Thornburg Mortgage Declares Dividend of $0.23 and Reports Third Quarter Earnings
SANTA FE, N.M.--(BUSINESS WIRE)--Oct. 16, 1998--Thornburg
Mortgage Asset Corp. (NYSE:TMA) reported earnings for the quarter
ended Sept. 30, 1998 of $4,678,000, or $0.14 per common share
(21,858,252 average common shares outstanding), compared to
$11,182,000, or $0.50 per common share (19,152,374 average common
shares outstanding) reported for the quarter ended Sept. 30, 1997.
The company reported net income of $7,475,000, or $0.27 per
common share in the prior quarter ended June 30, 1998. The company
currently has $0.18 of undistributed taxable income per share.
Larry A. Goldstone, president of the company, said, "We are
pleased to announce that TMA's philosophy of maintaining a
high-quality investment portfolio and a positive earnings outlook for
the future allow us to declare a dividend of $0.23 per share." The
dividend will be paid on Nov. 18, 1998 to shareholders of record on
Oct. 31, 1998.
The company's quarterly results were affected by the same factors
that have been adversely affecting the company since the beginning of
1998. First, the weighted-average interest rate on the company's
mortgage assets declined by 6 basis points to 7.37%.
Second, mortgage prepayments averaged 32% CPR for the quarter and
amortization expense increased by 5 basis points. As a result, and
after hedging expenses and the impact of payment receivables, the
average portfolio yield during the period declined to 5.82% compared
to 5.94% during the second quarter.
Additionally, the company's cost of funds increased by 6 basis
points, due primarily to the increased size of the unsecuritized loan
portfolio and the extended maturity of the company's borrowings
associated with hedging the company's hybrid ARM loans. As a result,
the company's portfolio margin declined to 0.47% in the third quarter
from 0.63% in the prior quarter.
Commenting on these results, Goldstone said, "As expected, the
third quarter's earnings were down from the second quarter for the
reasons outlined above. However, I am pleased to report that the
earnings trend in the month of September began to improve.
Specifically, the portfolio yield at Sept. 30, 1998 improved by five
basis points compared to the average for the quarter.
"An increase in the portfolio interest rate and a decline in
premium amortization contributed to this improvement during September.
Additionally, the company's cost of funds at the end of September
declined by four basis points compared to the average for the quarter.
This is the first monthly improvement we have seen in our
profitability measures since the beginning of the year."
Goldstone added, "The Federal Reserve Bank has begun to lower the
federal funds rate, which has resulted in lower financing rates for
our portfolio and steepened the yield curve. We believe that these
developments bode well for the company's earnings prospects."
Total assets for the quarter ended Sept. 30, 1998 were
$4.9 billion, a modest decline from June 30, 1998. Asset quality
remains excellent, with book value at $12.98. At Sept. 30, 1998, AA
and AAA rated securities and agency-guaranteed ARM securities
accounted for 79% of the portfolio.
Additionally, high-quality single-family ARM and hybrid loans
accounted for another 16% of ARM assets. Upon securitization of these
loans, approximately 93% of portfolio assets will be rated the
equivalent of AA or better.
Goldstone continued, "The market environment has become
increasingly difficult, particularly for entities who finance their
portfolios in the repurchase agreement market. We have always
recognized that these types of environments were likely to occur,
which is why we focus our business strategy on owning such high
quality and liquid assets.
"Accordingly, we are confident that we have sufficient liquidity,
cash flow and financing facilities to meet the company's cash and
funding requirements until market conditions improve. The company has
not had any difficulty in financing its portfolio or in meeting any of
its financial obligations or commitments thus far.
"We have and will continue to maintain a high quality and liquid
portfolio of assets, and we endeavor to preserve our lending
relationships, which remain intact."
Thornburg Mortgage Asset Corp. 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.
The company's objective is to grow earnings per share by
expanding its presence in the low credit risk ARM securities and loan
markets. As a real estate investment trust, TMA distributes the
majority of its income to shareholders in the form of dividends. The
company had 21,489,663 common shares outstanding at Sept. 30, 1998. |
