Net Income Increased by 17% Over the Prior Year
NEW YORK--(BUSINESS WIRE)--Feb. 10, 2000--Annaly Mortgage Management, Inc. (NYSE:NLY - news) today reported earnings for the year ended December 31, 1999 of $18,139,280, or $1.41 per average share outstanding, as compared to $15,488,923, or $1.22 per average share outstanding for the year ended December 31, 1998. For the quarter ended December 31, 1999, net income totaled $4,443,633, or $0.33 per average share outstanding. For the quarter ended December 31, 1998, net income totaled $3,685,797, or $0.29 per average share outstanding. Additional general and administrative expenses in the fourth quarter 1999 of $120,000, resulted in a $0.01 per share decline in earnings. The additional expenses are the result of cost associated with the incomplete secondary offering and are nonrecurring. Net income for 1999 increased 17% compared to the prior year and net income for the 4th quarter of 1999 increased 21% compared to the same quarter of the prior year.
For the year ended December 31, 1999, the yield on average assets was 6.15% and the cost of funds on the average repurchase balance was 5.17%. For the year ended December 31, 1998, the yield on average assets was 6.16% and the cost of funds on the average repurchase balance was 5.57%. The interest rate spread increased to 0.98% in 1999 from 0.59% for the prior year. For the year ended December 31, 1999, the Company's gain on sale of assets was $454,782, as compared to the prior year of $3,344,106. Income for the year ended December 31, 1999 reflects an improvement in net interest income and less dependence on gains on disposition of assets, when compared to the year ended December 31, 1998.
The weighted average Constant Prepayment Rate, ``CPR,' for the fourth quarter decreased to 11% from 18% for the previous quarter. The yield increased to 6.58% for the fourth quarter from 6.26% in the third quarter, as a result of rising market rates on a portion of the portfolio and a substantial decline in prepayment rates. The Company's cost of funds increased during the quarter to 5.61% as compared to the third quarter of 5.22%. Dividends declared for the quarter were $0.35 per average share. Dividends declared for the year were $1.38 per average share. The dividend yield for 1999, based on the December 31, 1999 closing price of $8.75, was 15.9% and for 1998, based on the December 31, 1998 closing price of $8.25, was 14.7%. For the year ended December 31, 1999, the Company's return on average equity was 15.4% as compared to 11.8% for the year ended December 31, 1998. Annaly's focus is to provide spread income for distribution to our shareholders.
The Company classifies all investment securities as ``available for sale.' Consequently, the entire portfolio is recorded at market value. At December 31, 1999, Annaly had a book value of $7.60. The fair value of the Company's Mortgage-Backed Securities portfolio at December 31, 1999 was $1,437,792,631. At December 31, 1999, the Company maintained a balanced portfolio comprised of approximately 31% Adjustable Rate Mortgages (ARMS), 34% Fixed Rate Mortgage-Backed Securities and 35% 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 summing up the year's operations, Mike Farrell, Annaly's Chairman and CEO said; `` I am proud of the exceptional earnings we generated in 1999. In what has been described as 'the worst bond market of the century``, compounded by planning Y2K liquidity and financing concerns, NLY's returns at year end outpaced the S&P 500 on a total return basis. The portfolio of assets we have created has generated strong earnings through the extremely turbulent markets of 1997, 1998 and 1999 and is well positioned for today's new environment of an inverted yield curve. As we cautioned investors at the beginning of 1999, we expect the markets to remain volatile going forward. This will be a reflection of the dialogue we started with investors over two years ago about the overall direction of interest rates and the shape of the yield curve. The reality of the strong tax revenue reducing the outstanding supply of high quality, government bonds should bode well for the value of the Company's assets.' |
