Anthracite Capital, Inc. Operating Earnings Increase 39% to $0.43 From $0.31 in the Prior Year Period.Business Editors NEW YORK--(BUSINESS WIRE)--May 8, 2002 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. (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 ): Earnings including realized gains Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. and losses and before SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 142 Goodwill adjustment increased 13% to a record $0.44 per quarter up from $0.39 in the prior year period. Total earnings including realized gains and losses and SFAS 142 Goodwill adjustment were $0.58. Anthracite Capital, Inc. (the "Company") (NYSE: AHR) today reported total income before adjustment for SFAS 142 for the first quarter of $0.44 per share versus $0.39 for the year earlier quarter. Income from the operating portfolio for the quarter was $0.43 per share versus $0.31 for the year earlier quarter. Income from the operating portfolio is net interest income after operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. and preferred dividends preferred dividend n. a payment of a corporation's profits to holders of preferred shares of stock. (See: preferred stock) but before realized gains and losses. Based on the $0.35 per share dividend declared on March 14, 2002, and the May 7, 2002 closing price of $11.71, 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 12.0%. In addition to operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before of $0.43, included in total earnings are gains from active trading of $0.06, a loss attributable to net other gains and losses of $0.05, and income of $0.14 due to implementation of SFAS 142. The Company was required to implement SFAS 142 on January 1, 2002. The cumulative effect of implementing this new accounting standard resulted in the unamortized balance of negative goodwill of $6,327,000 being recognized in income during the first quarter of 2002. 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>. , president and 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. of the Company, stated "We are very pleased with the year-over-year increase in the Company's quarterly operating earnings to levels over twenty percent in excess of our current quarterly dividend. Our principal goal in 2002 continues to be enhancing the stability of our operating earnings by issuing non-recourse, secured debt to match fund our credit sensitive assets. The Company is actively engaged in executing such a transaction which, if successful, would reduce the Company's interest rate and financing risks and free up liquidity for additional investments. We believe this meaningful reduction of risk can be achieved with no impact on dividends and limited impact, if any, on operating earnings." The Company's first quarter operating results represent an annualized return on the quarter's average common stock equity (Annualized ROE A fictitious surname used for an unknown or anonymous person or for a hypothetical person in an illustration. A lawsuit is generally named for the persons who are parties to it. ) of 21.9% and net interest margin of 5.01%. Annualized ROE for the year earlier period was 16.7% and the net interest margin was 5.04%. The significant year-over-year increase in ROE was due to the reinvestment Reinvestment Using dividends, interest and capital gains earned in an investment or mutual fund to purchase additional shares or units, rather than receiving the distributions in cash. 1. In terms of stocks, it is the reinvestment of dividends to purchase additional shares. of proceeds from the three equity raises in 2001, declining borrowing costs and declining expense ratios. The slight decrease in net interest margin over the year is attributable to the greater allocation of equity to higher credit quality assets versus the year earlier period. The components of other gains and losses includes $1,175,000 of hedge ineffectiveness reclassified from interest expense to other gain (losses); the hedge ineffectiveness resulted in a decrease in first quarter total earnings per share of $0.02. Over the quarter, the Company's weighted average credit rating Weighted Average Credit Rating The weighted average of all the bond credit ratings in a bond fund. The measure gives investors an idea of how risky a fund's bonds are overall. The lower the weighted average credit, rating the riskier the bond fund. of invested equity remained unchanged from BB-. Aggregate leverage declined from 4.8:1 to 4.0:1 as the Company reduced its allocation to residential mortgage backed securities (RMBS RMBS Residential Mortgage-Backed Securities RMBS Rambus, Inc. (NASDAQ stock symbol) RMBS Russian Mortgage-Backed Securities ). Leverage on credit sensitive positions was unchanged. The Company's exposure to changes in short-term interest rates Short-term interest rates Interest rates on loan contracts-or debt instruments such as Treasury bills, bank certificates of deposit or commerical paper-having maturities of less than one year. Often called money market rates. was reduced modestly over the quarter, resulting in somewhat higher hedging expenses. The Company reports GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). earnings on its commercial mortgage backed securities portfolio net of expected losses over the life of the portfolio. Actual losses remained unchanged during the first quarter but delinquencies on the collateral underlying the Company's CMBS CMBS See: Commercial Mortgage Backed Securities portfolio increased to 2.08% at quarter-end from 1.47% at year-end. The Company had anticipated that delinquencies and actual losses would increase significantly over the course of the year as the portfolio matures and the state of the economy remains uncertain. This experience is consistent with the loss assumptions made by the Company and reflected in reported GAAP 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. . The Company's earnings would be affected if actual losses on CMBS collateral were to be greater than expected losses. As of March 31, 2002 the reduction in operating earnings for every 50% increase in actual losses over expected losses would be approximately $0.08 per share per year, excluding the effect of non-cash impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. write-downs. Direct holdings of commercial mezzanine loans A mezzanine loan is a relatively large loan, typically unsecured (ie., not backed by a pledging of assets) or with a deeply subordinated security structure (e.g., third lien on the property but non-recourse vis-a-vis the borrower). are held at cost unless a specific indication of impairment exists. To date, the Company's portfolio of loans has never experienced a delinquency delinquency Criminal behaviour carried out by a juvenile. Young males make up the bulk of the delinquent population (about 80% in the U.S.) in all countries in which the behaviour is reported. and all the assets securing such loans are performing within the range of originally underwritten expectations. GAAP book value per share at quarter end was $7.97 based upon market prices provided by dealers for securities available for sale. At the end of the first quarter the Company reclassified its subordinated commercial mortgage-backed securities Commercial mortgage-backed securities (CMBS) are a type of bond commonly issued in American security markets. They are a type of Mortgage-backed security which are backed by mortgages on commercial rather than residential real estate. on the balance sheet from available for sale to held to maturity. This reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. reflects the Company's current intent to hold these assets until maturity. The effect of this change is that these assets will be presented on the balance sheet at their adjusted cost basis, rather than previously at their fair market value. The Company will continue to disclose the net asset value of all assets in its quarterly filings. As the portfolio matures, the GAAP book value of credit sensitive CMBS securities held by the Company will increase towards its original purchase cost provided that the Company's estimates of expected credit losses are reasonably accurate. The 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. on these securities at March 31, 2002 was $97,650,000. This amount reflects the amount of recovery net of expected losses if the portfolio is held to maturity. 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: increased approximately 5.8% from $7.53 at December 31, 2001 to $7.97 at March 31, 2002 due to a tightening of selected credit spreads on securities classified as available for sale and negative goodwill. The Company is seeking to finance a portion of the Company's CMBS portfolio and unsecured real estate investment trust obligations through a Collateralized Debt Obligation Collateralized Debt Obligation (CDO) A general inclusive term which covers Collateralized Bond Obligations, Collateralized Loan Obligations, and Collateralized Mortgage Obligations, (CDO (Collaborative Data Objects) A programming interface from Microsoft for accessing MAPI-based e-mail, calendaring and scheduling servers. Originally called "OLE Messaging" and "Active Messaging," CDO wraps the Enhanced MAPI library into a COM object that provides the ) offering in the approximate amount of $426 million. The CDO is designed to match fund such portion of the Company's CMBS portfolio and unsecured real estate investment trust obligations. Successful execution of this strategy will significantly increase the quality of the Company's earnings by eliminating the risk of financing the assets contributed to the CDO. The notes offered pursuant to the CDO will not be registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. absent registration or an applicable exemption from registration requirements. Improved Dividend Reinvestment Executions Now Available Anthracite has a 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. that provides current owners of its common stock with a simple, economical and convenient method of increasing their investment. Even if you are not a current owner of Anthracite Stock, the Company's transfer agent can issue registered stock directly to you without commission or markup (text) markup - In computerised document preparation, a method of adding information to the text indicating the logical components of a document, or instructions for layout of the text on the page or other information which can be interpreted by some automatic system. . This transaction can be done regardless of whether or not shares are held in street name. To take advantage of this program, shareholders must submit a signed Request for Waiver The voluntary surrender of a known right; conduct supporting an inference that a particular right has been relinquished. The term waiver is used in many legal contexts. to the Company. A printable version A printable version of an Internet HTML page is a simplified version of the webpage, rendered without navigation tools such as on-screen menus. In a printable version pages generally consist of plain text and pertinent images. of the form is available on the Company's website or investors can call or email the Company to obtain the Waiver and instructions via fax. To request a prospectus and receive enrollment materials or to ask questions about the plan, interested investors and shareholders may contact the Company's transfer agent, 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. , at 1-800-524-4458 or Investor Relations Investor relations The process by which the corporation communicates with its investors. , Anthracite Capital, Inc. at 212-409-3333. The Company's web site address is www.anthracitecapital.com. The Company is currently offering a 2% discount to the trailing 12-business day average provided the stock price remains above threshold levels Noun 1. threshold level - the intensity level that is just barely perceptible intensity, intensity level, strength - the amount of energy transmitted (as by acoustic or electromagnetic radiation); "he adjusted the intensity of the sound"; "they measured the established by the Company at the time. 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 $238 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 commercial 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 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, Robert Friedberg, Controller and Vice-President at 212-409-3333 or visit Anthracite's website at www.anthracitecapital.com.
Anthracite Capital, Inc. and Subsidiaries
Consolidated Statements of Financial Condition
(in thousands, except per share data)
----------------------------------------------------------------------
March 31, 2002 December 31, 2001
---------------------- ----------------------
(Unaudited)
ASSETS
Cash and cash
equivalents $ 19,583 $ 43,071
Restricted cash
equivalents 35,115 37,376
Securities available
for sale, at fair
value
Subordinated
commercial mortgage-
backed securities
(CMBS) $ - $ 360,159
Investment grade
securities 793,181 1,085,795
---------- ----------
Total securities
available for sale 793,181 1,445,954
Securities held for
trading, at fair
value 663,609 564,081
Securities held to
maturity 529,887 -
Commercial mortgage
loans, net 141,690 142,637
Investments in real
estate joint ventures 8,230 8,317
Equity investment in
Carbon Capital, Inc. 8,969 8,784
Receivable for
investments sold 297,129 344,789
Other assets 23,401 18,267
---------- ----------
Total Assets $2,520,794 $2,613,276
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Borrowings:
Secured by pledge of
subordinated CMBS
available for sale $ - $ 178,631
Secured by pledge of
other securities
available for sale
and cash equivalents 799,314 1,039,469
Secured by pledge of
securities held for
trading 523,105 559,145
Secured by pledge of
securities held to
maturity 247,970
Secured by pledge of
investments in real
estate joint
ventures 1,337 1,337
Secured by pledge of
commercial mortgage
loans 56,816 57,356
---------- ----------
Total borrowings $1,628,542 $1,835,938
Payable for
investments purchased 451,976 346,913
Distributions payable 17,472 17,245
Other liabilities 14,533 29,807
---------- ----------
Total Liabilities 2,112,523 2,229,903
---------- ----------
10.5% Series A
preferred stock,
redeemable convertible,
liquidation preference
$285 in 2001 - 258
---------- ----------
Stockholders' Equity:
Common stock, par value
$0.001 per share;
400,000 shares
authorized; 45,968
shares issued and
outstanding in 2002;
and 29,792 shares
issued and
outstanding in 2001 46 45
10% Series B Preferred
stock, liquidation
preference $55,317 42,086 42,086
Additional paid - in
capital 500,139 492,531
Distributions in
excess of earnings (3,320) (13,588)
Accumulated other
comprehensive loss (130,680) (137,959)
---------- ----------
Total Stockholders'
Equity 408,271 383,115
---------- ----------
Total Liabilities and
Stockholders' Equity $2,520,794 $2,613,276
========== ==========
Anthracite Capital, Inc.
Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
----------------------------------------------------------------------
For the For the
Three Months Three Months
Ended Ended
March 31, 2002 March 31, 2001
-------------------------------
Operating Portfolio
Income:
Securities $ 28,679 $ 17,247
Commercial mortgage loans 3,619 5,987
Mortgage loan pools - 1,438
Trading securities 6,288 1,104
Earnings from real estate joint
ventures 261 367
Earnings from equity investment 185 -
Cash and cash equivalents 319 197
-------- --------
Total income 39,351 26,340
-------- --------
Expenses:
Interest 9,207 11,593
Interest - trading securities 3,608 871
Management and incentive fee 5,064 2,239
Other expenses - net 576 494
-------- --------
Total expenses 18,455 15,197
-------- --------
Income from operating portfolio 20,896 11,143
-------- --------
Other gain (losses):
Gain (loss) on sale of securities
available for sale (4,079) 1,947
Gain from sale of active trading
securities 2,724 -
Gain on securities held for trading 1,290 692
Foreign currency gain (loss) (247) 104
Hedge Ineffectiveness 1,175 -
Incentive fee attributable to other
gains (343) (210)
-------- --------
Total other gain (loss) 520 2,533
-------- --------
Income before cumulative transition
adjustment 21,416 13,676
-------- --------
Cumulative transition adjustment -
SFAS 142 6,327 -
Cumulative transition adjustment -
SFAS 133 - (1,903)
-------- --------
Net Income 27,743 11,773
-------- --------
Dividends and accretion on preferred
stock 1,389 2,289
-------- --------
Net Income available to Common
Shareholders 26,354 9,484
======== ========
Income from operating portfolio per
share:
Basic $ 0.43 $ 0.33
Diluted $ 0.43 $ 0.31
Net income per share, basic:
Income before cumulative transition
adjustment $ 0.44 $ 0.42
Cumulative transition adjustment -
SFAS 142 0.14 -
Cumulative transition adjustment -
SFAS 133 - (0.07)
-------- --------
Net income $ 0.58 $ 0.35
======== ========
Net income per share, diluted:
Income before cumulative transition
adjustment $ 0.44 $ 0.39
Cumulative transition adjustment -
SFAS 142 0.14 -
Cumulative transition adjustment -
SFAS 133 - (0.06)
-------- --------
Net income $ 0.58 $ 0.33
======== ========
Weighted average number of shares
outstanding:
Basic 45,654 27,003
Diluted 45,731 31,116
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