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Thornburg Mortgage Sees Strong Credit Quality in First Quarter
By James Comtois
According to the earnings results of Thornburg Mortgage Inc.'s first quarter, its credit quality of originated and bulk purchased loans is holding up strong.
The quality of Thornburg's originated and bulk purchased loans remains exceptional and shows no signs of deteriorating. In a recent report by FBR Research, the firm referred to the company's credit quality as a "nonevent." At March 31, 2007, its 60-plus delinquent loans and real estate-owned properties were 0.11% of its $24.1 billion portfolio of securitized and unsecuritized loans, unchanged from Dec. 31, 2006, and still significantly below the comparable industry conventional prime ARM loan delinquency ratio of 2.14%.
Additionally, the allowance for loan losses at March 31, 2007 totaled $14.8 million, or 53.9% of seriously delinquent loans, which, according to the company's management, is an appropriate allowance level given the characteristics of Thornburg's loan portfolio.
"Our approach to interest rate and credit risk management continues to allow us to report earnings above consensus earnings estimates. We anticipate that we will further benefit from the troubles in the mortgage lending industry as credit standards tighten and investment returns on new mortgage assets improve," said Garrett Thornburg, Thornburg's CEO, in a statement.
"As a result, our first-quarter earnings were solid and we sustained the dividend. As we look ahead we are increasingly confident that we may not need to make a downward adjustment in the current dividend rate in 2007. After payment of the first quarter dividend, we will have an estimated $0.11 per share of undistributed taxable income to support future quarterly dividends."
Thornburg did not realize a loan loss during the first quarter.
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