Annaly's Earnings Remain Strong.Business Editors NEW YORK--(BUSINESS WIRE)--April 27, 2000 Annaly Mortgage Management, Inc. (NYSE NYSE See: New York Stock Exchange : NLY) today reported earnings for the quarter ended March 31, 2000 of $4,848,362, or $0.35 per average share outstanding. For the quarter ended March 31, 1999, net income totaled $4,318,456, or $0.34 per average share outstanding. For the quarter ended March 31, 2000, the yield on average assets was 6.80% and the cost of funds Cost of Funds The interest rate paid on an outstanding loan. Notes: Money isn't free! Cost of funds is the cost of borrowing money. See also: Interest Rate Cost of funds Interest rate associated with borrowing money. on the average repurchase balance was 5.80%. Whereas, for the quarter ended March 31, 1999, the yield on average assets was 5.87% and the cost of funds on the average repurchase balance was 4.97%. Consequently, the interest rate spread increased to 1.00% for the first quarter of 2000 from 0.90% for the first quarter of 1999. The weighted average Constant Prepayment Rate, "CPR Cardiopulmonary Resuscitation (CPR) Definition Cardiopulmonary resuscitation (CPR) is a procedure to support and maintain breathing and circulation for a person who has stopped breathing (respiratory arrest) and/or whose heart has stopped (cardiac ," for the first quarter decreased to 9.6% from 11% for the quarter ended December 31, 1999. For the quarter ended March 31, 2000 and 1999, the Company's gain on sale of assets was $106,853 and $64,560, respectively. General and administration expenses, as a percent of average assets was 0.16% and 0.16% for the quarters ended March 31, 2000 and 1999, respectively. This equates to an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. return on average equity of 18.27% and 13.71% for the quarters ended March 31, 2000 and 1999. The leverage ratio was 12:1 at March 31, 2000. Dividends declared for the quarter were $0.35 per average share. The annualized dividend yield for the quarter, based on the March 31, 2000 closing price of $9.00, was 15.56%. At March 31, 2000, Annaly had a book value of $7.84, which was materially unchanged from the December 31, 1999 book value of $7.60. 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 Mortgage-backed securities (MSBs) Securities backed by a pool of mortgage loans. portfolio at March 31, 2000 was $1,436,388,533 and at December 31, 1999 was $1,437,792,631. Fixed rate Mortgage-Backed Securities comprised approximately 34% of the portfolio at March 31, 2000. The balance of the portfolio is comprised of 29% Adjustable Rate Mortgages This article is about the US mortgage type. For an international perspective, see Variable rate mortgage. An adjustable rate mortgage (ARM) is a mortgage loan where the interest rate on the note is periodically adjusted based on an index. (ARMS) and 37% LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). Floating Rate Collateralized Mortgage Obligations Collateralized mortgage obligation (CMO) A security backed by a pool of pass-through rates , structured so that there are several classes of bondholders with varying maturities, called tranches. (CMO CMO See: Collateralized mortgage obligation CMO See collateralized mortgage obligation (CMO). Floaters floaters /float·ers/ (flo´ters) “spots before the eyes”; deposits in the vitreous of the eye, usually moving about and probably representing fine aggregates of vitreous protein occurring as a benign degenerative change. ). The Company has continued to avoid the introduction of credit risk in its portfolio. All of the assets in the portfolio are FNMA FNMA abbr. Federal National Mortgage Association Noun 1. FNMA - a federally chartered corporation that purchases mortgages Fannie Mae, Federal National Mortgage Association , GNMA GNMA abbr. Government National Mortgage Association or FHLMC See Federal Home Loan Mortgage Corporation. securities, which carry an implied "AAA AAA: see American Automobile Association. (Triple A) A common single-cell battery used in a myriad of electronic devices of all variety. Like its double A (AA) cousin, it provides 1.5 volts of DC power. When used in series, the voltage is multiplied. " rating. No derivatives, interest rate swaps Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. , swaptions, options, currency swaps Currency Swap A swap that involves the exchange of principal and interest in one currency for the same in another currency. Notes: Currency swaps were originally done to get around the problem of exchange controls. , total rate of return swaps were acquired. All assets in the portfolio were REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). eligible assets. As evidenced in the income statement, Management continues to focus on attaining favorable lending rates and maintaining a large base of lenders. The Company maintains lines of credit with 22 high quality banks and broker-dealers. In reviewing the quarter's results, Michael A.J. Farrell, Chairman and Chief Executive Officer stated; " The first quarter results reflect an improvement in overall high quality bond liquidity after Y2K See Y2K problem and Y2K compliant. Y2K - Year 2000 . The massive rally in US Treasury debt has not yet affected the other sectors of the fixed income market. As we have pointed out to Annaly's investors for the past two years, despite the volatility in asset valuations, the ongoing reduction in government debt is a 'win-win' situation for our strategy over the long run." 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 13,899,689 shares of common stock outstanding. The Company will hold a first quarter earnings conference call Thursday, April 27, 2000 at 4:00 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. . The number to call is 1-800-388-8975 (Password: Annaly). This press release contains "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such forward-looking statements involve known and unknown risks, uncertainties of other factors, which may cause actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. For more complete information concerning factors which could affect the Company's results, see "Risk Factors" in the Company's Registration Statements and Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. .
ANNALY MORTGAGE MANAGEMENT, INC.
BALANCE SHEETS
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March 31, 2000 December 31, 1999
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ASSETS
Cash and cash equivalents $ 155,914 71,918
Mortgage-Backed Securities, 1,436,388,533 1,437,792,631
At fair value
Receivable for
Mortgage-Backed
Securities Sold - 46,402,360
Accrued interest receivable 6,769,789 6,857,683
Other assets 216,191 197,896
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TOTAL ASSETS $ 1,443,530,427 $ 1,491,322,488
========================================
LIABILITIES AND
STOCKHOLDERS' EQUITY
LIABILITIES:
Repurchase agreements 1,323,987,500 1,338,295,750
Payable for Mortgage-Backed
Securities purchased 0 38,154,012
Accrued interest payable 5,439,793 6,682,687
Dividends payable 4,867,502 4,753,461
Accounts payable 269,284 164,100
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Total liabilities 1,334,564,079 1,388,050,010
----------------------------------------
STOCKHOLDERS' EQUITY:
Common stock:
par value $.01 per share;
100,000,000 authorized;
13,899,689 and 13,581,316
shares issued and
outstanding, respectively 138,997 135,813
Additional paid-in capital 143,617,749 141,065,820
Accumulated other
comprehensive income (34,313,224) (37,468,510)
Treasury stock at cost
(109,600 shares) 903,163) (903,163)
Retained earnings 425,989 442,518
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Total stockholders' equity 108,966,348 103,272,478
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,443,530,427 $ 1,491,322,488
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ANNALY MORTGAGE MANAGEMENT, INC.
STATEMENTS OF OPERATIONS
For the Quarter For the Quarter
Ended Ended
March 31, 2000 March 31, 1999
INTEREST INCOME:
Mortgage-Backed Securities $ 24,615,767 $ 22,014,921
Money market account 1,015 20
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Total interest income 24,616,782 22,014,941
INTEREST EXPENSE:
Repurchase agreements 19,292,954 17,151,041
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NET INTEREST INCOME 5,323,828 4,863,900
GAIN ON SALE OF
MORTGAGE-BACKED SECURITIES 106,853 64,560
GENERAL AND ADMINISTRATIVE
EXPENSES 582,319 610,004
-----------------------------------
NET INCOME 4,848,362 4,318,456
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OTHER COMPREHENSIVE INCOME
Unrealized gain (loss)
on available-for-sale
securities 3,255,286 421,985
Less: reclassification
adjustment
for gains included
in net income (106,853) (64,560)
-----------------------------------
Other comprehensive loss 3,148,433 357,425
-----------------------------------
COMPREHENSIVE INCOME $ 7,996,795 $ 4,675,881
===================================
NET INCOME PER SHARE:
Basic $0.35 $0.34
===================================
Diluted $0.35 $0.33
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AVERAGE NUMBER OF
SHARES OUTSTANDING
Basic 13,660,539 12,657,884
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Diluted 13,971,112 12,952,822
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