MuniMae profit falls but dividend is raised 25th quarter in a row

Earnings per share in 1Q drop 19%, from 62 cents to 50 cents

April 23, 2003|By William Patalon III | William Patalon III,SUN STAFF

Municipal Mortgage & Equity LLC, the Baltimore-based company better known as MuniMae, reported an 8 percent decrease in first-quarter earnings yesterday and announced its 25th consecutive quarterly dividend increase.

MuniMae reported net income of $13.9 million for the quarter that ended March 31, down from the $15.1 million earned in the first quarter of 2002. The decrease was attributed in part to the adoption of an accounting standard that required MuniMae to assess noncash gains and losses for hedging to smooth out its cash flow.

Earnings per share on a fully diluted basis were 50 cents for this year's first quarter, down 19 percent from the 62 cents earned in the year-earlier quarter. MuniMae attributed part of that decline to an increase in the number of outstanding shares.

Cash available for dividend payments - the financial metric by which the company gauges itself - rose to $17.4 million during the first quarter, an increase of 16 percent from the first three months of 2002.

MuniMae uses debt and equity to finance and invest in apartment housing.

The company said it was increasing its first-quarter dividend to 44.5 cents per common share, a 2 percent rise over the comparable quarter in 2002.

"This is our 25th consecutive quarterly dividend increase," said Mark K. Joseph, chairman and chief executive officer of MuniMae. "In an era when [dividend] yield is very important, and growing that yield is important to investors, we've been [focused on] raising the dividend."

Because MuniMae gets substantial revenue from tax-free bonds, about 85 percent of its dividend is typically free from federal taxes.

Though its current dividend yield is just over 7 percent, that tax-free feature means investors in the top tax bracket would have to find a taxable investment with a yield of 11 percent to keep the same amount of money in their pockets once their taxes are paid, Joseph said.

MuniMae shares closed at $24.26 yesterday, down 37 cents.

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