchanged from the previous quarter, but represents a 9 percent increase over the year-earlier period.
Commenting on the operating results for the fourth quarter and the year just ended, Larry Goldstone, president and chief operating officer of Thornburg Mortgage, Inc. said, "We are pleased with the results for the quarter and the year.
"For the second consecutive year we posted a double-digit increase in both net income and net income per share and increased the quarterly dividend in an environment in which the Federal Reserve increased interest rates six times.
"We attribute this improved performance to a combination of the expansion of our business plan, our emphasis on high credit quality, adjustable-rate mortgage assets, and our low operating expenses; all of which are designed to reduce volatility in our earnings and dividends."
Goldstone added, "At today's meeting the board elected to defer an increase in the quarterly dividend until the full effect of recent interest rate changes are determined. Historically, periods of predictable, moderately declining interest rates have tended to positively impact the company's earnings."
Goldstone continued, "Our most exciting undertaking during the year was the initiation of our direct lending program. Through our wholly owned subsidiary, Thornburg Mortgage Home Loans, Inc. ("TMHL"), we now offer competitively priced mortgages in 10 states, and have 15 additional state licensing applications pending.
"Our goal is to be licensed nationwide by the end of 2001."
The company directs its loan production efforts primarily at highly credit-worthy individuals in order to ensure portfolio credit quality. Because of the company's portfolio lending strategy, tax status and efficient operating structure, it can consistently offer competitive interest rates.
Goldstone stated, "We are not a mortgage lender that is dependent on volume to generate profitability; instead, we focus on providing our customers with an efficient approval process and a level of personal service that is uncommon in the industry today.
"This philosophy, we believe, will help us build a loyal customer base of financially sophisticated homeowners, enhance portfolio performance, and ultimately, the company's earnings and dividends."
Goldstone added, "Our objective is to build our origination business in a cost effective manner. As an example, we have outsourced virtually the entire back-office operation to providers identified as the best in their fields. These providers are paid on a 'loan-by-loan' basis, meaning they are only paid when they successfully close or service a loan."
It is anticipated that this strategy will prove to be an extremely efficient way to produce loans for the portfolio and incremental earnings for our shareholders. In 2001, expenses of this new business should be modest due to the company's outsourcing strategy, and more than offset by the anticipated overall earnings. Longer-term, the company is confident the new program will be solidly profitable.
"This new line of business will complement TMHL's existing correspondent and bulk loan acquisition businesses and will serve to expand our sources for acquiring mortgage assets for the portfolio. Based on what we have seen so far, we are convinced that loans originated directly by TMHL will be profitable for the company's portfolio," Goldstone commented.
TMHL now services loans for 350 customers, representing approximately $160 million of assets.
During the fourth quarter, net interest income reached $9.6 million from $9.0 million in the previous quarter despite a slight increase in the average cost of funds to 6.78 percent from 6.73 percent.
During the same period, the average ARM portfolio yield improved to 7.09 percent from 6.99 percent, resulting in a portfolio margin of 0.93 percent compared to 0.88 percent in the previous quarter. The portfolio prepayment rate was unchanged at an averaged 18 percent Constant Prepayment Rate (CPR) during the fourth quarter.
Total assets were $4.1 billion as of Dec. 31, 2000, unchanged from the prior quarter. During the fourth quarter the company purchased $387 million of new assets, including $125 million of purchases that were committed, but unsettled at year end.
High quality, mortgage-backed securities accounted for 89 percent of the purchases; the remainder was mortgage loans acquired principally in bulk purchases with servicing rights or through correspondents. The company also had $43 million of outstanding commitments to purchase or originate mortgage loans as of the end of the quarter.
In keeping with the company's commitment to minimize prepayment risk, over the past 12 months the average purchase premium of ARM assets has decreased from 1.95 percent to 1.65 percent. In total for 2000, the company acquired $1.04 billion of new assets at an average purchase price of 99.58 percent.
Asset quality also remains exceptional, with 94 percent of the company's assets rated AA, AAA or guaranteed by an agency of the federal government. At the end of the fourth quarter, the company's liquidation book value was $11.67 per common share, compared to $10.64 per common share at the end of the prior quarter.
Excluding unrealized market value adjustments, book value was $15.30 per common share at year end. |
