MuniMae may miss Nov. goal for filing

The Baltimore Sun

Executives with Municipal Mortgage & Equity LLC, the real estate and alternative-energy project financier, tried to reassure investors yesterday that the business is growing and to dispel the perception that it's involved in the subprime mortgage morass.

But Chief Operating Officer Charles M. Pinckney warned that the Baltimore company might not file corrected financial statements by the end of November, which had been the goal. The company hasn't filed any financial statements in the past year.

More than 90 people, including 72 consultants, are working to restate four years of earnings at the company, better known as MuniMae, while also fixing weaknesses in accounting procedures that have been uncovered.

"Although we have previously announced our intention to complete our restatement efforts in time for filing our annual report by Nov. 30, 2007, and we continue to work toward this goal, we believe that there is significant risk that we won't be able to make this date," Pinckney said.

"We can say that we are devoting as many resources as we can to getting this done as soon as we can, and we certainly expect to finish our efforts within the first two months of 2008," he added.

Pinckney, along with Chief Executive Officer Michael L. Falcone and four other top executives, spoke on a conference call to give investors a "midyear performance review," though they could not discuss earnings because of the restatement effort. They did not take questions on the call but said they would accept e-mailed questions and post the answers.

The executives reported that the company did $1.9 billion in deals in the first six months of this year, compared with $1.4 billion in the first half of 2006. Falcone said that the company's affordable-housing business declined year over year, but that other segments including the renewable energy arm have grown. He said margins across the business units have "held up."

MuniMae has been hampered not only by its accounting woes but also by an apparent misconception in the stock market that it's tied to the subprime industry, which has been reeling from a wave of loan defaults and a number of lender bankruptcies.

The company's stock price plunged 19 percent Wednesday amid concerns that problems in the subprime market are spreading. The shares rebounded yesterday after the morning conference call, rising $3.67, or 20 percent, to $21.65 on the New York Stock Exchange.

"There's clearly been a lot of trepidation in the financial markets about recent developments in the subprime mortgage markets," Falcone said. "Let me restate that the company is not engaged in subprime or any other single-family mortgage activities."

Falcone also said the company intends to continue its dividend policy. On Wednesday, it announced a distribution of 52.25 cents per share payable Aug. 22 to shareholders as of Aug. 8.

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