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Western Asset Mortgage Capital Corporation Declares Fourth Quarter Regular Dividend Of $0.90 Per Share And Additional Dividend Of $0.22 Per Share

Stocks in this article: WMC

PASADENA, Calif., Dec. 19, 2012 /PRNewswire/ -- Western Asset Mortgage Capital Corporation (NYSE: WMC) announced today that its Board of Directors has declared a regular quarterly cash dividend of $0.90 per share for the fourth quarter of 2012 and an additional dividend of $0.22 per share.  The Company is making the additional dividend to distribute estimated undistributed taxable income from 2012 net realized gains and other tax adjustments. These dividends are payable on January 29, 2013 to common shareholders of record as of December 31, 2012, with an ex-dividend date of December 27, 2012.

The Company also announced that its constant prepayment rate ("CPR") for the portfolio during the month of November was 3.4% on an annualized basis.

In addition, the Company announced that for the first time it recently acquired some non-Agency residential mortgage-backed securities for the purposes of seeking to assist in hedging against higher interest rates.

"We are pleased to announce a $0.05 per share increase in our regular quarterly dividend to $0.90. This reflects our expectation for Q4 core earnings performance in the portfolio, which is currently benefiting from our low prepayments," said Gavin James, Chief Executive Officer of Western Asset Mortgage Capital Corporation.  "During the quarter we also decided to add a small portion of non-Agency RMBS to our portfolio, primarily as a hedge against higher interest rates."

Stephen Fulton, Chief Investment Officer for WMC, added, "Our ongoing fine tuning of the portfolio to maximize loan attributes which lower prepayment rates has proven successful as our portfolio prepayment rate dropped to 3.4% CPR in November. We also continue to search for the most cost effective way to hedge interest rate risk. We have identified certain subsectors of the non-Agency RMBS market which we believe will hedge interest rate risk more cost effectively than either interest rate swaps or options on swaps and made some modest initial purchases, which currently represent less than 1% of our portfolio."   

There can be no assurance as to future levels of CPR, as to the amount of non-Agency mortgage backed securities the Company will hold or whether the Company will continue to hold any non-Agency mortgage backed securities and as to whether the Company's efforts to keep prepayments low or hedge interest rate risk will be successful.

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