Anthracite Capital, Inc. Reports Second Quarter Earnings; Increases Credit Loss Expectations; Dividend Yield is 12.6%.Business Editors NEW YORK--(BUSINESS WIRE)--Aug. 6, 2003 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" or 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 a loss for the second quarter of 2003 of $0.26 per share versus income of $0.18 per share for the first quarter of 2003 and $0.25 per share for the second quarter of 2002. This loss is primarily the result of an increase in loss expectations on certain 1998 controlling class CMBS CMBS See: Commercial Mortgage Backed Securities assets. As previously disclosed certain of the Company's controlling class CMBS assets were experiencing cash flow interruptions. Income from the operating portfolio ("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 ") for the quarter was $0.33 per share versus $0.40 per share for the first quarter of 2003 and $0.43 per share for the second quarter of 2002. The Company considers Operating Earnings to be 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 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. and losses and 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. of securities. The Company believes Operating Earnings better reflects the quality of long-term earnings and dividend stability provided asset values remain stable. (All numbers are thousands, except per share amounts). Based upon the $0.35 per common share dividend paid on July 31, 2003 and the August 5, 2003 closing price of $11.15, 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 12.6%. Second quarter net loss includes a charge of $0.56 per share which resulted from an increase in expected underlying loan losses on certain 1998 vintage Commercial Mortgage Backed Securities ("CMBS") assets. The increase in loss expectations triggered an impairment charge according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. previously disclosed Company accounting policies and as required by the accounting standard EITF EITF Emerging Issues Task Force EITF Edinburgh International Television Festival EITF Europe International Taekwon-Do Federation (Emerging Issue Task Force) 99-20, "Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized securitized Of, related to, or being debt securities that are secured with assets. For example, mortgage purchase bonds are secured by mortgages that have been purchased with the bond issue's proceeds. Financial Assets Financial assets Claims on real assets. ." Actual underlying loan losses recognized to date are still below original expectations, but the Company believes additional loss expectations are warranted. The increase in expected losses on these CMBS assets will decrease Operating Earnings by approximately $0.07 per share per year. The current value of the affected securities was largely reflected in the Company's March 31, 2003 reported book value because these assets are held as "available for sale" and marked to market in "accumulated other comprehensive loss" on the balance sheet. Included in net loss, for the second quarter, are realized and unrealized gains and losses that net to a loss of $1,422 ($0.03 per share), which are attributable to the sale of a portion of the Company's Residential Mortgage Backed Securities ("RMBS RMBS Residential Mortgage-Backed Securities RMBS Rambus, Inc. (NASDAQ stock symbol) RMBS Russian Mortgage-Backed Securities ") portfolio. During the quarter, the Company acquired or committed to acquire $269,000 par amount of Commercial Real Estate Securities and newly originated 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). , and reduced RMBS holdings by over $600,000. 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 performance of the majority of our credit sensitive portfolios remains consistent with or better than our original expectations, but it is necessary and prudent in the current commercial real estate environment to increase our underlying loan loss expectations and reduce the income attributable to certain transactions. In future periods, strong underlying loan collateral performance on these or other transactions may enable us to decrease loss provisions and increase income. The increase in our investment in newer vintage CMBS and the reduction in our RMBS exposure over the past quarter supports our goal of stable earnings and dividends. While low interest rates in the second quarter provided a challenging environment for 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. , the Company was able to lower its cost of capital by issuing fixed rate redeemable Redeemable Eligible for redemption under the terms of an indenture. 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. . The recent increase in long-term interest rates and credit spreads should provide more compelling investment opportunities to enable us to enhance our Operating Earnings and support our dividend." The Company's second quarter Operating Earnings 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 17.7% and net interest margin of 3.0%. Annualized ROE and the net interest margin for the year earlier period was 22.6% and 4.7%, respectively. This change was due to a significant reduction in the size of the Company's RMBS portfolio and increased hedging expenses from greater reliance on 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. . The components of realized loss Realized Loss A loss recognized when assets are sold for a price lower than the original purchase price. Notes: A portion of the realized loss may be applied against a capital gain or realized profit to reduce taxes. include $21 of hedge ineffectiveness that was reclassified from interest income to other gains. During the second quarter, aggregate leverage decreased from 5.41:1 to 3.95:1. Short-term borrowing on credit sensitive positions was 0.78:1. As of June 30, 2003, 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. result in a $0.035 change in annual net income per share for every 50 basis point change in LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). . The Company's book value is dependent on long-term interest rates and credit spreads. As of June 30, 2003, sensitivity to long-term rates is approximately 3.0% for each 50 basis point change in long-term rates and approximately 4% for a 50 basis point change in credit spreads. These percentages will change if fluctuations greater than 50 basis points occur in long-term rates or credit spreads. Recognition of Unrealized Losses 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. The Company performed an analysis of its current underlying loan loss expectations and credit performance of its 1998 vintage "controlling-class" CMBS. The Company increased expected underlying loan loss expectations on four securities from three 1998 vintage CMBS transactions. As a result of the increase in loss expectations, the Company is incurring an impairment charge of $27,014, as required by EITF 99-20. Three of the four securities are not rated and the fourth security is rated CCC CCC A very speculative grade assigned to a debt obligation by a rating agency. Such a rating indicates default or considerable doubt that interest will be paid or principal repaid. Also called Caa. by Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. . Securities which are not rated are highly sensitive Adj. 1. highly sensitive - readily affected by various agents; "a highly sensitive explosive is easily exploded by a shock"; "a sensitive colloid is readily coagulated" to changes in the timing of losses recognized on the underlying loans. Even though losses recognized on the underlying loans to date are still significantly less than original estimates, the Company maintains its belief that losses in 2003 will continue to rise due to weak conditions in many commercial real estate markets. The Company felt it was appropriate to increase the total amount of expected losses of these transactions. The Company's increased loss expectations do not affect the market value of the securities. Loss expectations of the underlying loans for the 1998 vintage transactions prior to June 30, 2003 were $127,080, or 1.71% of collateral outstanding, net of defeased loans. A defeased loan is a loan that has not paid off, but is fully collateralized by 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. obligations. The Company's loss expectations for its 1998 vintage transactions now total $158,292, or 2.13% of collateral outstanding, net of defeased loans. These loss expectation levels are consistent with the current loss estimates for transactions underwritten after 1998. As of June 30, 2003, the Company's loss expectations by vintage year vintage year n. 1. The year in which a vintage wine is produced. 2. A year of outstanding achievement or success. vintage year n it's been a vintage year for plays → are as follows:
Loss Collateral % of
Expectation Balance (a) Collateral
------------------------------------------
1998 $158,292 $7,418,035 2.13%
1999 18,675 727,525 2.57%
2001 23,756 968,448 2.45%
2003 23,131 1,003,183 2.31%
------------------------------------------
$223,854 $10,117,191 2.21%
(a) net of defeased loans
The CMAC CMAC Cerebellar Model Articulation Controller CMAC Cambodia Mine Action Centre CMAC Canadian Marine Advisory Council CMAC Confectionery Manufacturers Association of Canada CMAC Capital Military Assistance Command CMAC Contemporary Medical Archives Centre 1998-C2 CMBS transaction credit performance has lagged all other transactions in the Company's CMBS portfolio and is the only 1998 vintage transaction owned by the Company which has delinquencies above that of the Lehman index of 1998 vintage transactions. During the second quarter of 2003, the outstanding principal balance of the Class M security was reduced by $6,996 to $36,406. Eleven underlying loans with an original principal of $24,342 have been resolved with a weighted average loss severity of 34.6%; five loans resulted in no loss. The Company has active loss mitigation MITIGATION. To make less rigorous or penal. 2. Crimes are frequently committed under circumstances which are not justifiable nor excusable, yet they show that the offender has been greatly tempted; as, for example, when a starving man steals bread to satisfy strategies with respect to the loan seller including pursuing an indemnification Indemnification Used in insurance policy agreements as to compensation for damage or loss. In the context of corporate governance, Director Indemnification uses the bylaws and/or charter to indemnify officers and directors from certain legal expenses and judgements resulting from , initiating a put back of an asset, and initiating litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. against the loan seller regarding mis-representations made in connection with one of the loans. Over the remainder of 2003, the Company expects an additional seven underlying loan resolutions for CMAC 1998-C2. These seven loans have an original principal balance of $62,768. Fitch Ratings has placed the B and B- rated classes of CMAC 98-C2 on negative watch due to the pending loan resolutions. As shown in the table below, the 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. experience of the underlying loans is the highest of the three transactions and significantly above loss expectations for comparable 1998 transactions as reported in the Lehman conduit conduit /con·du·it/ (kon´doo-it) channel. ileal conduit the surgical anastomosis of the ureters to one end of a detached segment of ileum, the other end being used to form a stoma on the guide. The June 30, 2003 impairment charge related to the non-rated and CCC rated classes of this transaction is $19,217, or $0.40 per share. The Company owns 65% of the non-rated Class M security from the LBCMT 98-C1 CMBS transaction. During the second quarter 2003, the outstanding principal balance for this security was reduced by $9,284 to $7,991. Two loans with an original par of $29,779 were resolved and resulted in a 33.4% loss severity. The June 30, 2003 impairment charge related to this security is $5,573, or $0.12 per share. The Company owns 65% of the non-rated Class N security of the GMAC GMAC General Motors Acceptance Corporation GMAC Graduate Management Admission Council GMAC Give Me A Call GMAC Genetic Manipulation Advisory Committee GMAC Genetic Modification Advisory Committee (Singapore) GMAC Give Me A Chance 98-C1 CMBS transaction. During the second quarter 2003, the principal balance for this security was reduced by $904 to $8,396. One loan was resolved at a loss of $887, which represented a 18% loss severity. The June 30, 2003 impairment charge related to this security is $2,224, or $0.05 per share. Prior to the impairment charge, the weighted average loss-adjusted yield on the Company's controlling-class CMBS was 10.25%. After the impairment charge, the weighted average loss-adjusted yield is 10.14%. The table below shows current delinquency and underlying loan losses recognized on the Company's controlling-class CMBS, and the impact of increased underlying loan loss expectations as a percentage of underlying loans.
June 30, Post Losses
2003 Impairment Losses Recognized
Underlying Underlying Recognized as % of
Loan Loan Loss as % of Loss Underlying
Delinquency Expectations Expectations Loans (a)
-----------------------------------------------
CMAC 98-C2 3.67% 2.63% 26.46% 0.57%
LBCMT 98-C1 1.92% 2.63% 28.67% 0.65%
GMAC 98-C1 2.12% 1.56% 3.83% 0.06%
CMAC 98-C1 0.23% 1.44% 28.66% 0.45%
DLJ 98-CG1 1.27% 1.76% 20.25% 0.32%
-------- -------- -------- --------
Sub-total 1998
transactions 2.16% 2.13% 23.09% 0.45%
1999 Transactions 1.39% 2.57% 2.93% 0.07%
2001 Transactions 0.11% 2.45% 0.00% 0.00%
2003 Transactions 0.43% 2.31% 0.00% 0.00%
-----------------------------------------------
Total-All
Transactions 1.74% 2.21% 16.85% 0.34%
(a) As a % of cutoff balance
The table below shows the Lehman Brothers Lehman Brothers Holdings Inc. (NYSE: LEH), founded in 1850, is a diversified, global financial services firm. It is a participant in investment banking, equity and fixed income sales, research and trading, investment management, private equity, and private banking. June 2003 Conduit Guide delinquency statistics by vintage year.
Delinquency as a % of Losses Recognized as % of
Underlying Loans Underlying Loans
------------------------------------------------
1998 2.22% 0.42%
1999 1.91% 0.15%
2001 0.77% 0.03%
2003 0.02% 0.00%
Acquisition of New CMBS After the close of the 2003 second quarter, the Company acquired $62,111 of par of a 2003 vintage controlling-class CMBS transaction. $20,000 of these securities will be used to complete the ramp-up financing facility from the December 2002 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 . Underlying loan loss expectations on the collateral are estimated at 2.35%. The loss-adjusted yield on the securities rated B- and lower in aggregate is 11.36%. The non-rated and B- rated tranches Tranches A piece, portion or slice of a deal or structured financing. This portion is one of several related securities that are offered at the same time but have different risks, rewards and/or maturities. "Tranche" is the French word for "slice". of this transaction were purchased to yield an initial cash-on-cash return Cash-on-Cash Return A rate of return often used in real-estate transactions. The calculation determines the cash income on the cash invested: of 21.17% and 18.86%, respectively, and loss-adjusted yields of 9.00% and 14.42%, respectively. The coupon for these two securities is 5.11%. Commercial Real Estate Securities Income The assets in the Company's two CDOs are unaffected by the new credit expectations. The net asset value of the CDOs increased by $7,922 net of hedges. A breakdown of the commercial real estate securities portfolio income for the quarters ended June 30, 2003 and March 31, 2003 is as follows:
For the three months ended
June 30, 2003 March 31, 2003
-----------------------------
Interest Income $23,032 $22,573
Interest Expense(a) (11,776) (11,391)
-----------------------------
Net Interest Income from Commercial
Real Estate Securities $11,256 $11,182
=============================
(a) Including hedges in CDO I and II
Commercial Real Estate Loan Income Direct holdings of commercial loans are held at cost unless a specific indication of impairment exists. To date, the Company's portfolio of commercial loans has never experienced a delinquency and all of the assets securing such loans are performing within the range of originally underwritten expectations. A breakdown of the commercial real estate loan portfolio income performance for the quarters ended June 30, 2003 and March 31, 2003 is as follows:
For the three months ended
June 30, 2003 March 31, 2003
-------------------------------
Interest Income $2,103 $1,187
Interest Expense (108) (102)
-------------------------------
Net Interest Income from Commercial
Real Estate Loans $1,995 $1,085
===============================
Residential Mortgage Backed Securities During the second quarter, the Company reduced its investments in RMBS as the need to maintain 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. continued to decline. Total investment in RMBS was reduced 41% from approximately $1,500,000 at December 31, 2002 and was reduced further from March 31, 2003 balances. The Company's remaining investments in RMBS at June 30, 2003 is $888,878. By reducing the Company's investments in RMBS, Operating Earnings will be reduced; however, less reliance on RMBS is expected to provide greater stability of the Company's Operating Earnings over the long term. The RMBS markets have been extremely volatile on a mark-to-market basis as prepayments Prepayments Payments made in excess of scheduled mortgage principal repayments. reached record levels through June 2003, and as interest rates increased sharply in June and July 2003. At the beginning of the second quarter, the Company changed its strategy of hedging RMBS with U.S. Treasury futures to utilizing interest rate swaps which, while more expensive to use, have tended to demonstrate a more consistent relationship with RMBS. This change resulted in an increase in the Company's swap notional no·tion·al adj. 1. Of, containing, or being a notion; mental or imaginary. 2. Speculative or theoretical. 3. by $606,000, and caused a reduction in Operating Earnings of $0.04 per share for the quarter. A breakdown of the RMBS portfolio income performance for the quarters ended June 30, 2003 and March 31, 2003 is as follows:
For the three months ended
June 30, 2003 March 31, 2003
----------------------------------
Interest Income $16,126 $17,909
Interest Expense (a) (9,867) (7,940)
----------------------------------
Net Interest Income 6,259 9,969
----------------------------------
Realized loss (1,928) (8,672)
Unrealized gain (loss) in
value 506 (1,731)
----------------------------------
Net Income (loss) from RMBS $4,837 $(434)
==================================
(a) Includes hedging expense
Book Value Net book value per share at quarter end was $7.17 based upon market prices provided by dealers for securities available for sale. As the Company's portfolio matures, the net 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. Alternatively, if the Company's loss expectations prove to be too high an increase in the yield may be required in the future. The unrealized loss on all subordinated CMBS at June 30, 2003 was $44,289. This amount reflects the amount of recovery net of expected underlying loan losses if the portfolio is held to maturity. Net book value per share decreased approximately 5.4% from $7.58 at March 31, 2003 due to sharp rises in interest rates and wider interest rate spreads on certain CMBS assets. Preferred Stock Issuance On May 21, 2003, the Company lowered its cost of long-term capital with the issuance of $57,500 of Series C Cumulative Redeemable Preferred Stock. The new Series C Preferred Stock will pay an annual dividend of 9.375%. The Company invested part of the proceeds in investment grade CMBS and unsecured REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). debt. As a result, investments in Commercial Real Estate Securities increased by 20% to $1,147,398. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). Reconciliation The table below reconciles Net Income per common share with Operating Earnings per common share:
Six
Months
Three Months Ended Ended
--------------------------------
6/30/03 3/31/03 6/30/02 6/30/03
--------------------------------
Operating Earnings per share $0.33 $0.40 $0.43 $0.73
Gain/(loss) on sale of securities
available for sale 0.07 0.01 0.09 0.07
Gain/(loss) on securities classified
as held for trading(a) (0.10) (0.22) (0.25) (0.32)
Foreign currency gain/(loss) & hedge
ineffectiveness - (0.01) (0.02) (0.01)
Loss on impairment of asset (0.56) - - (0.56)
-------------------------------
Net Income (loss) per share $(0.26) $0.18 $0.25 $(0.09)
(a) Includes hedges
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. Even if you are not a current owner of Anthracite Common 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, American Stock Transfer & Trust Company, at 1-877-248-6416 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 website 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. About Anthracite Anthracite is a specialty finance company that is externally managed by BlackRock Financial Management, Inc. ("BlackRock"), 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 $286 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. as of June 30, 2003. 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. BlackRock is a subsidiary of BlackRock, Inc. (NYSE: BLK BLK Black BLK Blank BLK Block BLK Bulk BLK Blocked Shot (basketball) BLK Blocked Kick (football) BLK Blackpool, England, United Kingdom - Blackpool (Airport Code) ) and a member of The PNC Financial Services PNC Financial Services (NYSE: PNC) is a U.S.-based financial services corporation, with assets of $92.0 billion. PNC operations include a regional banking franchise operating primarily in eight states and the District of Columbia, specialized financial businesses serving Group, Inc. (NYSE:PNC PNC Purdue University North Central (Westville, Indiana) PnC Point 'n Click PNC Police National Computer PNC People's National Congress (Guyana) PNC People's National Congress ), a diversified financial The diversified financial services segment includes a range of consumer and commercially-oriented companies offering a wide variety of products and services, including various lending products (such as home equity loans and credit cards), insurance, and securities and investment services organization. Through its affiliates, PNC originates commercial, multifamily and residential real estate loans, and services $79 billion in commercial mortgage loans for third parties through its Midland Loan Services, Inc. subsidiary as of June 30, 2003. Forward Looking Statements This press release contains 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 Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and with respect to future financial or business performance, strategies or expectations. Forward-looking statements are typically identified by words or phrases such as "trend," opportunity," "pipeline," "believe," "comfortable," "expect," "current," "intention," "estimate," "position," "assume," "potential," "outlook," "continue," "remain," "maintain," "sustain," "seek," "achieve," and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "may" or similar expressions. Anthracite cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and Anthracite assumes no duty to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance. In addition to factors previously disclosed in Anthracite's Securities and Exchange Commission (the "SEC") reports and those identified elsewhere in this press release, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: (1) the introduction, withdrawal, success and timing of business initiatives and strategies; (2) changes in political, economic or industry conditions, the interest rate environment or financial and capital markets, which could result in changes in the value of Anthracite's assets; (3) the performance and operations of Anthracite's manager; (4) the impact of increased competition; (5) the impact of capital improvement projects; (6) the impact of future acquisitions; (7) the unfavorable resolution of legal proceedings All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. ; (8) the extent and timing of any share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. ; (9) the impact, extent and timing of technological changes and the adequacy of intellectual property protection; (10) the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government agencies relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc Anthracite, BlackRock or PNC; (11) terrorist activities, which may adversely affect the general economy, real estate, financial and capital markets, specific industries, and Anthracite and BlackRock; and (12) the ability of Anthracite's manager to attract and retain highly talented professionals. Anthracite's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2002 and Anthracite's subsequent reports filed with the SEC, accessible on the SEC's website at http://www.sec.gov, identify additional factors that can affect forward-looking statements.
Anthracite Capital, Inc. and Subsidiaries
Consolidated Statements of Financial Condition
(in thousands, except per share data)
June 30, December 31,
2003 2002
------------ ------------
(Unaudited)
ASSETS
Cash and cash equivalents $ 14,259 $ 24,698
Restricted cash equivalents 56,756 84,485
Commercial real estate securities 1,147,398 894,345
Commercial real estate loans 55,556 65,664
Residential mortgage backed securities 888,878 1,506,450
Equity investment in Carbon Capital, Inc. 18,570 14,997
Investments in real estate joint ventures 7,844 8,265
Receivable for investments sold 670 -
Other assets 71,899 40,447
------------ ------------
Total Assets $2,261,830 $2,639,351
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Borrowings:
Collateralized debt obligations $ 684,778 $ 684,590
Secured by pledge of commercial real
estate securities 163,503 42,861
Secured by pledge of commercial real
estate loans 14,667 14,667
Secured by pledge of residential mortgage
backed securities 850,294 1,418,206
Secured by pledge of real estate joint
ventures 512 1,337
------------ ------------
Total borrowings $1,713,754 $2,161,661
Payable for investments purchased 21,653 524
Distributions payable 17,299 16,589
Other liabilities 75,221 54,361
------------ ------------
Total Liabilities 1,827,927 2,233,135
------------ ------------
Stockholders' Equity:
Common stock, par value $0.001 per share;
400,000 shares authorized;
48,142 shares issued and outstanding in
2003; and 47,398 shares issued and
outstanding in 2002 48 47
10% Series B Preferred stock, liquidation
preference $43,942 in 2003 and
$47,817 in 2002 33,431 36,379
9.375% Series C Preferred stock, liquidation
preference $57,500 in 2003 55,513 -
Additional paid - in capital 522,334 515,180
Distributions in excess of earnings (61,830) (24,161)
Accumulated other comprehensive loss (115,593) (121,229)
------------ ------------
Total Stockholders' Equity 433,903 406,216
------------ ------------
Total Liabilities and Stockholders'
Equity $2,261,830 $2,639,351
============ ============
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, 2003 June 30, 2003
------------- -------------
Operating Portfolio
Income:
Commercial real estate securities $ 23,032 $ 45,605
Commercial real estate loans 2,103 3,290
Residential mortgage backed securities 16,126 34,035
Earnings from real estate joint ventures 238 473
Earnings from equity investment 702 1,445
Cash and cash equivalents 209 385
------------ ------------
Total income 42,410 85,233
------------ ------------
Expenses:
Interest expense:
Collateralized debt obligations 11,077 21,990
Commercial real estate securities 699 1,177
Commercial real estate loans 108 210
Residential mortgage backed securities 5,103 10,052
Real estate joint ventures 7 17
Hedging Expense 4,764 7,755
General and administrative 591 1,173
Management fee 2,649 5,226
------------ ------------
Total expenses 24,998 47,600
------------ ------------
Operating Earnings 17,412 37,633
------------ ------------
Other gain (losses):
Realized loss (1,928) (10,459)
Unrealized gain (loss) 506 (1,225)
Hedge Ineffectiveness 21 (241)
Loss on impairment of assets (27,014) (27,014)
------------ ------------
Total other loss (28,415) (38,939)
------------ ------------
Net Loss (11,003) (1,306)
------------ ------------
Dividends on preferred stock 1,611 2,806
------------ ------------
Net Loss attributable to Common
Shareholders (12,614) (4,112)
============ ============
Income from operating portfolio per share:
Basic $ 0.33 $ 0.73
Diluted $ 0.33 $ 0.73
Net Loss per share, basic $ (0.26) $ (0.09)
============ ============
Net Loss per share, diluted $ (0.26) $ (0.09)
============ ============
Weighted average number of shares
outstanding:
Basic 47,862 47,728
Diluted 47,883 47,746
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