Exhibit 99.2
Anthracite Capital Reports Operating Earnings of $0.30 Per Share
and GAAP Earnings of $0.27 Per Share for the First Quarter 2005
New York - May 10, 2005 - Anthracite Capital, Inc. (NYSE: AHR) (the "Company"
or "Anthracite") today reported net income available to common stockholders
for the first quarter of 2005 of $0.27 per share versus net income to common
stockholders of $0.20 per share for the same three-month period in 2004.
Operating Earnings (defined below) for the first quarters of 2005 and 2004
were $0.30 per share and $0.28 per share, respectively. Operating Earnings for
the quarter ended March 31, 2005 include a $0.02 per share non-cash adjustment
related to an increase in expected yields on certain commercial
mortgage-backed securities ("CMBS"). Based on the $0.28 per share dividend
declared on March 10, 2005, and the May 9, 2005 closing price of $11.25,
Anthracite's annualized dividend yield is 10.0%. Table 1, provided below,
reconciles Operating Earnings per share with net income available (loss) to
common stockholders per share. All dollar amounts discussed herein are in
thousands, except per share amounts.
First Quarter Financial Results
Total interest income from commercial real estate assets rose 29% from the
quarter ended March 31, 2004; in contrast, total interest income from
residential mortgage-backed securities ("RMBS") declined 57% from the same
period. (See Table 2 below for a reconciliation of total income from
commercial real estate assets to income before the effect of the consolidation
of the commercial mortgage loan pools.) The Company's $346,230 RMBS portfolio
at March 31, 2005 represented 10% of the Company's portfolio assets. This
portfolio is expected to remain between 10% and 15% of the Company's total
portfolio assets. The portfolio consists entirely of hybrid adjustable rate
mortgages and adjustable rate securities.
The Company's weighted average cost of funds increased slightly to 5.22% at
March 31, 2005 from 5.09% at December 31, 2004. For the three months ended
March 31, 2005, hedging expenses not related to collateralized debt
obligations ("CDOs") were $2,300 ($0.04 per share), a decrease from $4,631
($0.09 per share) for the quarter ended March 31, 2004 and $2,829 ($0.05 per
share) for the quarter ended December 31, 2004. The decrease in hedging
expense is primarily attributable to the removal of interest rate swaps due to
the issuance of fixed rate liabilities for CDO III in the first quarter of
2004 and CDO HY1 in the fourth quarter of 2004. The Company's estimated
exposure at March 31, 2005 to a 50 basis point move in short-term interest
rates decreased slightly to $0.012 per share annually from $0.018 per share
annually at December 31, 2004.
Operating earnings for the first quarter of 2005 were negatively impacted by a
$218, or 36%, increase in general and administrative expense over first
quarter 2004 levels. The increase was primarily attributable to professional
fees incurred in connection with the Company's ongoing compliance with the
Sarbanes-Oxley Act.
The Company's debt to capital ratio decreased from 6.2:1 at December 31, 2004
to 6.0:1 at March 31, 2005, and the recourse debt to capital ratio decreased
slightly from 1.8:1 to 1.6:1 over the same period.
The Company's Operating Earnings for the first quarter of 2005 represent an
annualized return on the quarter's average common stock equity of 13.8%, as
compared to 16.2% for the first quarter of 2004 and 13.6% for the quarter
ended December 31, 2004. The net interest margin of 3.2% for the first quarter
of 2005 increased slightly from 3.1% for the fourth quarter of 2004.
Commercial Real Estate Credit Risk
The Company's primary focus is to invest in a diverse portfolio of commercial
real estate loans and CMBS. The majority of these investments take the form of
CMBS that are collateralized by pools of underlying mortgage loans. The cash
flows the Company receives from its CMBS portfolio are dependent upon the
credit performance of the underlying mortgage loans. The Company assumes a
certain amount of losses will occur in the underlying mortgage loan pools and
calculates interest income net of these assumed losses. The Company's
objective is to maximize the spread between the loss-adjusted income and the
cost of financing. Credit performance and the cost of financing the Company's
portfolio are the most important factors affecting investment returns.
Controlling Class CMBS Investments
The Company considers CMBS securities where it maintains the right to control
the foreclosure/workout process on the underlying loans as controlling class
CMBS ("Controlling Class CMBS"). The Company owns 16 Controlling Class CMBS
transactions as of March 31, 2005. However, the non-rated tranches of ten of
the 16 transactions are included in CDO HY1. The unrealized gain on
Controlling Class CMBS at March 31, 2005 was $20,761, as compared to an
unrealized gain of $16,881 at December 31, 2004. The increase in the
unrealized gain is primarily attributable to tighter CMBS credit spreads
during the quarter.
Delinquencies of 30 days or more as a percent of current loan balances were
1.28% at the end of the first quarter of 2005, compared with 1.01% at the end
of the fourth quarter of 2004. With the disposition of seven loans during the
first quarter of 2005, the weighted average loss severity experienced for the
1998 and 1999 Controlling Class securities decreased from 30.9% at December
31, 2004 to 25.7% at March 31, 2005. No losses have been realized for those
Controlling Class securities with vintages from 2001 through 2004 and the
Company does not own any 2000 vintage Controlling Class securities.
Commercial Real Estate Securities
During the first quarter of 2005, the Company purchased $15,073 of commercial
real estate securities. The average yields on the Company's commercial real
estate securities for the first quarter of 2005 and 2004, respectively, were
as follows:
March 31,
2005 2004
----------- -------
Investment grade commercial real estate securities 6.7% 6.3%
Non-investment grade CMBS securities 10.6% 9.7%
All commercial real estate securities 8.7% 8.1%
The average cost of financing the commercial real estate securities portfolio
during the first quarter of 2005 was 5.3%, compared to 5.1% for the first
quarter of 2004.
Net interest income and realized gains from the commercial real estate
securities portfolio for the quarters ended March 31, 2005 and 2004,
respectively, are as follows:
For the quarter ended
March 31,
2005 2004
--------------------------------
Interest income $31,701 $29,185
Interest expense* (18,333) (13,194)
--------------------------------
Net interest income 13,368 15,991
--------------------------------
Realized gains 50 2,866
--------------------------------
Net interest income and realized gains/losses from $13,418 $18,857
commercial real estate securities
================================
*Including hedges in the Company's CDOs.
Commercial Real Estate Loans
During the quarter ended March 31, 2005, the Company experienced repayments of
$25,361 related to commercial real estate loans. The carrying value and
average yields on the Company's commercial real estate loans, exclusive of the
Company's investments in Carbon Capital, Inc. and Carbon Capital II, Inc.
(collectively, the "Carbon Capital Funds"), as of March 31, 2005 were as
follows:
Average Average
Spread to Spread to
Carrying Average 1-month USD 3-month GBP
Value Yield LIBOR LIBOR
---------------------------------------------------------------------
Fixed Rate $89,132 9.71%
Floating Rate 127,786 5.25%
Floating Rate 19,748 6.00%
------------------
$236,666
==================
For the three months ended March 31, 2005 and 2004, respectively, the total
cost of borrowings secured by loan assets was 3.7% and 2.9%. The Company has
three committed warehouse lines that can be used to finance these commercial
loan assets. The Company's investments in the Carbon Capital Funds are
included in commercial real estate loans. The annualized yield on the
Company's investments in the Carbon Capital Funds was 17.5% for the quarter
ended March 31, 2005. The Company's investments in the Carbon Capital Funds as
of March 31, 2005 were $59,121 as compared to $56,812 as of December 31, 2004.
Net interest income from the commercial real estate loan portfolio for the
quarters ended March 31, 2005 and 2004, respectively, is as follows:
For the quarter ended March 31,
2005 2004
--------------------------------
Interest income $8,239 $ 3,074
Interest expense (1,335) (148)
--------------------------------
Net interest income from commercial real estate $6,904 $ 2,926
loans
================================
Reconciliation of Operating Earnings to Net Income Available (Loss) to Common
Stockholders (Table 1)
The Company considers its Operating Earnings to be net interest income after
operating expenses and preferred dividends but before realized and unrealized
gains and losses, hedge ineffectiveness, incentive fees, and foreign currency
loss. The Company believes Operating Earnings to be an effective indicator of
the Company's profitability and financial performance over time. Operating
Earnings can and will fluctuate over time based on changes in asset levels,
funding rates, available reinvestment rates, and expected losses on credit
sensitive positions. The table below reconciles net income (loss) per common
share with Operating Earnings per common share:
Three Months Ended
-----------------------------
03/31/05 03/31/04
-----------------------------
Operating earnings per share $0.30 $0.28
Realized loss - (0.09)
Unrealized gain (loss)* (0.03) 0.03
Foreign currency loss & hedge
ineffectiveness - (0.02)
Loss on impairment of asset - -
-----------------------------
Net Income available to common
stockholders per share $0.27 $0.20
=============================
*Includes hedges
Reconciliation of Total Income from Commercial Real Estate Assets to Income
Excluding the Consolidation of Commercial Mortgage Loan Pools (Table 2)
The chart below summarizes the Company's interest income from commercial real
estate assets before the effect of the consolidation of the commercial
mortgage loan pools for the three months ended March 31, 2005 and 2004,
respectively. The Company believes interest income before the effect of the
consolidation of the commercial mortgage loan pools better reflects interest
earned on the Company's commercial real estate assets.
Three Months Ended
March 31,
---------------------------
2005 2004
---------------------------
Income from:
Commercial real estate securities $32,631 $29,185
Commercial mortgage loan pools 13,552 -
Commercial real estate loans 8,239 3,074
---------------------------
Total income from commercial real estate assets 54,422 32,259
---------------------------
Interest expense related to the consolidation of
commercial mortgage loan pools (12,777) -
---------------------------
Total income from commercial real estate assets
excluding the consolidation of commercial mortgage loan
pools $41,645 $32,259
===========================
Dividend Reinvestment Plan
If you are a participant in the Company's Dividend Reinvestment and Stock
Purchase Plan (the "Plan"), please note that, as previously announced, the
dividend reinvestment portion of the Plan has been reinstated for all dividend
payments made after August 2, 2004, and for all future dividend payment dates,
with a discount of 2%. The optional cash purchase portion of the Plan remains
suspended; however, it may be resumed at any time. The Company appreciates
your continued support.
To request a prospectus and receive enrollment materials or to ask questions
about the Plan, interested investors and stockholders may contact the
Company's transfer agent, American Stock Transfer & Trust Company, at
1-877-248-6416, or Investor Relations, Anthracite Capital, Inc., at
212-810-3333. The Company's website address is www.anthracitecapital.com.
About Anthracite
Anthracite Capital, Inc. is a specialty finance company focused on investments
in high yield commercial 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), one of the largest
publicly traded investment management firms in the United States with
approximately $391.3 billion in global assets under management as of March 31,
2005. BlackRock Realty Advisors, Inc., another subsidiary of BlackRock,
provides real estate equity and other real estate-related products and
services in a variety of strategies to meet the needs of institutional
investors. BlackRock is a member of The PNC Financial Services Group, Inc.
("PNC") (NYSE:PNC), a diversified financial services organization. Through its
affiliates, PNC originates commercial, multifamily and residential real estate
loans, and services $104.7 billion in commercial mortgage loans for third
parties through its Midland Loan Services, Inc. subsidiary as of March 31,
2005.
Forward Looking Statements
This press release may contain forward-looking statements within the meaning
of the Private Securities Litigation Reform Act with respect to future
financial or business performance, strategies or expectations. Forward-looking
statements are typically identified by words or phrases such as "trend,"
"potential," "opportunity," "pipeline," "believe," "comfortable," "expect,"
"anticipate," "current," "intention," "estimate," "position," "assume,"
"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 and divestitures;
(7) the unfavorable resolution of legal proceedings; (8) the extent and timing
of any share repurchases; (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 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; (12) the ability of Anthracite's
manager to attract and retain highly talented professionals; (13) fluctuations
in foreign currency exchange rates; and (14) the impact of changes to tax
legislation and, generally, the tax position of the Company.
Anthracite's Annual Report on Form 10-K for the year ended December 31, 2004
and Anthracite's subsequent reports filed with the SEC, accessible on the
SEC's website at www.sec.gov, identify additional factors that can affect
forward-looking statements.
To learn more about Anthracite, visit our website at
www.anthracitecapital.com. The information contained on the Company's website
is not a part of this press release.
Anthracite Capital, Inc. and Subsidiaries
Consolidated Statements of Financial Condition (Unaudited)
(in thousands, except per share data)
- -------------------------------------------------------------------------------------------------------------------------------
March 31, 2005 December 31, 2004
ASSETS
Cash and cash equivalents $22,305 $23,755
Restricted cash equivalents 17,100 19,680
Residential mortgage-backed securities 346,230 372,071
------------ --------------
Cash and RMBS 385,635 415,506
Commercial mortgage loan pools 1,307,035 1,312,045
Commercial real estate securities 1,624,007 1,628,519
Commercial real estate loans 296,151 325,350
-------------- -------------
Total commercial real estate 3,227,193 3,265,914
Other assets 60,499 47,714
-------------- -------------
Total Assets $3,673,327 $3,729,134
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Short term borrowings:
Secured by pledge of residential mortgage-backed securities $328,882 $356,451
Secured by pledge of commercial real estate securities 301,747 305,526
Secured by pledge of commercial mortgage loan pools 773 773
Secured by pledge of commercial real estate loans 121,549 141,601
------------ --------------
Total short term borrowings 752,951 804,351
Long term borrowings:
Collateralized debt obligations 1,067,764 1,067,967
Secured by pledge of commercial mortgage loan pools 1,288,690 1,294,058
------------ --------------
Total long term borrowings 2,356,454 2,362,025
-------------- -------------
Total borrowings 3,109,405 3,166,376
Payable for investments purchased 9,072 -
Distributions payable 15,821 15,819
Other liabilities 21,065 33,201
-------------- -------------
Total Liabilities 3,155,363 3,215,396
-------------- -------------
Stockholders' Equity:
Common Stock, par value $0.001 per share; 400,000 shares authorized;
53,297 shares issued and outstanding in 2005; and
53,289 shares issued and outstanding in 2004 53 53
9.375% Series C Preferred Stock, liquidation preference
$57,500 in 2005 and 2004 55,435 55,435
Additional paid-in capital 579,010 578,919
Distributions in excess of earnings (134,631) (134,075)
Accumulated other comprehensive income 18,097 13,406
-------------- -------------
Total Stockholders' Equity 517,964 513,738
-------------- -------------
Total Liabilities and Stockholders' Equity $3,673,327 $3,729,134
============== =============
Anthracite Capital, Inc.
Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
- ------------------------------------------------------------------------------------------------------------------------
For the Three Months Ended March 31,
-------------------------------------------------------
2005 2004
-------------------------------------------------------
Operating Portfolio
Income:
Commercial real estate securities $32,631 $29,185
Commercial mortgage loan pools 13,552 -
Commercial real estate loans 8,239 3,074
Residential mortgage-backed securities 2,880 6,717
Cash and cash equivalents 236 88
-------------------------------------------------------
Total income 57,538 39,064
-------------------------------------------------------
Expenses:
Interest expense:
Collateralized debt obligations 15,747 11,167
Commercial real estate securities 2,586 2,027
Commercial mortgage loan pools 12,780 -
Commercial real estate loans 1,335 148
Residential mortgage-backed securities 2,129 1,927
Hedging expense 2,300 4,631
General and administrative 820 602
Management fee 2,579 2,130
-------------------------------------------------------
Total expenses 40,276 22,632
-------------------------------------------------------
Income from the Operating Portfolio 17,262 16,432
-------------------------------------------------------
Other gain (loss):
Realized loss (87) (4,723)
Unrealized gain (loss) (1,393) 1,553
Foreign currency loss (168) -
Hedge ineffectiveness 261 (973)
Loss on impairment of asset (159) -
-------------------------------------------------------
Total other loss (1,546) (4,143)
-------------------------------------------------------
Net income 15,716 12,289
-------------------------------------------------------
Dividends on preferred stock 1,348 2,446
-------------------------------------------------------
Net income available to Common Stockholders $14,368 $ 9,843
=======================================================
Operating Earnings:
Income from the operating portfolio $17,262 $16,432
Dividends on preferred stock (1,348) (2,446)
-------------------------------------------------------
Net operating earnings $15,914 $13,986
=======================================================
Operating Earnings available to Common Stockholders per share:
Basic $0.30 $0.28
Diluted $0.30 $0.28
Net Income available to Common Stockholders per share, basic $0.27 $0.20
Net Income available to Common Stockholders per share, diluted $0.27 $0.20
Weighted average number of shares outstanding:
Basic 53,294 49,837
Diluted 53,303 49,846