Capstead Mortgage Q4 Profit Rises, Despite Lower Interest Income

(RTTNews) - Capstead Mortgage Corp. (CMO), a self-managed real estate investment trust, or REIT, reported Wednesday a higher profit in its fourth quarter, despite a decline in interest income.

President and Chief Executive Officer Andrew Jacobs said the company expects reporting earnings in 2014 sufficient to pay dividends at or above its 2013 quarterly dividend level. The projection reflects the company's current expectations for continued favorable mortgage prepayment rates and borrowing costs.

For the fourth quarter, the company's net income available to common shareholders increased to $33.76 million or $0.35 per share from last year's $29.81 million or $0.31 per share.

Interest income was $58.51 million, lower than last year's $61.17 million. In the quarter, residential mortgage investments declined to $58.45 million from $60.95 million a year ago.

For the quarter, the company reported net interest margins related to its residential mortgage investments of $43.1 million, compared to $30.9 million for its preceding third quarter.

Yields on Capstead's residential mortgage investments averaged 1.74 percent during the fourth quarter of 2013 and financing spreads on residential mortgage investments averaged 1.25 percent.

Commenting on current operating and market conditions, Jacobs said, "Mortgage prepayment rates declined significantly this quarter to levels not seen since early in 2012, resulting in considerably lower investment premium amortization charges."

Capstead shares closed Wednesday's trading at $12.37, up $0.02 or 0.16 percent.