Anthracite Capital, Inc Reports 10% Earnings Increase for the Second Quarter of 2000; Annualized Dividend Yield of 15.47% Based on Latest Closing Price.Business Editors NEW YORK--(BUSINESS WIRE)--Aug. 11, 2000 Anthracite anthracite (ăn`thrəsīt'): see coal. anthracite or hard coal Coal containing more fixed carbon than any other form of coal and the lowest amount of volatile (quickly evaporating) material, giving it the Capital, Inc. (Anthracite) (NYSE NYSE See: New York Stock Exchange : AHR AHR Aryl Hydrocarbon Receptor AHR American Historical Review (Journal of the American History Association) AHR Anchor AHR airway hyper-responsiveness AHR Assisted Human Reproduction AHR Air-Conditioning Heating Refrigeration ) today reported earnings for the quarter ended June 30, 2000 of $7,759,000 or $0.34 per share on a basic and $0.32 per share on a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis, versus $6,460,000 or $0.31 and $0.29 per share on a basic and diluted basis, respectively, for the three months ended March 31, 2000. Earnings for the year earlier quarter ended June 30, 1999 were $7,196,000 or $0.34 per share on both a basic and diluted basis. Based on the $0.29 per share dividend that was paid on July 28, 2000 and the August 10, 2000 closing price of $7.4375, Anthracite's annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. dividend yield is 15.6%. The components of second quarter earnings include $0.31 per share on a basic and $0.29 per share on a diluted basis of net operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. before other gains of $0.02 on both a basic and diluted basis. The comparable figures for the first quarter of 2000 were $0.29 per share of net operating income on a basic and $0.28 per share on a diluted basis and $0.02 per share from trading strategies In finance, a trading strategy (see also trading system) is a predefined set of rules to apply. Usually, this refers to a means used to replicate an option in order to give it an arbitrage free value in the sense that the cost of buying some financial assets to give the same . Total interest income increased over the first quarter as assets were increased by the closing of the CORE Cap merger and certain higher yielding investments were funded. This increase was partially offset by higher interest costs. The second quarter results represent an annualized net interest margin of 4.19% on the operating portfolio and a weighted average cost of funds Cost of Funds The interest rate paid on an outstanding loan. Notes: Money isn't free! Cost of funds is the cost of borrowing money. See also: Interest Rate Cost of funds Interest rate associated with borrowing money. of 7.05%. The comparable figures for first quarter of 2000 were 5.72% and 6.74% respectively. The decrease in net interest margin was caused primarily by the acquisition of CORE Cap, Inc. on May 15, 2000 which had a large portfolio of low yielding highly liquid assets Cash, or property immediately convertible to cash, such as Securities, notes, life insurance policies with cash surrender values, U.S. savings bonds, or an account receivable. . The increase in cost of funds was primarily based on the increase in one month LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). from 6.13% to 6.64% as the Federal Reserve raised interest rates 50 basis points during the second quarter. Since June 30, 1999 the Federal Reserve has raised interest rates by 175 basis points which has led to a significant increase in the Company's cost of funds. Anthracite's reported net operating income results in an annualized return on Anthracite's second quarter's average GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). common equity of 16.92% up from 15.18% in the first quarter, this increase is attributable to the addition of the series B preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. to the capital structure. Hugh Frater Fra´ter n. 1. (Eccl.) A monk; also, a frater house. Frater house an apartament in a convent used as an eating room; a refectory; - called also a fratery ltname>. CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. and President stated, "While the 175 basis points increase in short term rates over the past year has impacted our earnings we have been able to maintain and even increase earnings per share over the timeframe by redeploying the liquidity raised via our preferred issuance and merger with CORE Cap. In this past quarter we have posted record net interest income which exceeds declared dividends declared dividend A dividend authorized by a firm's board of directors. At the time a dividend is declared, the firm creates a liability for the dividend's payment. while reducing our exposure to changes in short-term rates. Our liquidity is high and we continue to seek high returns in both the residential and commercial markets to redeploy re·de·ploy tr.v. re·de·ployed, re·de·ploy·ing, re·de·ploys 1. To move (military forces) from one combat zone to another. 2. liquidity and increase earnings further." On May 15, 2000 the company closed the acquisition of CORE Cap Inc. The total net asset value of the portfolio acquired was $85,095,000. Anthracite issued 4,180,552 shares of its common stock with a value of $28,088,000 or $6.625 per share at the time of closing, and 2,260,997 shares of series B preferred stock with a value of $43,004,000, for total consideration of $71,092,000. The $14,003,000 excess of the value of the acquired portfolio over the value of the consideration paid, net of approximately $4,300,000 of acquisition expenses, will be accrued into income over the 5.7 year expected life of the acquired assets remaining after final portfolio restructuring Portfolio restructuring Applies to derivative products. Recomposition of a portfolio's asset mix by selling off undesired asset types (equities, debt, or cash) or specific securities within that class, while simultaneously buying desired types or securities. . The issuance of the common shares in the merger diluted stated GAAP book value by approximately 2.5% per share whereas operating asset value per common share was accreted by approximately 4% due to the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. purchase of the CORE Cap portfolio. At closing, the value of CORE CAP's assets was $1.31 billion. Post-closing, Anthracite restructured the portfolio to bring the CORE Cap's assets down to $845 million. A gain of $0.03 per share was realized as a result of the restructuring of the combined portfolios primarily as a result of market movements subsequent to the merger. The remaining portfolio is hedged with the sale of Treasury futures and interest rate swaps Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. . At quarter end the effective duration or exposure to long term interest rates of the Company's common equity was approximately 7.0 years and the exposure to a 50 basis points change up or down in short term rates was approximately $0.05 up or down per year in net income. Portfolio average credit quality increased from BBB- to BBB BBB A medium grade assigned to a debt obligation by a rating agency to indicate an adequate ability to pay interest and repay principal. However, adverse developments are more likely to impair this ability than would be the case for bonds rated A and above. + post-merger based on an increase in investment grade quality residential holdings. At quarter end, the ratio of debt to equity capital was 4.13 to 1 and the Company expects to maintain leverage ratios at that level or lower. GAAP book value attributable to common stock at June 30, 2000 was $197,548,000 based upon market prices provided by dealers for securities available for sale. GAAP book value at March 31, 2000 was $170,765,000. The increase in GAAP book value of $26,783,000 over the quarter was primarily due to common stock issued in the acquisition of CORE Cap and retention of income in excess of declared dividends. This increase was partially offset by a slight increase in spreads on assets held for sale. The Company's portfolio is principally priced off of the 10-year U.S. Treasury U.S. Treasury Created in 1798, the United States Department of the Treasury is the government (Cabinet) department responsible for issuing all Treasury bonds, notes and bills. Some of the government branches operating under the U.S. Treasury umbrella include the IRS, U.S. note, which yielded 6.03% at June 30, 2000, an increase from 6.02% at March 31, 2000. GAAP book value per common share Book Value Per Common Share A measure used by owners of common shares in a firm to determine the level of safety associated with each individual share after all debts are paid accordingly. Formula: decreased approximately 3.5% from $8.15 at March 31, 2000 to $7.86 at June 30, 2000. Notwithstanding the increase in asset value per share the decline in book value per share was primarily due to the issuance of common shares in connection with the CORE Cap acquisition and a widening of spreads on the Company's investment grade residential holdings. As of June 30, 2000 the Company has an unrealized loss Unrealized Loss A loss that results from holding onto an asset rather than cashing it in and officially taking the loss. Notes: Let's say you own a stock that is down 50%, but you haven't sold it to realize the loss yet. This is said to be an unrealized loss. per common share of $4.03 which was largely due to widening of credit spreads on below investment grade CMBS CMBS See: Commercial Mortgage Backed Securities holdings. To the extent the Company holds these assets to maturity and credit expectations on these assets are met the Company expects to recover this value over the approximately ten years remaining average life of the assets. Anthracite's August 10, 2000 closing price of $7.4375 represented a 5.4% discount to quarter-end GAAP book value. Dividend Reinvestment Plan Dividend Reinvestment Plan (DRP) Plan which provides for automatic reinvestment of shareholder dividends in more shares of a company's stock, often without commissions. Some plans provide for the purchase of additional shares at a discount to market price. Anthracite has a dividend reinvestment plan that provides current owners of its common stock with a simple, economical and convenient method of increasing their investment. For the second quarter dividend Anthracite used amounts invested through the plan to purchase shares on the open market. At such time as the company elects to issue stock directly, participants in the plan will be able to acquire fully registered stock directly from the company without commission. To request a prospectus and receive enrollment materials or to ask questions about the plan, interested investors and shareholders may contact Investor Relations Investor relations The process by which the corporation communicates with its investors. , The Bank of New York The Bank of New York, abbrieviated to BNY, was a global financial services company that existed until its merger with the Mellon Financial Corporation on July 2, 2007.[1] The bank now continues under the new name of The Bank of New York Mellon Corporation. (the Plan Administrator), at 1-800-524-4458 or Investor Relations, Anthracite Capital, Inc. at 212-409-3333. Anthracite is a specialty finance company that is externally managed by BlackRock, Inc., a New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. based investment manager with over $173 billion in global assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. . The company's principal business objective is to generate net income for distribution to stockholders from the spread between the interest income on its mortgage-backed securities Mortgage-backed securities (MSBs) Securities backed by a pool of mortgage loans. and loan investments and the costs of financing these investments. Certain matters discussed in this press release may constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the federal securities laws. Anthracite's actual results could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those detailed from time to time in Anthracite's reports and filings with the Securities and Exchange Commission. For further information, please contact Hugh Frater, President and Chief Executive Officer at 212-754-5535 or Richard Shea, Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. and Chief Financial Officer at 212-754-5579, or visit Anthracite's website at www.anthracitecapital.com.
Anthracite Capital, Inc.
Statements of Financial Condition
(in thousands, except per share data)
----------------------------------------------------------------------
June 30, 2000 December 31, 1999
------------- -----------------
(unaudited)
ASSETS
Cash and cash equivalents $ 10,578 $ 22,265
Restricted cash 3,869
Securities available for sale,
at fair value
Subordinated commercial
mortgage-backed securities (CMBS) $279,973 $272,733
Investment grade
securities 757,598 304,462
----------- -----------
Total securities available for sale 1,037,571 577,195
Mortgage loans, held for sale 87,195 -
Commercial mortgage loans, net 98,014 69,611
Other assets 24,030 10,591
----------- -----------
Total Assets $ 1,261,257 $ 679,662
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Borrowings:
Secured by pledge of
subordinated CMBS $153,516 $162,738
Secured by pledge of other
securities available for sale
and cash equivalents 678,672 272,289
Secured by mortgage loans,
held for sale 73,984 -
Secured by pledge of commercial
mortgage loans 58,040 36,506
----------- -----------
Total short-term borrowings $ 964,212 $ 471,533
Distributions payable 7,289 6,079
Other liabilities 19,016 3,767
----------- -----------
Total Liabilities 990,517 481,379
----------- -----------
10.5% Series A preferred stock,
redeemable convertible 30,188 30,022
----------- -----------
Commitments and Contingencies
Stockholders' Equity:
Common stock, par value $0.001 per
share; 400,000 shares authorized;
25,136 shares issued and outstanding
in 2000; and 20,961 shares issued
and outstanding in 1999 25 21
10% Series B preferred stock,
liquidation preference $56,025 43,004 -
Additional paid-in capital 315,571 287,486
Distributions in excess of earnings (16,649) (18,107)
Accumulated other comprehensive loss (101,399) (101,139)
----------- -----------
Total Stockholders' Equity 240,552 168,261
----------- -----------
Total Liabilities and
Stockholders' Equity $ 1,261,257 $ 679,662
=========== ===========
Anthracite Capital, Inc.
Statements of Operations (Unaudited)
(in thousands, except per share data)
For the Three For the Six
Months Ended Months Ended
June 30, 2000 June 30, 2000
------------- -------------
Operating Portfolio
Interest Income:
Securities available for sale $ 19,186 $ 33,528
Commercial mortgage loans 2,989 4,977
Mortgage loans, held for sale 3,465 3,465
Other income 212 212
Cash and cash equivalents 363 655
----------------------------
Total interest income 26,215 42,837
----------------------------
Expenses:
Interest 15,096 22,563
Management fee 1,700 2,990
Other expenses 760 1,647
----------------------------
Total expenses 17,556 27,200
----------------------------
Income from operating portfolio 8,659 15,637
----------------------------
Other Gains (Losses)
Gain on sale of securities
available for sale 682 705
Gain on securities held for trading - 328
Foreign currency (loss) (7) (11)
----------------------------
Net Income $ 9,334 $ 16,659
Dividends and accretion on
Preferred stock 1,575 2,441
----------------------------
Net Income Available to
Common Shareholders $ 7,759 $ 14,218
============================
Income from operating portfolio per share:
Basic $ 0.31 $ .60
Diluted $ 0.29 $ .57
Net income per share:
Basic $ 0.34 $ .65
Diluted $ 0.32 $ .61
Weighted average number of shares outstanding:
Basic 23,115 22,029
Diluted 27,196 26,111
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