The company earned about $35.1 million in net income and 31 cents per diluted common share during the quarter ending Dec. 31, 2012, down from about $40 million and 35 cents per diluted common share the previous quarter. Earnings also were lower than they were during the same quarter a year ago.
President and CEO Andrew F. Jacobs said in press release that during the period the yields on the company’s portfolio faced pressure due to moderately higher prepayments and lower coupon resets that reflected recent declines in six- and 12-month London interbank offered rate indices.
In addition, he noted that the company’s borrowing costs were higher due to higher markets rates and an increase in the company’s currently-paying swap position.
However, he said he expects there will be more stability in the company’s results this year as the company 93% of the loans underlying adjustable-rate mortgage securities it has invested in have pre-2008 origination dates and related features likely to deter prepayment.
“On an overall basis, we expect mortgage prepayment levels to remain manageable in the coming quarters absent additional government intervention to lower mortgage interest rates beyond the Federal Reserve’s current bond buying program,” Jacobs said.