Citing Prepays, Anworth Estimates 3Q EPS

Anworth Mortgage Asset Corp., Santa Monica, Calif., has indicated that it expects net income for the third quarter to be in the range of $0.29 to $0.32 per share, citing the high level of home mortgage prepayment activity in recent months.The real estate investment trust's net income and dividend per share for the second quarter both stood at $0.45. Lloyd McAdams, Anworth's chairman and chief executive officer, said that based on the prepayment reports released so far in September, the mortgage REIT expects a third-quarter prepayment rate of 46% CPR. This has called for increased premium amortization on the portfolio of the mortgage backed-securities investor and will affect earnings for the third quarter. However, considering the increase in mortgage rates and the "significant decline" in the Mortgage Bankers Association of America's refinancing index for the quarter to date, Anworth said it expects refi levels to decline in the fourth quarter and early 2004. Annaly Mortgage, Capstead Mortgage, and MFA Mortgage -- three other mortgage REITs whose primary business is MBS investments -- have made similar announcements recently.