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 SANTA FE, N.M., April 18 /PRNewswire/ -- Thornburg Mortgage Asset Corporation (NYSE: TMA) today reported net income of $3,592,416, or $0.31 per share for the first quarter of 1994, based on 11,748,331 shares outstanding. Earnings per share for the quarter increased by 63% as compared to earnings per share of $0.19 reported for the fourth quarter of 1993.
 Larry A. Goldstone, President of Thornburg Mortgage Asset Corporation, commented, "We continue to be pleased with the earnings growth being generated by the Company. The direction and magnitude of the earnings increase to date has been as anticipated. The Company's earnings continue to grow both because the yield continues to increase on the Company's "teaser" rate assets and because the amount of interest earning assets increased during the quarter. We expect the trend of increasing net interest income to continue over the balance of 1994, although the recent increases in short-term interest rates are expected to temporarily slow the rate earnings growth over the next several quarters.
 Net interest income for the first quarter of 1994 increased to $4,014,538 as compared to $1,930,630 for the fourth quarter of 1993. For the first quarter, the annualized return on average assets was .90%, and the annualized effective spread on the portfolio was 1.01%, versus .67% and .81% respectively for the fourth quarter of 1993. Additionally, due to the completion of the investment of the equity proceeds received in November 1993, average interest earning assets increased during the quarter to $1.6 billion, up from $950 million during the fourth quarter of 1994.
 The Company continues to reduce its cost of operations as a percentage of assets. Annualized operating expense as a percent of average assets, excluding the management incentive fee, was .11% for the first quarter of 1994, as compared to .13% for the fourth quarter of 1993. Total annualized noninterest expense for the first quarter of 1994 as a percentage of assets, including the management incentive fee, was .14%. The management incentive fee was not payable in the fourth quarter of 1994.
 The Company also reported total assets at March 31, 1994 in excess of $1.8 billion, primarily consisting of adjustable rate mortgage securities. Mr. Goldstone commented, "The credit quality and liquidity of the Company's portfolio remains excellent." Eighty-seven percent of the adjustable rate mortgage securities in the portfolio are rated AA or better by the rating agencies including approximately $850 million, or 47%, which were issued and guaranteed by an agency of the U.S. Government. Of the remainder of the
portfolio, 12% are rated A and 1% are rated BBB by the rating agencies. Mr. Goldstone went on to emphasize, "The Company owns only the most liquid types of adjustable rate mortgage securities. The Company does not own highly volatile and illiquid mortgage derivative products. We want to clearly differentiate our portfolio strategy from the much publicized problems currently being experienced by some very prominent hedge funds and other mortgage investors who invest in derivative or fixed rate mortgage products.
 The Company recently declared a $.30 per share first quarter dividend, which was better than analysts had expected. Goldstone added, "Assuming that any future interest rate increases are moderate, we expect to be able to increase the earnings per share over the balance of
1994 consistent with current analyst expectations. Dramatic increases in short-term interest rates can temporarily reduce the Company's earnings, but as the portfolio reprices to a spread over the higher interest rates, a higher level of earnings results. The magnitude of the earnings change is partially a function of how close the Company's borrowings reprice as compared to the Company's assets. The Company's portfolio of adjustable rate assets and borrowings generally need six months to completely reprice, but on average the assets will reprice in 3.1 months as compared to the borrowings, which will reprice in 2.6 months. The repricing difference between the Company's assets and borrowings is 13 days."
 Thornburg Mortgage Asset Corporation is a real estate investment trust which commenced operations on June 25, 1993. The Company's investment strategy is to acquire and manage a portfolio of adjustable rate mortgage assets and to earn income from the difference between the yield on its mortgage assets and
the cost of its borrowings, similar to other financial institutions. As a real estate investment trust, the

Company is required to pay out at least 95% of its taxable earnings each year in the form of dividends.
 At March 31, 1994, the Company had 11,748,331 common shares outstanding.
 Statement of Operations
 Three Months Ended Three Months Ended
 March 31, 1994 December 31, 1994
 Interest Income:
 Adjustable-rate mortgage
 securities $16,443,153 $8,932,421
 Cash and cash equivalents 214,172 183,896
 Total 16,657,325 9,116,317
 Interest expense from
 repurchase agreements 12,642,787 7,185,687
 Net interest income 4,014,538 1,930,630
 Gain on sale of adjustable-rate
 mortgage securities 135,652 --
 Management fees 455,005 247,933
 Other 102,769 74,768
 Total 557,774 322,701
 Net income $3,592,416 $1,607,929
 Net income per share $0.31 $0.19
 Average number of shares
 outstanding 11,748,331 8,372,683
 Dividends declared per share $0.30 $0.14
 Noninterest expense as percent
 of average assets 0.14% 0.13%
 -0- 4/18/94
 /CONTACT: Larry A. Goldstone or Richard P. Story of Thornburg Mortgage Asset Corporation, 505-989-1900/

CO: Thornburg Mortgage Asset Corporation ST: New Mexico IN: FIN SU: ERN

LP-TW -- NY057 -- 7693 04/18/94 12:30 EDT
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Publication:PR Newswire
Date:Apr 18, 1994

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