Annaly Mortgage Management, Inc. Announces Second Quarter 1998 Results
NEW YORK, N.Y., July 24 /PRNewswire/ -- Annaly Mortgage Management, Inc. (NYSE: NLY) today reported earnings for the quarter ended June 30, 1998 of $3,387,000, or $0.27 basic earnings per average share outstanding. Taxable income was $0.29 per share for the second quarter. This is a decrease compared to earnings of $4,708,000, or $0.36 basic earnings per average share outstanding, for the quarter ended March 31, 1998. The decrease is due primarily to a decline in gains on disposition of assets from $1,427,000 for the quarter ended March 31, 1998, compared to $295,000 for the second quarter of 1998. As mentioned in the first quarter's earnings release, gains may not be recurring. The Company previously declared a dividend of $0.32 per share for the second quarter 1998. Dividends declared were from earnings and not a distribution of capital.
The Constant Prepayment Rate, "CPR," for the second quarter decreased to 20%, from the previous quarter's rate of 21%. General and administrative expenses as a percentage of average assets continued to decrease compared to previous quarters. General and administrative expenses as a percentage of average assets for the quarter ended June 30, 1998 and March 31, 1998 were 0.13% and 0.15%, respectively.
Market value of the portfolio is determined from three independent pricing sources. Quarter-end statements do not reflect internally determined pricing. Including market value adjustments for available-for-sale securities, the book value of the Company at June 30, 1998 was $10.28 per share. This is not a substantial change from the March 31, 1998 book value of $10.32 per share. The Company's mortgage-backed securities portfolio at quarter end was $1.6 billion. Fixed rate mortgage-backed securities comprised 26% of the portfolio at June 30, 1998 and 20% at March 31, 1998. The Company has continued to avoid the introduction of credit risk in its portfolio. All of the assets in the portfolio carry or have an implied "AAA" rating. Annaly was able to obtain an annualized dividend yield for the second quarter of 14.1%, based on the June 30, 1998 closing price of $9 1/16 per share, and a return on equity of 10.3%. As mentioned in the first quarter 1998 earnings release, net income per average share for the quarter ended March 31, 1998, without the recognition of gains on sale of securities, would have been $0.26 per weighted average share, which is a 10% return on equity.
Michael A.J. Farrell, Chairman and Chief Executive Officer, summarized the quarter. "We are extremely proud of our results in this difficult environment. Many of our long-time investors appreciate the consistency with which we have addressed the current investment climate. We began preparing for the disinflationary tone in the credit markets during the summer of 1997. We immediately conveyed our thoughts to our shareholders and investors. We acted prudently during the winter and early spring, cautiously deploying our capital into investments that would perform well in a flat yield curve with low interest rates. As evidenced by results in the second quarter, our book value is intact from first quarter 1998, our prepayment exposure has flattened out from the first quarter 1998, our G&A expenses continue to drop as a percentage of average assets to where we are the lowest-cost, self- advised/self-managed company in our peer group. We accomplished this without using derivatives and by adhering to our conservative, 'plain vanilla' strategy. During the second quarter, we continued to build our investment in the European origination effort, Annaly International Money Management, Inc. We understand that difficult operating conditions in our sector have caused investors to generally pause and reflect on which companies will be most affected. We believe that our results will, over time, be positively acknowledged by the markets."
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") under the Internal Revenue Code of 1986. |
