NEW YORK--(BUSINESS WIRE)--July 23, 2004--Annaly Mortgage
Management, Inc.
(NYSE: NLY) today reported net income for the quarter
ended June 30, 2004 of $63,835,000 or $0.52 basic earnings per common
share, as compared to $58,152,000 or $0.62 basic earnings per common
share for the quarter ended June 30, 2003 and $58,843,000 or $0.52
basic earnings per common share for the quarter ended March 31, 2004.
The Company was able to provide an annualized return on average
equity of 15.76% for the quarter ended June 30, 2004, as compared to
20.79% for the quarter ended June 30, 2003 and 16.59% for the quarter
ended March 31, 2004. Dividends declared for the quarter ended June
30, 2004 were $0.48 per share, as compared to $0.60 per share for the
quarter ended June 30, 2003 and $0.50 for the quarter ended March 31,
2004. The annualized dividend yield for the quarter, based on the June
30, 2004 closing price of $16.96, was 11.32%.
Michael A.J. Farrell, Chairman, Chief Executive Officer and
President of Annaly, said, "The second quarter started with a
surprisingly strong employment report and ended with the first rate
hike in four years. In between, the bond market suffered some of its
worst returns since 1980. In addition, investors in mortgage-backed
securities saw a peaking in amortization expense related to the mini
refinancing boom of the first quarter--a sequential quarterly increase
of 35.2% in our case. Even with this background, I am pleased with our
performance in the quarter, as our investment strategy has delivered
solid results. We are likely to see more volatility in the bond market
going forward as the Federal Reserve changes from its accommodative
monetary policy stance, but investors in our strategy should see the
benefits of improving mortgage market fundamentals, particularly the
decline in refinancing activity."
For the quarter ended June 30, 2004, the yield on average earning
assets was 2.94% and the cost of funds on the average repurchase
balance was 1.40%, which equates to an interest rate spread of 1.54%.
This is a 29 basis point increase over the 1.25% interest rate spread
for the quarter ended June 30, 2003 and a 14 basis point decrease over
the 1.68% interest rate spread for the quarter ended March 31, 2004.
For the quarter ended June 30, 2004, the Company's gain on sale of
Mortgage-Backed Securities was $2.1 million as compared to $20.2
million for the quarter ended June 30, 2003 and $595,000 for the
quarter ended March 31, 2004.
General and administrative expenses as a percentage of average
assets were 0.13%, 0.12%, and 0.15% for the quarters ended June 30,
2004, June 30, 2003, and March 31, 2004, respectively. In addition,
the Company's dividend efficiency ratio, calculated as general and
administrative expenses divided by dividends declared, was 9.5%, 7.4%
and 9.8% for the quarters ended June 30, 2004, June 30, 2003, and
March 31, 2004, respectively.
The Constant Prepayment Rate was 33% during the second quarter of
2004, as compared to 44% during the second quarter of 2003, and 31%
during the first quarter of 2004. The weighted average purchase price
of the portfolio was 102.4 at June 30, 2004, 102.5 at June 30, 2003
and 102.5 at March 31, 2004. The net amortization of premiums and
accretion of discounts on investment securities for the quarters ended
June 30, 2004, June 30, 2003, and March 31, 2004 was $56.1 million,
$57.6 million, and $41.5 million, respectively. Leverage at June 30,
2004 was 9.9:1, in comparison to 10.5:1 at June 30, 2003 and 8.7:1 at
March 31, 2004.
"During the quarter, the yield on the 2-year Treasury rose 111
basis points, from 1.57% to 2.68%, and the 10-year Treasury rose 75
basis points, from 3.83% to 4.58%," said Wellington Denahan-Norris,
Vice Chairman and Chief Investment Officer of Annaly. "Our investment
discipline not only served us well during this significant market
move, but it also should provide us with the foundation to take
advantage of opportunities going forward. Our portfolio is designed to
perform in a wide range of interest rate environments. For example, in
a rising rate environment, asset yields should be helped by declining
amortization expense as well as the adjustable-rate feature of
approximately 70% of our portfolio. In addition, principal
amortization and new capital can be reinvested into the higher
interest rate environment."
At June 30, 2004, June 30, 2003, and March 31, 2004, the Company
had a common stock book value of $12.07, $12.35, and $13.45,
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 30% of the Company's portfolio at June 30, 2004. The
balance of the portfolio was comprised of 58% adjustable rate
mortgages and 12% LIBOR floating rate collateralized mortgage
obligations. The Company has continued to avoid the introduction of
credit risk into its portfolio. As of June 30, 2004, 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 merger of Fixed Income Discount Advisory Company ("FIDAC"), as
approved by the shareholders on May 27, 2004, was completed on June 4,
2004. Annaly issued 2,201,080 shares, based on the December 31, 2003
closing price of $18.40. As was previously disclosed, following
completion of the transaction Annaly will continue to operate as a
self-managed and self-advised real estate investment trust, and FIDAC
will operate as Annaly's wholly-owned taxable REIT subsidiary. FIDAC
is a registered investment advisor which generally receives annual net
investment advisory fees of approximately 10 to 15 basis points of the
gross assets it manages, assists in managing or supervises. At June
30, 2004, FIDAC had under management approximately $1.7 billion in net
assets and $12.8 billion in gross assets, compared to $1.5 billion in
net assets and $13.6 billion in gross assets at December 31, 2003.
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 120,348,768 shares of
common stock outstanding.
The Company will hold the second quarter 2004 earnings conference
call on July 26, 2004 at 10:00 a.m. EST. The number to call is
1-800-915-4836. The re-play number is 1-800-428-6051 for domestic
calls and 973-709-2089 for international calls and the pass code is
367515. 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, FIDAC's clients removal of
assets FIDAC manages, FIDAC's regulatory requirements, and competition
in the investment management business. 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, 2003. 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
(dollars in thousands)
JUNE 30, 2004
(Consolidated MARCH 31,
and 2004
Unaudited) (Unaudited)
-------------------------
ASSETS
Cash and cash equivalents $4,499 $738
Mortgage-Backed Securities, at fair value 16,142,801 17,046,117
Agency Debentures, at fair value 978,994 1,033,481
Receivable for preferred stock proceeds - 102,903
Receivable for Mortgage-Backed Securities
sold - 81,200
Accrued interest receivable 74,874 71,446
Receivable for advisory fees and services 1,644 -
Intangible for customer relationships 15,613 -
Goodwill 22,905 -
Other assets 1,427 2,808
-------------------------
Total assets $17,242,757 $18,338,693
=========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Repurchase agreements $15,342,123 $14,689,300
Payable for Mortgage-Backed Securities
purchased 263,207 1,873,813
Accrued interest payable 19,959 21,299
Dividends payable 57,674 58,942
Other liabilities 3,294 4,664
Accounts payable 3,989 2,087
-------------------------
Total liabilities 15,690,246 16,650,105
-------------------------
Stockholders' Equity:
7.875% Series A Cumulative Redeemable
Preferred Stock: 4,250,000 shares
authorized, issued and outstanding 102,708 102,870
Common stock: par value $.01 per share;
500,000,000 authorized, 120,148,709,
117,866,932, 96,074,096, 95,964,915,
and 94,030,753 shares issued and
outstanding, respectively 1,201 1,179
Additional paid-in capital 1,620,666 1,578,778
Accumulated other comprehensive
income (loss) (177,489) 4,500
Retained earnings 5,425 1,261
-------------------------
Total stockholders' equity 1,552,511 1,688,588
-------------------------
Total liabilities and stockholders' equity $17,242,757 $18,338,693
=========================
SEPT. 30, JUNE 30,
DEC. 31, 2003 2003
2003 (Unaudited) (Unaudited)
------------------------------------
ASSETS
Cash and cash equivalents $247 $3,381 $304
Mortgage-Backed Securities, at
fair value 11,956,512 11,628,271 12,887,495
Agency Debentures, at fair value 978,167 976,814 1,375,980
Receivable for preferred stock
proceeds - - -
Receivable for Mortgage-Backed
Securities sold - 177,304 387,218
Accrued interest receivable 53,743 53,955 58,026
Receivable for advisory fees and
services - - -
Intangible for customer relationships - - -
Goodwill - - -
Other assets 1,617 1,233 1,104
------------------------------------
Total assets $12,990,286 $12,840,958 $14,710,127
====================================
LIABILITIES AND STOCKHOLDERS'
EQUITY
Liabilities:
Repurchase agreements $11,012,903 $11,201,897 $12,162,333
Payable for Mortgage-Backed
Securities purchased 761,115 445,148 1,306,238
Accrued interest payable 14,989 13,868 16,788
Dividends payable 45,155 26,876 56,420
Other liabilities 4,017 4,294 4,708
Accounts payable 2,887 3,147 2,202
------------------------------------
Total liabilities 11,841,066 11,695,230 13,548,689
------------------------------------
Stockholders' Equity:
7.875% Series A Cumulative
Redeemable Preferred Stock:
4,250,000 shares authorized,
issued and outstanding - - -
Common stock: par value $.01 per
share; 500,000,000 authorized,
120,148,709, 117,866,932,
96,074,096, 95,964,915, and
94,030,753 shares issued and
outstanding, respectively 961 960 940
Additional paid-in capital 1,194,159 1,192,819 1,157,092
Accumulated other comprehensive
income (loss) (47,261) (51,870) 1,190
Retained earnings 1,361 3,819 2,216
------------------------------------
Total stockholders' equity 1,149,220 1,145,728 1,161,438
------------------------------------
Total liabilities and
stockholders' equity $12,990,286 $12,840,958 $14,710,127
====================================
ANNALY MORTGAGE MANAGEMENT, INC.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)
(dollars in thousands)
For the quarters ended
June 30, March 31,
2004 2004
(Consolidated)
--------------------------
Interest income $122,234 $114,341
Interest expense 55,648 50,303
--------------------------
Net interest income 66,586 64,038
Investment advisory and service fees 1,260 -
Gain on sale of Mortgage-Backed Securities 2,126 595
General and administrative expenses 5,643 5,790
--------------------------
Net income before income taxes 64,329 58,843
Income taxes 494 -
--------------------------
Net income 63,835 58,843
Dividend on preferred stock 1,998 -
--------------------------
Net income available to common shareholders $61,837 $58,843
==========================
Net income per share available to common
shareholders:
Basic $0.52 $0.52
==========================
Diluted $0.52 $0.52
==========================
Weighted average number of shares
outstanding:
Basic 118,276,509 112,506,206
==========================
Diluted 118,489,470 112,804,001
==========================
Net income $63,835 $58,843
--------------------------
Comprehensive income (loss):
Unrealized gain (loss) on available-for-
sale securities (179,863) 52,356
Less: reclassification adjustment for net
gains included in net income (2,126) (595)
--------------------------
Other comprehensive income (loss): (181,989) 51,761
--------------------------
Comprehensive income (loss) ($118,154) $110,604
==========================
For the quarters ended
December September June
31, 2003 30, 2003 30, 2003
---------------------------------
Interest income $89,186 $66,855 $93,892
Interest expense 42,264 43,922 51,770
---------------------------------
Net interest income 46,922 22,933 42,122
Investment advisory and service fees - - -
Gain on sale of Mortgage-Backed Securities - 9,656 20,231
General and administrative expenses 4,225 4,110 4,201
---------------------------------
Net income before income taxes 42,697 28,479 58,152
Income taxes - - -
---------------------------------
Net income 42,697 28,479 58,152
Dividend on preferred stock - - -
---------------------------------
Net income available to common
shareholders $42,697 $28,479 $58,152
=================================
Net income per share available to
common shareholders:
Basic $0.44 $0.30 $0.62
=================================
Diluted $0.44 $0.30 $0.62
=================================
Weighted average number of shares
outstanding:
Basic 96,027,468 94,685,685 93,384,128
=================================
Diluted 96,232,899 95,500,486 93,588,024
=================================
Net income $42,697 $28,479 $58,152
---------------------------------
Comprehensive income (loss):
Unrealized gain (loss) on
available-for-sale securities 4,609 (43,405) (49,579)
Less: reclassification adjustment
for net gains included in net income - (9,656) (20,231)
---------------------------------
Other comprehensive income (loss): 4,609 (53,061) (69,810)
---------------------------------
Comprehensive income (loss) $47,306 ($24,582) ($11,658)
=================================
ANNALY MORTGAGE MANAGEMENT, INC.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)
(dollars in thousands)
For the six-months ended
June 30, June 30,
2004 2003
(Consolidated)
-------------------------
Interest income $236,575 $181,392
Interest expense 105,951 95,818
-------------------------
Net interest income 130,624 85,574
Investment advisory and service fees 1,260 -
Gain on sale of Mortgage-Backed Securities 2,721 31,252
General and administrative expenses 11,433 7,898
-------------------------
Net income before income taxes 123,172 108,928
Income taxes 494 -
-------------------------
Net income 122,678 108,928
Dividend on preferred stock 1,998 -
-------------------------
Net income available to common shareholders $120,680 $108,928
=========================
Net income per share available to common
shareholders:
Basic $1.05 $1.22
=========================
Diluted $1.04 $1.22
=========================
Weighted average number of shares
outstanding:
Basic 115,391,357 89,109,821
=========================
Diluted 115,638,943 89,231,272
=========================
Net income $122,678 $108,928
-------------------------
Comprehensive income (loss):
Unrealized loss on available-for-sale
securities (127,507) (43,069)
Less: reclassification adjustment for net
gains included in net income (2,721) (31,252)
-------------------------
Other comprehensive loss (130,228) (74,321)
-------------------------
Comprehensive income (loss) ($7,548) $34,607
=========================
CONTACT: Annaly Mortgage Management, Inc.
Investor Relations:
1- (888) 8Annaly
www.annaly.com
SOURCE: Annaly Mortgage Management, Inc.