Prime Time: Thornburg Sees Quarterly Profit Rise, Says Will Beat Previous 2007 Earnings Target

For proof of how strongly segmented the mortgage banking market can be these days, look no further than Thornburg Financial — a prime lender whose business has been, frankly, overshadowed by high-flying and then crashing subprime lenders. Thornburg reported earnings yesterday that not only were up, but beat analyst estimates. And that’s not all: the company also said it will beat the high end of its 2007 earnings guidance. Reuters summarizes the second quarter’s results:

Mortgage originations for the second quarter rose 21 percent to $1.7 billion, Thornburg said in a statement. “…The credit performance of our prime quality mortgage loan portfolio remained exceptional…,” Chairman and Chief Executive officer Garrett Thornburg said. The Santa Fe, New Mexico-based company reported second-quarter net income of $83.4 million, or 66 cents a share, up from $69.7 million, or 61 cents a share, a year ago.

A 21 percent increase in originations tied to a nearly 20 percent increase in net income is a pretty good outcome, all things considered — and especially so given where most of the industry news is at right now. A big part of what’s helping the numbers, beyond the company’s focus on prime lending, is a loan portfolio that sports an average LTV of under 70 percent. With that much equity to work with, there are plenty of workout strategies — even in the current market — that can keep foreclosures and REO off the books. At the end of the second quarter, the company’s total of 60+ day delinquences and REO stood at a meager 0.21 percent of its total $24.7 billion loan portfolio.

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