Thornburg Mortgage Reports 1Q Eps of $0.42, Up 56%
Declares $0.30 1Q Dividend
-- 1Q '01 EPS of $0.42; up 56% year-over-year and 50% over 4Q `00
SANTA FE, N.M.--(BUSINESS WIRE)--April 18, 2001-- -- Quarterly dividend increases to $0.30, a 20% increase
1Q book value of $12.46; up 7% over 4Q '00
Thornburg Mortgage Home Loans, Inc. lending in 20 states
Thornburg Mortgage, Inc. (NYSE: TMA - news) reported net income of $10,727,000 for the quarter ended March 31, 2001, or $0.42 per common share, a 56% increase over the same period last year. This compares to $7,513,000 or $0.27 per common share, for the quarter ended March 31, 2000, and $7,669,000 or $0.28 per common share for the quarter ended December 31, 2000. Taxable earnings for the quarter were $0.44 per common share, compared to $0.29 per common share in the same quarter a year ago.
Simultaneous with the earnings announcement, the company's Board of Directors declared a first quarter dividend of $0.30 per common share, payable on May 21, 2001 to shareholders of record on May 4, 2001. This represents a 30% increase over the year-earlier period and a 20% increase over the fourth quarter of 2000.
Larry Goldstone, president and chief operating officer, commented, ``While our results were positively impacted by recent reductions in the fed funds rate, we believe our solid earnings growth is also attributable to our diversified business strategy. Having remained focused on executing several new strategic initiatives over the past two years, we are beginning to see the financial benefits of those efforts. One example is our success in reducing the impact of prepayments on portfolio margins. With mortgage rates at their lowest point in almost two years, we anticipate prepayments will accelerate over the next few quarters. However, the impact on our portfolio should be minimal since we have reduced our net premium on mortgage assets to $63 million, or 1.47% of ARM assets. Over time, we believe initiatives like this will further reduce earnings volatility and translate into long-term value for our shareholders.''
In commenting on the dividend, Mr. Goldstone added, ``Though conservative compared to this quarter's earnings, the dividend increase is indicative of the board's intention to minimize fluctuations in dividend payments, and reflects its belief that going forward, earnings will remain sufficient, at a minimum, to sustain the new dividend level.''
Turning to the operating results for the quarter, Richard Story, chief financial officer, remarked, ``The company's earnings quality for the quarter was excellent. Operating results showed marked improvement compared to the quarter ended December 31, 2000 and the same quarter in 2000. Net interest income grew to $14.3 million up from $9.6 million the previous quarter. The increase can primarily be attributed to the decline in borrowing costs as compared to asset yields. Our average cost of funds decreased during the quarter to 6.07% from 6.78% in the previous quarter, and continues to trend lower. We expect to continue to benefit from lower financing costs over the balance of the year, as it takes approximately nine to twelve months for our ARM portfolio to fully adjust to a new interest rate environment.''
During the first quarter, the average ARM portfolio yield decreased to 6.85% from 7.09% also in response to declining market rates. Reduced financing costs more than offset the decline in the current portfolio yield, resulting in a portfolio margin of 1.31% compared to 0.93% in the previous quarter. The portfolio prepayment rate averaged 19% Constant Prepayment Rate (CPR) for the first quarter, up from 18% CPR in the previous quarter, and 15% CPR in the first quarter of 2000.
Commenting on the direct lending program, Ron Chicaferro, president of Thornburg Mortgage Home Loans, Inc. (``TMHL''), a wholly owned subsidiary of the company, said, ``We are pleased with the initial results of our direct lending program. Because of the cost effective business model we've adopted, our mortgage rates have remained extremely competitive, which allows us to compete with more established mortgage lenders around the country. Importantly, the quality of the loans we're generating through both our correspondent and direct lending channels is exceptional, and is a direct result of our focus on high quality borrowers. In the first quarter we closed $30.4 million of loans, which is in-line with our projections and up 55% from last quarter. We currently have an additional $54 million in our pipeline.'' TMHL is currently lending in 20 states and has eleven additional licenses pending. TMHL also services loans for 421 customers, representing approximately $193.8 million of mortgage loans. Mr. Chicaferro concluded, ``As this customer base expands, our ability to provide refinancings and other financial services should enhance earnings and further reduce prepayments.''
Total assets for the quarter ended March 31, 2001 increased to $4.4 billion from $4.2 billion at December 31, 2000. Consistent with our policy to limit credit risk, 93% of these assets are rated AA or AAA, or are guaranteed by an agency of the federal government. During the quarter the company acquired $443.1 million of new assets, which were purchased at an average purchase price of 99.9%.
At the end of the first quarter, the company's liquidation book value improved to $12.46 per common share, compared to $11.67 per common share at the end of the prior quarter. Excluding unrealized market value adjustments, book value was $15.38 per common share. |
