Capstead Mortgage Corporation Aktie
WKN: 872385 ISIN: US14067E5069
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Capstead Mortgage Corporation Announces Third Quarter 2020 Results

Mittwoch, 28.10.20 21:30
News-Schriftzug auf schwarzem Hintergrund.
Bildquelle: pixabay

DALLAS –

Capstead Mortgage Corporation (“Capstead” or the “Company”) (NYSE: CMO) today announced financial results for the quarter ended September 30, 2020.

Third Quarter 2020 Summary

  • Recognized GAAP net income of $29.1 million or $0.25 per diluted common share
  • Generated core earnings of $19.9 million or $0.16 per diluted common share, representing an annualized 8.9% return on common equity capital
  • Paid a $0.15 dividend per common share for the fourth consecutive quarter
  • Book value per common share increased $0.01 to $6.80 per common share
  • Agency-guaranteed residential adjustable-rate mortgage (ARM) portfolio ended the quarter unchanged at $8.3 billion
  • Leverage ended the quarter at 7.55 times long-term investment capital

Third Quarter Earnings and Related Discussion

Capstead reported GAAP net income of $29.1 million or $0.25 per diluted common share for the quarter ended September 30, 2020, compared to $22.7 million or $0.19 per diluted common share for the quarter ended June 30, 2020. The Company reported core earnings of $19.9 million or $0.16 per diluted common share for the quarter ended September 30, 2020. This compares to core earnings of $21.9 million or $0.18 per diluted common share for the quarter ended June 30, 2020. See the “Non-GAAP Financial Measures” section of this release for more information on core earnings.

Yields on the Company’s portfolio of agency-guaranteed residential ARM securities averaged 1.85% during the third quarter of 2020, a decrease of 48 basis points from 2.33% reported for the second quarter of 2020. Yields declined due to lower coupon interest rates on acquisitions and on existing loans that reset lower based on prevailing interest rates, as well as higher yield adjustments for investment premium amortization due to higher mortgage prepayment levels. Mortgage prepayments increased during the quarter to an average annualized constant prepayment rate (“CPR”) of 39.97%, compared to 32.89% CPR in the prior quarter. Portfolio leverage was relatively unchanged at 7.55 to one at September 30, 2020 compared to 7.49 to one at June 30, 2020.

The following table illustrates the progression of Capstead’s portfolio of residential mortgage investments for the quarter and nine months ended September 30, 2020 (dollars in thousands):

 

 

Quarter Ended
September 30, 2020

 

 

Nine Months Ended
September 30, 2020

 

Residential mortgage investments, beginning of period

 

$

8,327,900

 

 

$

11,222,182

 

Portfolio acquisitions (principal amount)

 

 

980,740

 

 

 

2,389,333

 

Investment premiums on acquisitions

 

 

40,333

 

 

 

84,902

 

Portfolio runoff (principal amount)

 

 

(1,041,845

)

 

 

(2,798,666

)

Sales of investments (basis)

 

 

 

 

 

(2,620,297

)

Investment premium amortization

 

 

(20,056

)

 

 

(56,135

)

(Decrease) increase in net unrealized gains on securities classified as available-for-sale

 

 

(12,563

)

 

 

53,190

 

Residential mortgage investments, end of period

 

$

8,274,509

 

 

$

8,274,509

 

Decrease in residential mortgage investments during the indicated periods

 

$

(53,391

)

 

$

(2,947,673

)

Rates on Capstead’s secured borrowings, after adjusting for hedging activities, averaged 42 basis points lower at 0.67% during the third quarter of 2020, compared to 1.09% for the prior quarter. Borrowing rates before hedging activities averaged 0.26% during the third quarter, also a decline of 42 basis points over the prior quarter. The Company continues to benefit from the Federal Reserve’s actions to reduce the Fed Funds rate by a total of 150 basis points during March. Secured borrowings ended the quarter at $7.64 billion.

Notional amounts of secured borrowings-related interest rate swap agreements averaged $4.02 billion during the third quarter of 2020 with fixed swap rates averaging 0.95%. Average fixed swap rates declined 43 basis points from the prior quarter as new swaps were added to hedge acquisitions and replace higher rate swaps at fixed rates of zero to three basis points for two to three years terms reflecting market expectations for a prolonged period of low short-term interest rates. The Company also entered into $500 million in 12-month secured borrowings, lowering swap hedging requirements. At September 30, 2020, the Company held $4.00 billion notional amount of secured borrowings-related interest rate swaps with fixed rates averaging 0.69%, a decrease of $600 million in notional amount and 58 basis points in rate from swaps held on June 30, 2020. The Company’s duration gap, a measure of interest rate risk, decreased from approximately five months at June 30th to four months at quarter end – see page 10 for further information.

Capstead operates a highly efficient, internally-managed investment platform, particularly compared to other mortgage REITs, and has a competitive cost structure relative to a wide variety of high yielding investment vehicles. Operating costs expressed as an annualized percentage of long-term investment capital averaged 1.29% and 1.31% for the quarter and nine months ended September 30, 2020. As an annualized percentage of total assets, operating costs averaged 0.15% and 0.14% during these periods.

Book Value per Common Share

Book value per share as of September 30, 2020 was $6.80, an increase of $0.01 for the quarter. Derivative-related increases in value totaling $0.13 were offset by $0.13 in portfolio-related declines. Capstead’s investment strategy attempts to mitigate risks to book value by focusing on investments in agency-guaranteed residential mortgage pass-through securities, which are considered to have little, if any, credit risk and are collateralized by ARM loans with interest rates that reset periodically to more current levels. Because of these characteristics, the fair value of the Company’s portfolio is expected to be less vulnerable to significant pricing declines caused by credit concerns or rising interest rates compared to leveraged portfolios containing a significant amount of non-agency-guaranteed securities or agency-guaranteed securities backed by longer-duration fixed-rate loans. Fair value is impacted by market conditions, including changes in interest rates and the availability of financing at reasonable rates and leverage levels.

Management Remarks

Commenting on current operating and market conditions, Phillip A. Reinsch, President and Chief Executive Officer, said, “Our third quarter results reflect the stability inherent in our short duration strategy. We declared and paid a $0.15 common dividend for the quarter, which we have now held steady for four quarters. We hold the distinction of being the only publicly-traded mortgage REIT to have maintained its dividend payouts and, more importantly, generated core earnings in excess of these dividends during this challenging time. Book value was stable for the quarter, up $0.01 to $6.80 per common share.

“Portfolio returns remain attractive, despite higher levels of mortgage prepayments spurred by lower prevailing mortgage interest rates, in large part due to declining borrowing costs. On a core earnings basis, the annualized return on our common equity capital was 8.9% this quarter, reflecting overall portfolio returns of approximately 10% before platform costs achieved at leverage levels of around 7.5 times our long-term investment capital. We expect to continue replacing runoff with additional investments in agency-guaranteed ARM securities in the coming quarters.

“We anticipate that mortgage prepayment levels will moderate over time as rates on mortgages underlying the portfolio are reduced by coupon resets and new acquisitions. More immediately, unhedged 30-day borrowing rates are presently less than 25 basis points and rates on related swaps held for hedging purposes continue to decline as existing swaps mature or are replaced at lower levels. The amount of leverage we deploy will be dependent upon the continued attractiveness of investment opportunities and future mortgage prepayment levels.

“For the last 20 years, Capstead has operated as a cost-effective, internally managed REIT that invests in a leveraged portfolio of relatively short duration agency-guaranteed residential ARM securities with the goal of generating attractive risk-adjusted returns over the long-term. For investors seeking risk-adjusted levered returns with a comparably higher degree of safety from interest rate and credit risk, we believe Capstead represents a compelling opportunity that is difficult to find elsewhere in the markets.”

Non-GAAP Financial Measures

Management believes the presentation of core earnings and core earnings per common share, both non-GAAP financial measures, when analyzed in conjunction with the Company’s GAAP operating results, allows investors to more effectively evaluate the Company’s performance and provides investors management’s view of the Company’s economic performance. Management also believes that presenting financing spreads on residential mortgage investments, a non-GAAP financial measure, provides important information for evaluating the performance of the Company’s portfolio, as opposed to total financing spreads, because the non-GAAP measure speaks specifically to the performance of the Company’s investment portfolio. See the “Reconciliation of GAAP Measures to Non-GAAP Measures” section of this release.

Earnings Conference Call Details

An earnings conference call and live audio webcast will be hosted Thursday, October 29, 2020 at 9:00 a.m. ET. The conference call may be accessed by dialing toll free (877) 505-6547 in the U.S., (855) 669-9657 for Canada, or (412) 902-6660 for international callers. A live webcast of the conference call can be accessed via the investor relations section of the Company’s website at www.capstead.com and an archive of the webcast will be available up to the date of our next earnings press release. An audio replay can be accessed one hour after the end of the conference call, also up to the date of our next earnings press release, by dialing toll free (877) 344-7529 in the U.S., (855) 669-9658 for Canada, or (412) 317-0088 for international callers and entering conference number 10148844.

About Capstead

Capstead is a self-managed real estate investment trust, or REIT, for federal income tax purposes. The Company earns income from investing in a leveraged portfolio of residential adjustable-rate mortgage pass-through securities, referred to as ARM securities, issued and guaranteed by government-sponsored enterprises, either Fannie Mae or Freddie Mac, or by an agency of the federal government, Ginnie Mae.

Statement Concerning Forward-looking Statements

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain the words “believe,” “anticipate,” “expect,” “estimate,” “intend,” “will be,” “will likely continue,” “will likely result,” or words or phrases of similar meaning. Actual results could differ materially from those projected in these forward-looking statements due to a variety of factors, including without limitation, fluctuations in interest rates, the availability of suitable qualifying investments, changes in mortgage prepayments, the availability and terms of financing, changes in market conditions as a result of federal corporate and individual tax law changes, changes in legislation or regulation affecting the mortgage and banking industries or Fannie Mae, Freddie Mac or Ginnie Mae securities, the availability of new investment capital, the liquidity of secondary markets and funding markets, our ability to maintain our qualification as a REIT for U.S. federal tax purposes, our ability to maintain our exemption from registration under the Investment Company Act of 1940, as amended, and other changes in general economic conditions. These and other applicable uncertainties, factors and risks are described more fully in the Company’s filings with the U.S. Securities and Exchange Commission.

Forward-looking statements speak only as of the date the statement is made and the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Accordingly, readers of this document are cautioned not to place undue reliance on any forward-looking statements included herein.

CAPSTEAD MORTGAGE CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except ratios, pledged and per share amounts)

 

 

 

 

 

 

September 30, 2020

 

 

December 31, 2019

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Residential mortgage investments ($8.06 and $10.83 billion pledged at September 30, 2020 and December 31, 2019, respectively)

 

$

8,274,509

 

 

$

11,222,182

 

Cash collateral receivable from derivative counterparties

 

 

93,329

 

 

 

65,477

 

Derivatives at fair value

 

 

 

 

 

1,471

 

Cash and cash equivalents

 

 

229,788

 

 

 

105,397

 

Receivables and other assets

 

 

141,414

 

 

 

125,474

 

 

 

$

8,739,040

 

 

$

11,520,001

 

Liabilities

 

 

 

 

 

 

 

 

Secured borrowings

 

$

7,644,830

 

 

$

10,275,413

 

Derivatives at fair value

 

 

46,529

 

 

 

29,156

 

Unsecured borrowings

 

 

98,468

 

 

 

98,392

 

Common stock dividend payable

 

 

15,158

 

 

 

14,605

 

Accounts payable and accrued expenses

 

 

20,226

 

 

 

28,702

 

 

 

 

7,825,211

 

 

 

10,446,268

 

Stockholders’ equity

 

 

 

 

 

 

 

 

Preferred stock - $0.10 par value; 100,000 shares authorized: 7.50% Cumulative Redeemable Preferred Stock, Series E, 10,329 shares issued and outstanding ($258,226 aggregate liquidation preference) at September 30, 2020 and December 31, 2019

 

 

250,946

 

 

 

250,946

 

Common stock - $0.01 par value; 250,000 shares authorized: 96,481 and 94,606 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

 

 

965

 

 

 

946

 

Paid-in capital

 

 

1,267,672

 

 

 

1,252,481

 

Accumulated deficit

 

 

(655,008

)

 

 

(444,039

)

Accumulated other comprehensive income

 

 

49,254

 

 

 

13,399

 

 

 

 

913,829

 

 

 

1,073,733

 

 

 

$

8,739,040

 

 

$

11,520,001

 

 

 

 

 

 

 

 

 

 

Long-term investment capital (consists of stockholders’ equity and unsecured borrowings) (unaudited)

 

$

1,012,297

 

 

$

1,172,125

 

Portfolio leverage (secured borrowings divided by long-term investment capital) (unaudited)

 

7.55:1

 

 

8.77:1

 

Book value per common share (based on share of common stock outstanding and calculated assuming liquidation preferences for preferred stock) (unaudited)

 

$

6.80

 

 

$

8.62

 

 
CAPSTEAD MORTGAGE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

 

 

 

Quarter Ended
September 30

 

 

Nine Months Ended
September 30

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage investments

 

$

37,592

 

 

$

77,693

 

 

$

154,953

 

 

$

246,600

 

Other

 

 

20

 

 

 

1,065

 

 

 

441

 

 

 


Quelle: Business Wire



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Capstead Mortgage Corporation Announces Third Quarter 2020 Results

DALLAS – Capstead Mortgage Corporation (“Capstead” or the “Company”) (NYSE: CMO) today announced financial results for the quarter ended September 30, 2020. Third ...weiterlesen

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