NEW YORK--(BUSINESS WIRE)--July 28, 2003--Annaly Mortgage
Management, Inc. (NYSE: NLY)(the "Company")today reported earnings for
the quarter ended June 30, 2003 of $58,152,000 or $0.62 per average
share outstanding, as compared to $59,369,000 or $0.72 per average
share outstanding for the quarter ended June 30, 2002.
During the quarter the Company raised approximately $151.3 million
in net proceeds through a secondary offering of 9,300,700 shares of
common stock.
The Company provided an annualized return on average equity of
20.79% for the quarter ended June 30, 2003, as compared to 18.83% for
the quarter ended March 31, 2003 and 23.08% for the quarter ended June
30, 2002. Dividends declared for the quarter ended June 30, 2003 were
$0.60 per share, compared to $0.60 for the quarter ended March 31,
2003 and $0.68 per share for the quarter ended June 30, 2002. The
annualized dividend yield for the quarter, based on the June 30, 2003
closing price of $19.91, was 12.05%.
"As managers, our job is to create for shareholders a steady
stream of income in the form of dividends," said Michael A.J. Farrell,
Chairman, Chief Executive Officer and President of Annaly. "That
stream of income will fluctuate with the nominal level of rates and as
the yields that we earn on our assets change in relation to our cost
of funds. Investors in all markets--equities, money markets,
credit-sensitive securities--have had to adjust their return
expectations in response to the nominally low interest rate
environment and the sluggish economy, and we are no different. Our
results for the quarter reflect these market conditions, particularly
the effect of high mortgage refinancing activity. As we navigate
through these markets, we believe that our portfolio of
adjustable-rate and fixed-rate mortgage-backed securities will
continue to offer competitive returns."
For the quarter ended June 30, 2003, the yield on average earning
assets was 2.93% and the cost of funds on the average repurchase
balance was 1.68%, which equates to an interest rate spread of 1.25%.
This is a 30 basis point decrease over the 1.55% interest rate spread
for the quarter ended March 31, 2003, when the yield on average
earning assets was 3.23% and the cost of funds on the average
repurchase balance was 1.68%, and a 120 basis point decrease over the
2.45% interest rate spread for the quarter ended June 30, 2002, when
the yield on average earning assets was 4.55% and the cost of funds on
the average repurchase balance was 2.10%.
The Constant Prepayment Rate increased to 44% during the second
quarter of 2003, as compared to 41% in the first quarter of 2003 and
25% for the quarter ended June 30, 2002. The homeowners' prepayment
option makes the average term, yield and performance of a
mortgage-backed security uncertain because of the uncertainty in
timing the return of principal. In general, prepayments decrease the
yield on a security purchased at a premium. The faster prepayments
come in, the faster that premium is amortized. The weighted average
purchase price of the portfolio was 102.5 at June 30, 2003, 102.6 at
March 31, 2003, and 102.2 at June 30, 2002. "The dominant challenge
today for any mortgage-backed securities portfolio manager is
maintaining performance through these periods of extremely fast
prepayments and historically low yields," said Wellington Denahan,
Vice Chairman and Chief Investment Officer. "Prepayments have reduced
our spread income through the high levels of premium amortization, and
we expect to see these effects continue near term. Nevertheless, the
recent backup in 10 year Treasury yields from 3.50% at quarter end to
4.17% on July 24, 2003 should result in slowing refinance activity.
This slowing, along with low funding costs, should be advantageous for
the Company in the long term."
For the quarter ended June 30, 2003, the Company's gain on sale of
assets was $20.2 million as compared to $11.0 million in the quarter
ended March 31, 2003 and $1.3 million for the quarter ended June 30,
2002. Leverage at June 30, 2003 was 10.5:1, in comparison to 9.5:1 at
March 31, 2003 and 8.8:1 at June 30, 2002.
General and administrative expenses as a percent of average assets
was 0.12% for the quarters ended June 30, 2003 and March 31, 2003 and
0.13% for the quarter ended June 30, 2002. In addition, the Company's
Dividend Efficiency Ratio, calculated as general and administrative
expenses divided by dividends paid, was 7.4%, 7.3%, and 6.3% for the
quarters ended June 30, 2003, March 31, 2003, and June 30, 2002,
respectively.
At June 30, 2003, March 31, 2003, and June 30, 2002, the Company
had a book value of $12.35, $12.72, and $12.65, respectively. The
Company classifies all investment securities as "available for sale;"
therefore requiring the Company to record the entire portfolio at
market value. Fixed rate securities comprised approximately 36% of the
Company's portfolio at June 30, 2003. The balance of the portfolio was
comprised of 42% adjustable rate securities and 22% LIBOR floating
rate securities. The Company has continued to avoid the introduction
of credit risk into its portfolio. As of June 30, 2003, all of the
assets in the Company's portfolio were FNMA, GNMA, FHLMC
mortgage-backed securities, and agency debentures, which carry an
actual or implied "AAA" rating.
The Company is a Maryland corporation which owns and manages a
portfolio of mortgage-backed securities. The Company's principal
business objective is to generate net income for distribution to
stockholders from the spread between the interest income on its
mortgage-backed securities and the cost of borrowing to finance their
acquisition. The Company has elected to be taxed as a real estate
investment trust ("REIT") and currently has 94,032,753 shares of
common stock outstanding.
The Company will hold the 2nd quarter 2003 earnings conference
call on Tuesday, July 29, 2003 at 10:00 a.m. EDT. The number to call
is 1-800-915-4836. The re-play number is 1-800-428-6051 and the pass
code is 302067. There will be a web cast of the call on
www.annaly.com. If you would like to be added to the e-mail
distribution list, please visit www.annaly.com, click on E-Mail
alerts, enter your e-mail address where indicated and click the
Subscribe button.
This news release and our public documents to which we refer
contain or incorporate by reference certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements which are based on various assumptions (some of which are
beyond our control) may be identified by reference to a future period
or periods or by the use of forward-looking terminology, such as
"may," "will," "believe," "expect," "anticipate," "continue," or
similar terms or variations on those terms or the negative of those
terms. Actual results could differ materially from those set forth in
forward-looking statements due to a variety of factors, including, but
not limited to, changes in interest rates, changes in yield curve,
changes in prepayment rates, the availability of mortgage-backed
securities for purchase, the availability of financing and, if
available, the terms of any financing. For a discussion of the risks
and uncertainties which could cause actual results to differ from
those contained in the forward-looking statements, see "Risk factors"
in our Annual Report on Form 10-K for the fiscal year ended December
31, 2002. We do not undertake, and specifically disclaim any
obligation, to publicly release the result of any revisions which may
be made to any forward-looking statements to reflect the occurrence of
anticipated or unanticipated events or circumstances after the date of
such statements.
ANNALY MORTGAGE MANAGEMENT, INC.
STATEMENTS OF FINANCIAL CONDITION
JUNE 30, DECEMBER 31,
2003 2002
(Unaudited)
(dollars in thousand)
----------------------------
ASSETS
Cash and cash equivalents $304 $726
Mortgage-Backed Securities, at fair value 12,887,495 11,551,857
Agency debentures, at fair value 1,375,980 -
Receivable for Mortgage-Backed Securities
sold 387,218 55,954
Accrued interest receivable 58,026 49,707
Other assets 1,104 840
------------ ------------
Total assets $14,710,127 $11,659,084
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Repurchase agreements $12,162,333 $10,163,174
Payable for investment securities purchased 1,306,238 338,691
Accrued interest payable 16,788 14,935
Dividends payable 56,420 57,499
Other liabilities 4,708 2,812
Accounts payable 2,202 1,907
------------ ------------
Total liabilities 13,548,689 10,579,018
------------ ------------
Stockholders' Equity:
Common stock: par value $.01 per share;
500,000,000 authorized, 94,030,753 and
84,569,206 shares issued and
outstanding, respectively 940 846
Additional paid-in capital 1,157,092 1,003,200
Accumulated other comprehensive gain 1,190 75,511
Retained earnings 2,216 509
------------ ------------
Total stockholders' equity 1,161,438 1,080,066
------------ ------------
Total liabilities and stockholders' equity $14,710,127 $11,659,084
============ ============
ANNALY MORTGAGE MANAGEMENT, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
For the For the For the Six For the Six
Quarter Quarter Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
(dollars in thousands)
---------------------------------------------
INTEREST INCOME $93,892 $109,423 $181,392 $202,323
INTEREST EXPENSE 51,770 47,860 95,818 87,872
--------------------------------------------
NET INTEREST INCOME 42,122 61,563 85,574 114,451
GAIN ON SALE OF MORTGAGE-
BACKED SECURITIES 20,231 1,342 31,252 4,753
GENERAL AND ADMINISTRATIVE
EXPENSES 4,201 3,536 7,898 6,791
--------------------------------------------
NET INCOME 58,152 59,369 108,928 112,413
--------------------------------------------
OTHER COMPREHENSIVE INCOME
(LOSS):
Unrealized gain (loss)
on available-for-sale
securities (49,579) 38,123 (43,069) 33,866
Less: reclassification
adjustment for net
gains included in net
income (20,231) (1,342) (31,252) (4,753)
--------------------------------------------
Other comprehensive
gain (loss) (69,810) 36,781 (74,321) 29,113
--------------------------------------------
COMPREHENSIVE INCOME
(LOSS) $(11,658) $96,150 $34,607 $141,526
===============================================
NET INCOME PER SHARE:
Basic $0.62 $0.72 $1.22 $1.41
===============================================
Diluted $0.62 $0.71 $1.22 $1.40
===============================================
AVERAGE NUMBER OF SHARES
OUTSTANDING:
Basic 93,384,128 82,910,206 89,109,821 79,954,529
===============================================
Diluted 93,588,024 83,186,865 89,231,272 80,245,372
===============================================
CONTACT: Annaly Mortgage Management, Inc.
Investor Relations:
Kathryn Fagan, 212-696-0100
1- (888) 8Annaly
www.annaly.com
SOURCE: Annaly Mortgage Management, Inc.