Anthracite Capital, Inc. Operating Earnings of $0.43 From $0.34 in the Prior Year Period.Business Editors NEW YORK--(BUSINESS WIRE)--Aug. 14, 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. Earnings Including Unrealized and 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 On Securities Held for Trading of $0.25 Versus $0.32 in the Prior Year Period Earnings Including Realized and Unrealized Gains Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. of $0.82 for the Six Months Ended June 30, 2002 Versus $0.65 for the Prior Year Period Anthracite Capital, Inc. (the "Company") (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 second quarter earnings per share from the operating portfolio of $0.43 per share versus $0.34 for the year earlier quarter. 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 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 gains and losses and the effects of changes in accounting principles. Net Income which includes gains and losses for the second quarter were $0.25 per share versus $0.32 for the year earlier. Based on the $0.35 per share dividend declared on June 20, 2002, and the August 13, 2002 closing price of $11.51, 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 12.2%. Net income for the quarter ended June 30, 2002 of $0.25 per share includes a loss attributable to net other gains and losses of $0.07, and losses from active trading of $0.11 compared to a gain from active trading of $0.06 in the quarter ended March 31, 2002. The Company's active 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 consist of predominantly low coupon fixed rate 15 year mortgages hedged with five year 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. and various treasury futures. The Company sought to take advantage of historically wide spreads between low coupon Residential Mortgage Backed Securities (RMBS RMBS Residential Mortgage-Backed Securities RMBS Rambus, Inc. (NASDAQ stock symbol) RMBS Russian Mortgage-Backed Securities ) and interest rate swaps as part of its longstanding strategy to trade actively a portion of its residential securities portfolio. Unusually high volatility and increased supply expectations due to lower long-term interest rates overwhelmed o·ver·whelm tr.v. o·ver·whelmed, o·ver·whelm·ing, o·ver·whelms 1. To surge over and submerge; engulf: waves overwhelming the rocky shoreline. 2. a. the positive attributes of this strategy causing the Company to experience losses of $5,145,000. A similar strategy generated a gain of $2,724,000 in the quarter ended March 31, 2002. Net other gains and losses is largely attributable to price performance on certain of the Company's hedges and RMBS portfolio which is classified as held for trading and therefore marked to market through the income statement. The Company uses treasury futures to hedge a portion of its interest rate risk. These securities are required to be marked to market through the income statement at quarter end. The Company classifies a significant portion of its RMBS portfolio as held for trading to balance the mark to market risk of the treasury futures. The Company believes that the significant spread that can be earned today in RMBS continues to be an attractive alternative to holding cash particularly in light of the Fed's accommodative position on short-term rates. The Company will maintain its commitment to this sector until compelling long-term commercial real estate loan investments become available. The RMBS portfolio contributed approximately $0.20 per share to the 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. of the Company but can contribute to greater variability of reported results when classified as held for trading due to the requirement to mark to market through income. 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, "The second quarter was an important quarter for the Company. The 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 debt issuance which closed on May 29, 2002 established the Company as a premier secured debt issuer in the commercial real estate sector. The match funded liability Funded Liability A source of funds that a firm must take overt action to arrange and that carries an interest cost. structure and significant liquidity resulting from the CDO put the Company's balance sheet on its strongest footing ever. However, because we are finding new issue commercial real estate loans priced at lower spread levels than we typically seek, the Company has slowed its pace of investing in commercial real estate assets despite having significant amounts of liquid capital. Operating earnings will reflect the slower pace of capital deployment and higher interest expense from the CDO until we find acceptable opportunities 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. our excess liquidity. Despite negative results in this quarter from the portfolio of residential securities held for trading, we remain confident that earnings will support the current level of dividends, thus maintaining our primary objective of dividend stability over the long term." The Company's second quarter operating results represent an annualized return on the quarter's average common stock equity (Annualized ROE) of 22.6% and net interest margin of 4.7%. Annualized ROE for the year earlier period was 18.9% and the net interest margin was 4.9%. The components of other gains and (losses) for the quarter ended June 30, 2002 include $963,000 of hedge ineffectiveness reclassified from interest expense; the hedge ineffectiveness resulted in a decrease in second quarter total earnings per share of $0.02. The hedge ineffectiveness of $212,000 for the six months ended June 30, 2002 resulted in an increase in earnings per share. The Company uses interest rate swaps to hedge its short-term interest risk. Excluding hedge ineffectiveness, the use of interest rate swaps caused the Company's interest expense for the quarter ended June 30, 2002 to be $4,443,000 higher, or $0.10 per share. 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 increased from BB- to BB based on the additional liquidity raised from the CDO. Aggregate leverage declined from 4.0:1 debt to capital at March 31, 2002 to 3.3:1 at June 30, 2002 as the Company paid down existing liabilities coincident co·in·ci·dent adj. 1. Occupying the same area in space or happening at the same time: a series of coincident events. See Synonyms at contemporary. 2. with the CDO and decreased its investment in RMBS assets in anticipation of redeployment 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. into credit sensitive assets. Recourse debt on credit sensitive assets declined from 0.49:1 at March 31, 2002 to 0.05:1 at June 30, 2002. To take advantage of a continuous steep yield curve, the Company increased its investment in RMBS subsequent to quarter end. 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 during the quarter; as of June 30, 2002 a 50 basis point change in LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). would cause the Company's net income to decline by $0.02 annually versus $0.06 annually as of March 31, 2002. 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 while delinquencies on the collateral underlying the Company's CMBS CMBS See: Commercial Mortgage Backed Securities portfolio decreased slightly to 1.98% at quarter-end from 2.08% at March 31, 2002. The Company anticipates that delinquencies and actual losses will increase 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 Operating Income. The Company's earnings would be affected if actual losses on CMBS collateral were to be greater than expected losses. As of June 30, 2002, the reduction in operating earnings for every 50% increase in actual aggregate losses over expected losses would be approximately $0.08 per share per year, excluding the effect of non-cash impairment write-downs. For more information on credit performance and its possible effect on Company performance please refer to the Company's financial statements. 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 and all the assets securing such loans are performing within the range of originally underwritten expectations. 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 are presented on the balance sheet at their adjusted cost basis, rather than previously at their fair market value. 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 June 30, 2002 was $86,470,000. This amount reflects the amount of recovery net of expected losses if the portfolio is held to maturity. The GAAP book value per share at quarter end was $7.52. The net asset value per common share of the Company at quarter end was $7.83 based upon market prices provided by dealers. The net asset value per common share decreased approximately 2% from $7.97 at March 31, 2002 and has increased 4% from $7.53 at December 31, 2001. Improved Dividend 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. 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 a brokerage account Brokerage Account An arrangement between an investor and a licensed brokerage firm that allows the investor to deposit funds with the firm and place investment orders through the brokerage, which then carries out the transactions on the investor's behalf. . To take advantage of this program, shareholders must submit a signed Request for Waiver 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 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 $250 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)
----------------------------------------------------------------------
June 30, 2002 December 31, 2001
------------- -----------------
(Unaudited)
ASSETS
Cash and cash
equivalents $ 19,565 $ 43,071
Restricted cash equivalents 38,685 37,376
Securities available for sale,
at fair value
Subordinated commercial
mortgage-backed
securities (CMBS) $ - $360,159
Investment grade
securities 424,124 1,085,795
---------- ----------
Total securities
available
for sale 424,124 1,445,954
Securities held for
trading, at
fair value 887,232 564,081
Securities held
to maturity 557,629 -
Commercial mortgage
loans, net 134,043 142,637
Investments in
real estate
joint ventures 8,209 8,317
Equity investment in
Carbon Capital, Inc. 9,164 8,784
Receivable for
investments sold 13,999 344,789
Other assets 32,900 18,267
---------- ----------
Total Assets $2,125,550 $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 359,600 1,039,469
Secured by pledge of
securities held
for trading 498,416 559,145
Secured by pledge
of securities held
to maturity 403,688
Secured by pledge
of investments in
real estate
joint ventures 1,337 1,337
Secured by pledge
of commercial
mortgage loans 36,014 57,356
---------- ----------
Total borrowings $1,299,055 $1,835,938
Payable for investments
purchased 391,870 346,913
Distributions payable 16,214 17,245
Other liabilities 28,181 29,807
---------- ----------
Total Liabilities 1,735,320 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;
46,325 shares issued and
outstanding in 2002; and
45,286 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 503,641 492,531
Distributions in
excess of earnings (8,183) (13,588)
Accumulated other
comprehensive loss (147,360) (137,959)
---------- ----------
Total Stockholders'
Equity 390,230 383,115
---------- ----------
Total Liabilities and
Stockholders' Equity $2,125,550 $2,613,276
========== ==========
Anthracite Capital, Inc.
Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
----------------------------------------------------------------------
For the Three For the Six
Months Ended Months Ended
June 30, 2002 June 30, 2002
----------------------------------------
Operating Portfolio
Income:
Securities $ 26,938 $ 55,617
Commercial mortgage loans 3,427 7,046
Trading securities 7,420 13,708
Earnings from real estate
joint ventures 262 523
Earnings from equity investment 194 379
Cash and cash equivalents 491 810
--------- ---------
Total income 38,732 78,083
--------- ---------
Expenses:
Interest 12,084 21,291
Interest - trading securities 2,427 6,035
Management and incentive fee 2,278 7,342
Other expenses - net 497 1,073
--------- ---------
Total expenses 17,286 35,741
--------- ---------
Income from
operating portfolio 21,446 42,342
--------- ---------
Other gain (losses):
Gain on sale of securities
available for sale 4,154 75
Loss from sale of active
trading securities (5,145) (2,421)
Loss on securities held for trading (6,769) (5,479)
Foreign currency gain (loss) 18 (229)
Hedge Ineffectiveness (963) 212
Incentive fee attributable
to other gains - (343)
--------- ---------
Total other gain (loss) (8,705) (8,185)
--------- ---------
Income before cumulative
transition adjustment 12,741 34,157
--------- ---------
Cumulative transition adjustment
- SFAS 142 - 6,327
--------- ---------
Net Income 12,741 40,484
--------- ---------
Dividends and accretion
on preferred stock 1,382 2,771
--------- ---------
Net Income available to
Common Shareholders 11,359 37,713
========= =========
Income from operating
portfolio per share:
Basic $0.43 $0.86
Diluted $0.43 $0.86
Net income per share, basic:
Income before cumulative
transition adjustment $0.25 $0.68
Cumulative transition adjustment
- SFAS 142 - 0.14
--------- ---------
Net income $0.25 $0.82
========= =========
Net income per share, diluted:
Income before cumulative
transition adjustment $0.25 $0.68
Cumulative transition adjustment
- SFAS 142 - 0.14
--------- ---------
Net income $0.25 $0.82
========= =========
Weighted average number of
shares outstanding:
Basic 46,144 45,901
Diluted 46,183 45,951
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