Can Thornburg Mortgage (TMA) finally be taken off the respirator? After the most turbulent quarter in the Company's 25+ year history, the second quarter results show that the business may have settled down somewhat.
Thornburg posted shocking second quarter GAAP earnings of $0.84/share versus $0.66/share a year ago. Of course, TMA's financials are no longer comparable, to, well, anything -- let alone the prior year. The Company's earnings were largely due to a $536.9 million fair value gain related to the Principal Participation Agreement (the “PPA”) and Additional Warrant Liability. TMA also picked up paper gains of $24.9 million on markups to the Senior Subordinated Loans.
Thornburg did eat a $209.6 million impairment loss on its MBS portfolio, which was partially offset by a $14.3 million net gain on the sale of ARM Assets and REO and a $23.0 million gain on the extinguishment of the company’s remaining asset-backed commercial paper debt.
Nonetheless, Thornburg is getting closer to digging out from the Override Agreement that is strangling the Company's financials. With over 2/3 of all classes of preferred stock tendered (as of now, though the numbers are a bit tight on the Class F series) and $352 million remaining in the liquidity reserve, Thornburg's heartbeat is thumping a little louder.
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