HORNBURG MORTGAGE MAINTAINS $0.23 DIVIDEND AND REPORTS EARNINGS AS OF MARCH 31, 1999
SANTA FE, N.M.--(BUSINESS WIRE)--Thornburg Mortgage Asset Corp.
(NYSE:TMA) Thursday reported net income for the quarter ended
March 31, 1999 of $4,599,000, or $0.14 per common share, compared to
$10,496,000, or $0.42 per common share for the quarter ended March 31,
1998.
The company had 21,490,000 average common shares outstanding at
March 31, 1999 and 20,797,000 average common shares outstanding at
March 31, 1998.
Simultaneous with the earnings announcement, the company's board
of directors declared a first quarter dividend of $0.23 per common
share, payable on May 19, 1999 to shareholders of record on April 30,
1999.
Larry A. Goldstone, president of the company, commented, "The
board of directors and management are confident that the earnings
improvement in the current quarter compared to the prior quarter is
consistent with our expectations and, further, the outlook for
earnings for the remainder of 1999 should allow us to maintain the
current dividend level."
Goldstone added, "The company's operating results for the first
quarter showed marked improvement compared to the prior quarter and
showed steady improvement during each month of the quarter."
Net interest income improved to $6,566,000 in the first quarter
of 1999 compared to $6,044,000 in the December 1998 quarter. The
improvement in net interest income was principally the result of a
lower cost of funds, which averaged 5.56% for the quarter compared to
5.74% in the prior quarter.
The company also benefited from a decline in the portfolio
premium amortization rate, which dropped to 1.14% from 1.25% in the
prior quarter. The portfolio prepayment rate averaged 29% CPR during
the quarter, but the higher premium ARM assets prepaid more slowly,
which partly explains the decline in the premium amortization rate.
These benefits were partially offset by a decline in the
portfolio interest rate, which declined to 7.12% from 7.34% during the
prior quarter. The company owns adjustable-rate mortgage assets with
interest rates tied to short term rates, which have been declining for
the past year. Taken together, the portfolio yield declined to 5.69%
from 5.78% in the prior quarter.
As a result, the company's portfolio margin improved to 0.63% for
the quarter from 0.53% in the prior quarter.
Total assets for the quarter ended March 31, 1999 were
$4.049 billion, a decline from the $4.345 billion at Dec. 31, 1998.
As previously indicated, the company limited its new asset
acquisitions in the first quarter in order to build excess liquidity
to facilitate the refinancing of its collateralized note obligation.
In March, this refinancing was accomplished at a much lower
financing rate and without requiring the company to contribute any
additional capital.
The company now has excess liquidity and has resumed its asset
acquisition efforts. Accordingly, the company acquired $99.7 million
of new assets in the month of March and second quarter purchase
commitments presently total $505 million. These asset acquisitions
continue to be concentrated principally in hybrid ARMs hedged with
comparable fixed rate funding and LIBOR indexed floating rate notes.
The company's "book value" also showed dramatic improvement as
ARM security prices recovered from the lows of December as financial
markets returned to normal activity levels. The company's
market-value-adjusted book value, which represents the company's
current liquidation value, improved to $12.53 at March 31, 1999, up
from $11.45 at Dec. 31, 1998.
Further, the company's historical contributed equity capital is
$15.24 per common share.
In commenting on the quarter's results and the outlook for the
remainder of the year, Goldstone stated, "We remain confident that the
earnings outlook for the company will continue to improve over the
course of 1999. The company was the beneficiary of a lower cost of
funds during the latter part of the first quarter and expects to
benefit further from that trend during the second quarter.
"Additionally, we were able to successfully refinance the
asset-backed notes in March. The savings in funding costs will also
help earnings over the balance of the year. Further, our ARM asset
balances were less than planned during the first quarter, and we have
begun to reverse that situation as asset acquisition activity
increases.
"The benefit of a larger balance sheet won't be fully realized
until the third quarter of this year. Lastly, portfolio prepayments
continue to decline, particularly on those seasoned assets that carry
higher premium balances. Some of these benefits will be offset by a
declining portfolio interest rate as the ARM portfolio continues to
reprice to current lower short term interest rates.
"However, we are encouraged by our progress year to date and by
the trends we see going forward."
Goldstone added, "Most important, we continue to be consistent in
our business strategies while actively pursuing new and more
profitable lines of business. Portfolio credit quality remains
excellent with 95% of portfolio assets being rated AA or better.
"Loan delinquencies remain very low, with seriously delinquent
loans equaling .46% of total loans, with no losses expected from these
loans. Interest rate risks continue to be managed in a conservative
fashion. The interest rate mismatch between asset and borrowing
repricing remains low at 54 days.
"This interest rate repricing difference includes the fact that
11% of our current asset portfolio consists of hybrid ARMs that have a
fixed rate of interest for the first three to five years. Meanwhile,
we continue to work to develop correspondent lending and more direct
lending capabilities.
"We are actively pricing and marketing 14 different ARM and
hybrid ARM products to mortgage originators. We expect to begin
purchasing loans directly from them in the second quarter." |
