Annaly's Earnings Reflect Higher Interest Rates
NEW YORK--(BUSINESS WIRE)--July 19, 2000--Annaly Mortgage Management, Inc. (NYSE: NLY - news) today reported earnings for the quarter ended June 30, 2000 of $3,838,955, or $0.27 per average share outstanding. For the quarter ended June 30, 1999, net income totaled $4,863,949, or $0.38 per average share outstanding. Earnings for the six months ended June 30, 2000 were $8,687,318, or $0.63 per average share outstanding, as compared to $9,182,405, or $0.72 per average share outstanding for the six months ended June 30, 1999.
For the quarter ended June 30, 2000, the yield on average assets was 6.97% and the cost of funds on the average repurchase balance was 6.30%. Whereas, 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%. The interest rate spread decreased to 0.67% for the second quarter of 2000 from 1.04% for the second quarter of 1999. The average cost of funding increased by 0.50% from the first quarter of 2000, which was 5.80%.
In this environment of rising rates, management continues to focus on attaining favorable lending rates with lines of credit with 20 high quality banks and broker-dealers. The weighted average Constant Prepayment Rate, ``CPR,'' for the second quarter increased to 11.1% from 9.6% for the first quarter of the year 2000. For the quarter ended June 30, 2000 and 1999, the Company's gain on sale of assets was $64,774 and $25,853, respectively. General and administration expenses, as a percent of average assets was 0.14% and 0.15% for the quarters ended June 30, 2000 and 1999, respectively. The annualized return on average equity was 14.00% for the quarter ended June 30, 2000 even with the substantial decline in net interest rate spread. The leverage ratio was 12:1 at June 30, 2000 and was not increased above the investment policy guidelines. Dividends declared for the quarter were $0.30 per share. The annualized dividend yield for the quarter, based on the June 30, 2000 closing price of 8 7/8, was 13.52%.
At June 30, 2000, Annaly had a book value of $7.77, which was materially unchanged from the March 31, 2000 book value of $7.84. During the second quarter, the Company raised $2,583,473 in the dividend reinvestment and share purchase plan. The Company classifies all investment securities as ``available for sale.'' Consequently, the entire portfolio is recorded at market value, which is determined by the average price provided by three independent sources. The fair value of the Company's Mortgage-Backed Securities portfolio at June 30, 2000 was $1,450,852,364. Fixed rate Mortgage-Backed Securities comprised approximately 33% of the portfolio at June 30, 2000. The balance of the portfolio is comprised of 27% Adjustable Rate Mortgages (ARMS) and 40% 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 reviewing the quarter's results, Mike Farrell, the Company's Chairman and CEO stated; ``For the past year the Company's single largest line cost, interest expense, has risen from 4.75% to 6.50%, a 1.75 basis point increase, with 75 of those basis points coming since the latter part of the first quarter of this year. The firm continues to be the low cost provider from a G&A perspective and we believe that the Company is well positioned to provide extremely competitive yields going forward. As the business cycle shows signs of slowing, high quality assets continue to provide attractive returns as we continue to generate new capital internally.'' |
