Q4 2004 Municipal Mortgage & Equity, LLC Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Welcome to the encore replay at the MuniMae Conference Call with Mike Falcone as the speaker occurring on March 18, 2005 at 9 o'clock a.m. Eastern time. This is the encore replay for conference I.D. 4654326.

Good morning and welcome to Municipal Mortgage and Equity LLC Conference Call to discuss the 2004 year end earnings and productions results. A related press release was issued Wednesday, March 16th. Our 2004 Year End Supplemental Financial package along with the press release are available on the Company website. We would like to remind you that the release relating to the Company's earnings and production and some companies statements may contain forward-looking statements which involve know and unknown risks, uncertainties and other factors not under the Company's control which cause actual results, performance, appeasements, or expectations of the Company to be materially different from the same as implied by these forward-looking statements. These factors include but are not limited to those details in the Company's periodic filings with the SEC. In addition to the net income as per generally accepted accounting principles or debt the Company uses cash available for distribution as a non-GAAP performance measure. A reconciliation of net income for CAD for the most recently reported fiscal year quarter is available on the Company's website at www.munimae.com . On the call today from the Company we have Michael Falcone, CEO and President, who will in turn introduce other speakers. At this time, I would like to turn the conference call over to Michael Falcone. Please go ahead sir.

MICHAEL FALCONE, PRESIDENT AND CEO, MUNICIPAL MORTGAGE & EQUITY: Thank you very much operator and good morning everyone and thank you for joining us today. We appreciate your continued interest in MuniMae.

Here with me this morning is Bill Harrison who is CFO who will speak the financial results and the leaders of our various business units Gary Mentesana, Frank Creamer and Charlie Pinckney who I will introduce as we go on and also Earl Cole who's Chief Credit Officer is on the line with us today.

MuniMae had a strong and productive year. We're pleased to report that our cash available for distribution for fiscal 2004 came in at $2.33 an increase of 9% over the $2.16 per share reported for 2003 an increase of 2.0% over the current research analysts consensus of $2.29.

Over the course of the year we've doubled the rate at which we increase our quarterly dividend and at the same time increased our retained CAD earnings to $0.47 per share or approximately $17 million in the aggregate.

Highlighting some of our accomplishments in 2004. We reorganized our company in separate profit centers for improved efficiency and accountability while simultaneously encouraging our two largest units debt and equity to develop a joint marketing program. This program quickly proved to highly effective and contributed significantly to a 68% increase in overall production in 2004.

We successfully integrated one acquisition our tax credit equity business and identified and negotiated the NAXT our recently accounted acquisition of money realty capital. Our tax credit equity group raised $1.1 billion in equity being one of only two companies to raise more than $1.0 billion of equity in the same calendar year.

We upgraded our internal controls and spent thousand of hours of management and staff time to ensure timely compliance with Section 404 of the Sarbanes-Oxley Act and we maintained out streak of 32 consecutive increases in our quarterly dividend and we achieved all this while keeping overall company leverage constant.

Our ability to deliver solid bottom line results while managing numerous projects reaching into all areas of our organization is a testament to the strength and dedication of our people. In that connection to give you a better feel for the story behind the financial results we thought you should hear the story from our business and unit leaders themselves. To that end I ask each of the leaders of our operating units to speak today to the 2004 results and at a high level to 2005 prospects for their business.

Bill Harrison our CFO will lead off with details of the financial results and key developments in the corporate group after which we will introduce the leaders of our tax credits that structured finance and investment managements groups.

After all the group heads have had a chance to speak, I will wrap things up with overall guidance for 2005 then open the call for questions. Before I turn the presentation over to our groups heads, I'd like to talk briefly about our recent acquisition of Money Realty Capital or as we now know it MMA Realty Capital which we purchased in February of this year from Axa Financial and which we have combined with our existing investment management business.

This acquisition provides us with an opportunity to build upon some very strong investor relations particularly in the financial institutions and institutional investors segments. It immediately increases our assets under management by more than 20% jumpstarts the growth of our investment management business and expands our platform beyond multi-family housing.

While we remain committed to our core business of multi-family housing we are always looking to further diversify our sources of revenues in ways that my creating value for our developer customers and our investor clients will also drive strong returns to shareholders.

Real estate development is a regional business and many of our developer customers are building more than just affordable housing in their respective markets. The acquisition of MRC allows us to provide more products to our existing developer customers further expanding the one-stop shop we have built for them.

By providing more products to our developer customers we generate more deal flow and that in turn attracts more investor clients. This creates a virtuous circle that feeds the growth of our business and allows us to be truly innovative when it comes to real estate finance. Ultimately, this benefits the shareholders. At this point, I'll turn the call over to our Chief Financial Officer, Bill Harrison to talk about outstanding year in 2004.

WILLIAM S. HARRISON, CHIEF FINANCIAL OFFICER, MUNICIPAL MORTGAGE & EQUITY: Thanks Mike. To allow time for our colleagues to talk about their business unit performance, I will try to brief in my review of the year. Additional detail can be found our annual report on Form 10-K which was filed earlier this week and in the supplemental financial information on our public website at www.munimae.com. We have recently revised our supplemental financial information package in an effort to make it more user friendly and to present selected GAAP data adjusted to eliminate the effects of 1046-R and 566 to accounting pronouncements which have limited the comparability of 2004 results to those of the prior year.

As Mike noted, MuniMae had a strong finish last year. CADS per share for the fourth quarter of 2004 was $0.63 a share which represents a 9% increase over the fourth quarter of 2003.

Fiscal '04 CAD per share of $2.33 increased by 9% over the prior year figure of 213. Our CAD payout ratio for 2004 came in at 80% as compared with 86% in 2003. Driving this ratio down, in other words, increasing our retained CAD has been an important objective as it permits the company to fund more of its growth through internally generated capital.

We reported GAAP net income per share of $0.16 per share basic and diluted for the fourth quarter of 2004 as compared with $0.29 basic and $0.28 diluted per share for the prior year quarter. For the full year GAAP earnings per share came in at $0.78 both basic and diluted as compared with $2.47 per share basic and $2.44 per share diluted for 2003.

For several years our GAAP income comparisons have been complicated by the impact of FAS-133 which is required as to record changes in the fair value of interest rate flops in current earnings. Starting in 2004 our GAAP results have been further complicated by 1046-R which is …