Anthracite Capital, Inc. Reports Third Quarter Earnings; Strategic RMBS Shift in Progress; Dividend Yield is 11%.Business Editors NEW YORK--(BUSINESS WIRE)--Oct. 31, 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 net loss for the third quarter of 2003 of $0.51 per share versus a loss of $0.26 per share for the second quarter of 2003 and net income of $0.26 per share for the third quarter of 2002. The third quarter of 2003 results fall within the range indicated in the Company's September September: see month. 25, 2003 news release which also announced a $0.28 third quarter dividend. This net loss is due primarily to the Company's previously announced decision to accelerate the reduction of the risk associated with the Company's portfolio of residential mortgage backed securities (RMBS RMBS Residential Mortgage-Backed Securities RMBS Rambus, Inc. (NASDAQ stock symbol) RMBS Russian Mortgage-Backed Securities ) in favor of upon the side of; favorable to; for the advantage of. See also: favor a shift toward credit sensitive assets. Based on the $0.28 per share dividend declared on September 25, 2003, and the October October: see month. 30, 2003 closing price of $10.20, 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 11%. Net earnings 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 third quarter of 2003 was $0.28 per share versus $0.33 per share for the second quarter of 2003 and $0.40 per share for the third 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. The Company believes Operating Earnings better reflects the recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. earnings of the Company. Operating Earnings can and will fluctuate over time based on changes in asset levels, funding rates, available reinvestment rates Reinvestment Rate The rate at which cash flows from fixed-income securities may be reinvested. Notes: Because of the additional interest income, bondholders can make larger investment returns if they reinvest received coupon payments. and expected losses on credit sensitive positions. To the extent that Operating Earnings change based on changes in risk or market conditions, shareholders can expect dividends to be adjusted accordingly. A table is provided at the end of this news release which reconciles Operating Earnings per share with net income (loss) per share. (All numbers are thousands, except per share amounts.) Hugh Hugh (pronunced hyuu) is a male given name. It is Germanic and means "Bright in Mind and Spirit" or "Thoughtful". It is related to the name Hugin( one of Odin's ravens, who represented Thought.) The following medieval rulers were named 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 Chief Executive Officer of the Company, stated, "During the fourth quarter, we have continued to make progress on reducing the Company's exposure to RMBS. Since December December: see month. 31, 2002, commercial real estate loans and securities have increased from 39% to 59% of the total portfolio while RMBS have declined from 60% to 39%. While residential mortgage prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. rates have slowed in the third quarter as expected, there remains significant potential for further interest rate volatility over the next twelve months and, for this reason, we have reduced the interest rate risk of the portfolio. As we complete this transition there could be additional income volatility." Mr. Frater continued, "While there remains some weakness in employment, the economic recovery is taking hold and third quarter GDP GDP (guanosine diphosphate): see guanine. growth is the strongest quarterly performance since 1984. Combined with increasing federal borrowing, we expect upward pressure on interest rates over the next year. The economic recovery should ultimately prove beneficial to the performance of the Company's credit sensitive holdings. Subject to market conditions, which include the intense competition for high yield real estate assets, credit sensitive holdings are expected to become an even larger part of the Company's portfolio over the next year." Included in the net loss for the third quarter of 2003 are realized and unrealized gains and losses that net to a loss of $34,019 ($0.70 per share), which are attributable to the RMBS portfolio and expenses of hedging that portfolio. Net loss for the quarter also includes a write down of $5,412 ($0.11 per share) on a franchise loan backed security. The Company determined it is unlikely that further payments will be received from this franchise loan backed security and wrote this security down to zero, despite its par balance of $16,366 as of September 30, 2003. This third quarter write down of $0.11 per share had only a $0.02 per share effect on the Company's net asset value ("NAV See navigation system and navigation bar. ") at September 30, 2003 from June June: see month. 30, 2003. As previously described in the Company's filings with the Securities and Exchange Commission, the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. and market value of this franchise loan backed security had already been reduced in the second quarter of 2003. The Company's third quarter Operating Earnings represent an annualized return on the quarter's average common stock equity ("Annualized ROEs") of 16.7% and a net interest margin of 2.9%. 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. and the net interest margin for the year earlier period were 22.5% and 4.3%, respectively. These changes were due to a significant reduction in the risk 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. and less reliance on Treasury futures. Operating expenses for the quarter ended September 30, 2003 declined by $574 as compared to the second quarter, and declined $2,776 for the nine months ended September 30, 2003 as compared to the comparable prior year period. The principal cause of the expense decline was a decline in incentive and management fees paid. As of September 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. would result in a $0.003 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). . As of September 30, 2003, the Company's reported book value would change by approximately 3.2% for each 50 basis point increase in long-term rates and approximately 5.3% for a 50 basis point increase in credit spreads. These percentages will change if fluctuations greater than 50 basis points occur in long-term rates or credit spreads. Residential Mortgage Backed Securities A low interest rate environment in the first half of the year produced record prepayments Prepayments Payments made in excess of scheduled mortgage principal repayments. causing significant yield compression for all RMBS products. At the end of the second quarter and into the third quarter, a sharp rise in interest rates added to the turmoil. 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. data prepared by 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. , the RMBS index turned in its worst performance ever during the month of July July: see month. 2003. The market value of the RMBS portfolio was $874,404 at September 30, 2003. In addition to the reduction from the $888,878 as of June 30, 2003, the composition and risk of this portfolio has changed significantly. The Company realized losses 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. during this period as it continued to reposition its RMBS portfolio. As part of the continuing effort to reduce interest rate risk in the RMBS portfolio, during the quarter, the Company sold $486,574 of fixed rate RMBS and purchased $484,840 of hybrid ARM (adjustable rate mortgage This article is about the US mortgage type. For an international perspective, see Variable rate mortgage. An adjustable rate mortgage (ARM) is a mortgage loan where the interest rate on the note is periodically adjusted based on an index. ) product. The hybrid ARMs are expected to have less volatility in a rising interest rate environment and also allow the Company to maintain its regulatory status as it seeks attractive credit sensitive securities. Total RMBS holdings are expected to continue to decline from their current level of 39.1% to represent less than 25% of the Company's total portfolio within the next several quarters, subject to the availability of high yield real estate assets and other market conditions. Subsequent to September 30, 2003, the Company's RMBS portfolio was reduced by an additional $130,000. The Company also entered into $440,000 of notional no·tion·al adj. 1. Of, containing, or being a notion; mental or imaginary. 2. Speculative or theoretical. 3. par of interest rate swaps and $165,300 of notional par of ten-year Treasury futures to reduce exposure to rising interest rates. Each of these hedging instruments was designated as held for trading; therefore, changes in their value were marked to market through the Company's consolidated statements of operations. This action significantly reduced the interest rate sensitivity of the Company's RMBS portfolio. The loss in value of the hedges greatly exceeded the change in value of the assets in the held for trading account Trading Account 1. An account similar to a traditional bank account, holding cash and securities, and is administered by an investment dealer. 2. An account held at a financial institution and administered by an investment dealer that the account holder uses to employ a , resulting in $0.21 per share of losses recorded directly into the consolidated statements of operations rather than accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. other comprehensive loss in the consolidated statements of financial condition. Hedges designated as held for trading will create greater income volatility but will provide greater book value stability.
A breakdown of the RMBS portfolio income performance for the three
and nine months ended September 30, 2003 is as follows:
For the three and
nine months ended
September 30, 2003
-------------------
Interest Income $11,591 $45,626
Interest Expense * (9,004) (26,811)
-------------------
Net Interest Income 2,587 18,815
-------------------
Realized loss (23,981) (34,581)
Unrealized loss in value ** (10,038) (11,263)
-------------------
Net Income (loss) from RMBS $(31,432)$(27,029)
===================
* Includes swap hedging expense
** Includes mark to market on trading derivatives (includes
futures, cap and swaps)
Commercial Real Estate Securities The total amount of commercial real estate ("CRE CRE Commercial Real Estate CRE Corporate Real Estate CRE Commission for Racial Equality (Scotland) CRE CCD (Charge Coupled Device) and Readout Electronics CRE Camp Response Element ") securities increased by $81,971 to $1,229,369 during the third quarter, representing a 7.1% increase. For the nine months ended September 30, 2003, total CRE increased by $335,024 or 37.5%. The average yield on the Company's total CRE (primarily investment grade and below investment grade commercial mortgage backed securities ("CMBS CMBS See: Commercial Mortgage Backed Securities "), investment grade REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). debt, and CMBS IOs) for the second and third quarters respectively was 8.3% and 8.2%, respectively, while the average yield on only the below investment grade CMBS was 9.6% and 9.7%, respectively. The Company considers the CMBS securities where it maintains the right to control the foreclosure/workout process on the underlying loans its controlling class CMBS ("Controlling Class CMBS"). During the third quarter, the Company acquired $62,111 of par of a 2003 vintage controlling-class CMBS transaction (GECMC 2003-02). 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. A portion of this GECMC 2003-02 acquisition was match funded in the Company's 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 ramp facility. This completes the $50 million ramp financing facility created in December 2002. The Company's two CDOs contributed $0.08 per share to Operating Earnings during the third quarter. At September 30, 2003, the Company owned Controlling Class CMBS in nine separate transactions with a market value of $435,428 and a par of $805,044. The total principal amount of commercial real estate loans underlying these transactions at acquisition was $12,705,741 and the Company computed its loss adjusted yield assuming $260,817 or 2.05% would be uncollectable. As of September 30, 2003, the remaining principal amount of the commercial real estate loans after paydowns and amortization was $11,161,373, and $51,737 of the $260,817 in assumed losses has been realized; therefore, $209,080 or 80% of the assumed losses has not been realized. The $51,737 includes losses of $6,999 on loans deemed uncollectable during the third quarter. The average severity of all loan losses recognized through September 30, 2003 was 32%. Loan loss severity is the loss from the underlying loans which the Company incurs, including unpaid interest, late fees and servicer advances, when an underlying loan is subject to workout Workout Informal repayment or loan forgiveness arrangement between a borrower and creditors. workout 1. The process of a debtor's meeting a loan commitment by satisfying altered repayment terms. with the loan servicer  This article or section is in need of attention from an expert on the subject.Please help recruit one or [ improve this article] yourself. See the talk page for details. . The Company also tracks loan delinquencies as an indicator of potential losses. At the end of the second and third quarters, the total delinquencies on the commercial real estate loans underlying these transactions were 1.74% and 1.54% of their respective quarter end aggregate loan balances, excluding the GECMC 2003-02 CMBS which was purchased during the third quarter of 2003. This improvement in 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. rate was due to seven delinquent delinquent 1) adj. not paid in full amount or on time. 2) n. short for an underage violator of the law as in juvenile delinquent. DELINQUENT, civil law. He who has been guilty of some crime, offence or failure of duty. loans being worked out and three being brought current.
A breakdown of the CRE portfolio net interest income and realized
gains for the three and nine months ended September 30, 2003 is as
follows:
For the three and
nine months ended
September 30, 2003
--------------------
Interest Income $26,125 $71,730
Interest Expense* (12,540) (35,707)
--------------------
Net Interest Income 13,585 36,023
--------------------
Realized Gains 1,161 1,161
--------------------
Net Interest Income and Realized Gains from
Commercial Real Estate Securities $14,746 $37,184
===================
* Including hedges in the Company's CDOs
Commercial Real Estate Loans Commercial real estate loans includes the Company's investment in Carbon Capital, Inc., a company managed by BlackRock BlackRock Inc. (NYSE: BLK) is a major American investment management firm. As of September 30, 2007, BlackRock’s assets under management totaled $1.3 trillion[2] across fixed income, liquidity, equity, alternative investment and real estate strategies. Financial Management, Inc. that invests in mezzanine mez·za·nine n. 1. A partial story between two main stories of a building. 2. The lowest balcony in a theater or the first few rows of that balcony. debt loans ("Carbon Capital"). The total amount of commercial real estate loans increased by $9,085 to $91,055 during the third quarter, representing an 11.1% increase. This includes a $9,402 increase in the Company's funding of Carbon Capital to $26,965. For the nine months ended September 30, 2003, the Company's commercial real estate loan portfolio increased by $2,129 or 2.4%. Subsequent to September 30, 2003, the Company increased its commercial real estate loans by $7,000 as it acquired a mezzanine real estate loan. The average yield on the Company's commercial real estate loan portfolio for the second and third quarters in 2003 was 10.3% and 10.4%, respectively. The total cost of borrowing secured by loan assets is 2.8%. The Company has two committed warehousing lines that can be used to finance these assets. There are no delinquencies in any of the commercial real estate loans owned by the Company or Carbon Capital. The annualized yield on the Company's investment in Carbon Capital for the nine months ended September 30, 2003 was 15.3%.
A breakdown of the commercial real estate loan portfolio net
interest income performance for the three and nine months ended
September 30, 2003 is as follows:
For the three and nine
months ended
September 30, 2003
-----------------------
Interest Income $2,160 $7,368
Interest Expense (136) (363)
-----------------------
Net Interest Income from Commercial Real Estate
Loans $2,024 $7,005
=======================
Delinquency Statistics The delinquencies on the Company's Controlling Class CMBS have declined since the second quarter. The table below shows current delinquency and underlying loan losses recognized on the Company's Controlling Class CMBS and compares these figures to the comparable vintages in the Lehman Brothers September 2003 Conduit Guide.
The Lehman Brothers
September 2003 Conduit
Anthracite Capital Guide
-----------------------------------------------
September Losses Losses
30, 2003 Recognized Delinquency Recognized
Underlying as % of as a % of as % of
Loan Underlying Underlying Underlying
Delinquency Loans* Loans Loans*
-----------------------------------------------
1998 Transactions 2.06% 0.54% 2.47% 0.47%
1999 Transactions 0.32% 0.50% 1.97% 0.20%
2001 Transactions 0.00% 0.00% 0.81% 0.06%
2003 Transactions 0.00% 0.00% 0.04% 0.00%
-----------------------------------------------
Average - All
Transactions 1.37% 0.41% 1.82% 0.34%
-----------------------------------------------
As of June 30, 2003 1.74% 0.34% 1.84% 0.33%
* Delinquency statistics are weighted by the Company's current
loan balance, and loss statistics are weighted by cutoff
principal balance
Book Value Net book value per share at quarter end was $6.53. The securities of the Company are marked to market based upon market prices provided by dealers. As the Company's portfolio matures, the net book value of credit sensitive CMBS securities held by the Company is expected to increase towards its original purchase cost, provided that the Company's estimates of expected credit losses are 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 all Controlling Class CMBS at September 30, 2003 was $61,173. 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 8.9% from $7.17 at June 30, 2003 due to sharp rises in interest rates resulting in realized and unrealized losses associated with reducing the risk of the RMBS portfolio. Since the securities of the Company are marked to market, there can be fluctuations in book value based solely on quarterly changes in credit spreads and interest rates. To the extent that there is a sustained decline in book value due to changes in credit experience or other permanent factors, then such declines would effectively reduce earnings.
GAAP Reconciliation
The table below reconciles Net Income (loss) per common share with
Operating Earnings per common share:
Nine
Months
Three Months Ended Ended
-----------------------------------
9/30/03 6/30/03 9/30/02 9/30/03
-------------------------- --------
Operating Earnings per share $0.28 $0.33 $0.40 $1.01
Gain/(loss) on sale of securities
available for sale (0.10) 0.07 0.20 (0.03)
Loss on securities classified
as held for trading* (0.58) (0.10) (0.34) (0.90)
Foreign currency gain/(loss) &
hedge ineffectiveness** - - - -
Loss on impairment of asset (0.11) (0.56) - (0.68)
-------- -------- -------- --------
Net Income (loss) per share $(0.51) $(0.26) $0.26 $(0.60)
* Includes hedges
** Less than $0.01
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 American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of 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 Capital, Inc. is a specialty finance company focused on investments in high yield real estate loans and related securities. Anthracite is externally managed by BlackRock Financial Management, Inc., which is a subsidiary of BlackRock, Inc. ("BlackRock") (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) ), one of the largest publicly traded investment management firms 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. with $293.5 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 September 30, 2003. BlackRock is 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. ("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 ") (NYSE:PNC), 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 $79.8 billion in commercial mortgage loans for third parties through its Midland Loan Services, Inc. subsidiary as of September 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," "anticipate," "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 and does not undertake 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 relative and absolute investment 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 See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. and on Anthracite's website at www.anthracitecapital.com, identify additional factors that can affect forward-looking statements. To learn more about Anthracite Capital, Inc., visit our website at:www.anthracitecapital.com
Anthracite Capital, Inc. and Subsidiaries
Consolidated Statements of Financial Condition
(in thousands, except per share data)
September December
30, 2003 31, 2002
------------------------
(Unaudited)
ASSETS
Cash and cash equivalents $39,577 $24,698
Restricted cash equivalents 19,475 84,485
Residential mortgage backed securities 874,404 1,506,450
----------- -----------
Cash and RMBS $933,456 $1,615,633
Commercial real estate securities 1,229,369 894,345
Commercial real estate loans 91,055 88,926
----------- -----------
Total Commercial real estate $1,320,424 $983,271
Receivable for investments sold 37,660 -
Other assets 53,736 40,447
----------- -----------
Total Assets $2,345,276 $2,639,351
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Short term Borrowings:
Secured by pledge of residential mortgage
backed securities $818,031 $1,418,206
Secured by pledge of commercial real
estate securities 282,267 42,861
Secured by pledge of commercial real
estate loans 22,784 16,004
----------- -----------
Total short term borrowings 1,123,082 1,477,071
Long term Borrowings: Collateralized debt
obligations 684,875 684,590
----------- -----------
Total borrowings $1,807,957 $2,161,661
Payable for investments purchased 60,562 524
Distributions payable 14,580 16,589
Other liabilities 54,153 54,361
----------- -----------
Total Liabilities $1,937,252 $2,233,135
----------- -----------
Stockholders' Equity:
Common stock, par value $0.001 per share;
400,000 shares authorized; 48,863 shares
issued and outstanding in 2003; and 47,398
shares issued and outstanding in 2002 49 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 55,435 -
Additional paid - in capital 530,315 515,180
Distributions in excess of earnings (100,224) (24,161)
Accumulated other comprehensive loss (110,982) (121,229)
----------- -----------
Total Stockholders' Equity 408,024 406,216
----------- -----------
Total Liabilities and Stockholders'
Equity $2,345,276 $2,639,351
=========== ===========
Anthracite Capital, Inc.
Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
For the Three For the Nine
Months Months
Ended Ended
September September
30, 2003 30, 2003
------------- ------------
Operating Portfolio
Income:
Commercial real estate securities $26,125 $71,730
Commercial real estate loans 2,160 7,368
Residential mortgage backed securities 11,591 45,626
Cash and cash equivalents 453 838
------------- ------------
Total income 40,329 125,562
------------- ------------
Expenses:
Interest expense:
Collateralized debt obligations 11,098 33,088
Commercial real estate securities 1,442 2,619
Commercial real estate loans 136 363
Residential mortgage backed securities 3,508 13,560
Hedging Expense 5,496 13,251
General and administrative 551 1,724
Management fee 2,115 7,341
------------- ------------
Total expenses 24,346 71,946
------------- ------------
Operating Earnings 15,983 53,616
------------- ------------
Other gain (loss):
Realized loss (22,820) (33,279)
Unrealized loss (10,038) (11,263)
Hedge Ineffectiveness 66 (175)
Loss on impairment of assets (5,412) (32,426)
------------- ------------
Total other loss (38,204) (77,143)
------------- ------------
Net Loss (22,221) (23,527)
------------- ------------
Dividends on preferred stock 2,491 5,298
------------- ------------
Net Loss attributable to Common Shareholders (24,712) (28,825)
============= ============
Income from operating portfolio per share:
Basic $0.28 $1.01
Diluted $0.28 $1.01
Net Loss per share, basic $(0.51) $(0.60)
============= ============
Net Loss per share, diluted $(0.51) $(0.60)
============= ============
Weighted average number of shares
outstanding:
Basic 48,405 47,956
Diluted 48,421 47,972
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