Annaly Announces Increased Earnings
NEW YORK--(BUSINESS WIRE)--July 22, 1999--Annaly Mortgage
Management, Inc. (NYSE: NLY) today reported earnings for the quarter
ended June 30, 1999 of $4,863,949, or $0.38 per average share
outstanding. For the quarter ended June 30, 1998, net income totaled
$3,386,530, or $0.27 per average share outstanding. Earnings for the
six months ended June 30, 1999 were $9,182,405, or $0.72 per average
share outstanding, as compared to $8,094,680, or $0.64 per average
share outstanding for the six months ended June 30, 1998.
For the quarter ended June 30, 1999, the yield on average assets
was 5.95% and the cost of funds on the average repurchase balance was
4.91%. Whereas, for the quarter ended June 30, 1998, the yield on
average assets was 6.13% and the cost of funds on the average
repurchase balance was 5.60%. Consequently, the interest rate spread
increased to 1.04% for the second quarter of 1999 from 0.53% for the
second quarter of 1998. The interest rate spread has increased for the
second quarter of 1999 over the first quarter's rate spread of 0.90%.
The weighted average Constant Prepayment Rate, "CPR," for the second
quarter decreased to 21% from 23% for the quarter ended March 31,
1999. For the quarter ended June 30, 1999 and 1998, the Company's gain
on sale of assets was $25,853 and $295,875, respectively. Income for
the second quarter of 1999 reflects an improvement in net interest
income and less dependence on gains on disposition of assets, when
compared to the second quarter of 1998. Net interest income increased
because of lower funding costs for the period. This increase was
partially offset by lower yields on assets. General and administration
expenses, as a percent of average assets was 0.15% and 0.13% for the
quarters ended June 30, 1999 and 1998, respectively. The leverage
ratio was 11.8:1 at June 30, 1999. Annaly has maintained its optimal
leverage range of 10:1 to 12:1. Dividends declared for the quarter
were $0.35 per average share. The annualized dividend yield for the
quarter, based on the June 30, 1999 closing price of $11.25, was
12.44%.
At June 30, 1999, Annaly had a book value of $8.95, which was a
decline from the March 31, 1999 book value of $9.97. The Company
classifies all investment securities as "available for sale."
Consequently, the entire portfolio is recorded at market value. The
fair value of the Company's Mortgage-Backed Securities portfolio at
June 30, 1999 was $1,474,103,767. Even with a decline in book value,
Annaly continues to provide extremely positive financial results.
For the quarter ended June 30, 1999, the Company's annualized
return on average equity was 16.20% as compared to 10.31% for the
quarter ended June 30, 1998. As we have stated previously, Annaly has
the intention to buy and hold assets. Our primary focus is to provide
spread income for distribution to our shareholders.
Fixed rate Mortgage-Backed Securities comprised approximately 35%
of the portfolio at June 30, 1999. The balance of the portfolio is
comprised of 42% Adjustable Rate Mortgages (ARMS) and 23% LIBOR
Floating Rate Collateralized Mortgage Obligations (CMO Floaters). The
Company has continued to avoid the introduction of credit risk in its
portfolio. All of the assets in the portfolio are FNMA, GNMA or FHLMC
securities, which carry an implied "AAA" rating. No derivatives,
interest rate swaps, swaptions, options, currency swaps, total rate of
return swaps were acquired. All assets in the portfolio were REIT
eligible assets.
In commenting on the quarter's results, Mike Farrell, Chairman
and CEO of Annaly said, "I am extremely proud of Annaly's exceptional
operating results during this very volatile interest rate period.
Since its inception in February 1997, the Company has created a
strong, reliable earnings stream for its investors. As compared to the
second quarter of 1998 our earnings increased by 40%, from $0.27 to
$0.38 per average share. Our operating margins for the second quarter
almost doubled when compared to second quarter 1998 levels. The
current operating environment continues to be very favorable as
compared to the prior two and a half years. Our acquisition policies,
when reflected against this environment, demonstrate a very attractive
return on equity profile across almost all sectors of the mortgage
market. Investors familiar with our Company's conservative nature will
recall that we mark all of our assets and liabilities to market every
day. This creates a snapshot of our portfolio at any given time, and
in times of extreme volatility will create a volatile book valuation.
As noted in this release prepayments, which have been a drain on
earnings in the past, continue to slow. This is a direct result of the
massive 100 basis point increase in yields since the beginning of the
year. We do not believe that the full positive impact of this slowing
is fully reflected yet in the pricing valuation of many high quality,
premium assets. As the low cost provider of this strategy, we believe
we continue to be well positioned to take advantage of any weakness in
the sector."
Annaly Mortgage Management, Inc. a Maryland corporation 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 costs of borrowing to
finance its acquisition of Mortgage-Backed Securities. The Company has
elected to be taxed as a real estate investment trust (REIT) and
currently has 12,697,548 shares of common stock outstanding.
The Company will hold a second quarter earnings conference call
Friday, July 23, 1999 at 3:00 p.m. EST. The number to call is
1-800-210-5592 (REF: Annaly Mortgage Management - 2nd Quarter Earnings
Call) |
