Magazine article American Banker

Thornburg Sees Return to Profit, Stays 'Cautious'

Magazine article American Banker

Thornburg Sees Return to Profit, Stays 'Cautious'

Article excerpt

Just four months ago, the jumbo lender Thornburg Mortgage Inc. was caught in a credit squeeze, and its president, Larry Goldstone, had to go on television to reassure investors that it did not intend to file for bankruptcy protection.

On Tuesday the Santa Fe, N.M., real estate investment trust provided the strongest evidence yet that it is well on the road to recovery.

Thornburg's board reinstated its dividend - albeit at about one-third the payout it had made to shareholders in the second quarter - and Mr. Goldstone said the company would return to profitability this quarter.

The company also said Tuesday that it had promoted him to chief executive, taking over duties from Garrett Thornburg, who remains chairman.

"We anticipate being profitable again in the fourth quarter," Mr. Goldstone said on CNBC Tuesday morning, declining to make a specific forecast.

"All of our loans are performing as expected, our delinquency rate is well below industry averages, and our credit losses are minuscule," he said.

However, in the press release announcing the dividend reinstatement, Mr. Goldstone said Thornburg "remains cautious in its near-term outlook for financing high-quality mortgage assets."

Bose George, an analyst at KBW Inc.'s Keefe, Bruyette & Woods Inc., said restoring the dividend was more an indication of Thornburg's outlook for 2008 than of its fourth-quarter performance. "This is what their investor base wanted to see, so they're positioning themselves better for 2008," he said.

"It is not surprising" that Thornburg would be back in the black this quarter after weathering a credit crunch and being forced to sell assets at steep discounts, Mr. George said.

Thornburg raised $500 million in a convertible preferred offering on Aug. 30 to improve its liquidity.

"The main problem of liquidity is now under control," Mr. …

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