Annaly Mortgage Management, Inc. Announces 1st Quarter 2003 Earnings.Business Editors NEW YORK--(BUSINESS WIRE)--April 25, 2003 Annaly Annaly (Irish Angaile) was a medieval lordship in central Ireland. Its territory roughly coincided with modern County Longford. It was associated with the O'Farrell family[1]. Mortgage Management, Inc. (NYSE NYSE See: New York Stock Exchange : NLY) today reported earnings for the quarter ended March 31, 2003 of $50,775,000 or $0.60 per average share outstanding, as compared to $50,426,000 or $0.60 per average share outstanding for the quarter ended December December: see month. 31, 2002 and $53,043,000 or $0.69 per average share outstanding for the quarter ended March 31, 2002. The Company was able to provide 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 18.83% for the quarter ended March 31, 2003, as compared to 18.63% for the quarter ended December 31, 2002 and 25.32% for the quarter ended March 31, 2002. Dividends declared for the quarter ended March 31, 2003 were $0.60 per share, compared to $0.60 for the quarter ended December 31, 2002 and $0.63 per share for the quarter ended March 31, 2002. The annualized dividend yield for the quarter, based on the March 31, 2003 closing price of $17.47, was 13.74%. For the quarter ended March 31, 2003, the yield on average earning assets Earning Assets Any income-earning asset owned by a company. Notes: These assets are generally interest-bearing accounts, bonds, and securities available for sale. See also: Asset, Asset Valuation, Earnings, Net Interest Margin was 3.23% 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 re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. balance was 1.68%, which equates to an interest rate spread of 1.55%. This is a 3 basis point decrease over the 1.58% interest rate spread for the quarter ended December 31, 2002, when the yield on average mortgage-backed securities Mortgage-backed securities (MSBs) Securities backed by a pool of mortgage loans. was 3.56% and the cost of funds on the average repurchase balance was 1.98%, and a 110 basis point decrease over the 2.65% interest rate spread for the quarter ended March 31, 2002, when the yield on average mortgage-backed securities was 4.88% and the cost of funds on the average repurchase balance was 2.23%. The Constant Prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. Rate was 41% during the first quarter of 2003, as compared to 43% in the fourth quarter of 2002 and 28% for the quarter ended March 31, 2002. Subsequent to quarter end, the Company raised approximately $151.2 million in net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). through a secondary offering of 9,300,700 shares of common stock. Commented Annaly's Chairman, Chief Executive Officer and President, Michael A.J. Farrell: "Record-low interest rates have helped the average homeowner reduce his or her borrowing costs to multi-decade lows and support our nation's economy. The resulting record-setting prepayment speeds Prepayment speed Also called speed, the estimated rate at which mortgagors pay off their loans ahead of schedule, critical in assessing the value of mortgage pass-through securities. , however, have had a continuing negative impact on the yield earned on the Company's portfolio of mortgage-backed securities. For as long as this environment continues, we will continue to see high levels of amortization. Nevertheless, the current market presents numerous opportunities and we feel confident that the new capital we have recently raised will be profitably invested for the benefit of our shareholders." The weighted average purchase price of the portfolio at March 31, 2003 and March 31, 2002 was 102.6 and 102.0, respectively. For the quarter ended March 31, 2003, the Company's gain on sale of assets was $11.0 million as compared to $3.4 million for the same quarter in the prior year. Leverage at March 31, 2003 was 9.5:1, compared to 9.4:1 at December 31, 2002 and 8.3:1 at March 31, 2002. General and administration expenses, as a percent of average assets was 0.12% and 0.14% for the quarters ended March 31, 2003 and 2002, respectively. In addition, the Company's Dividend Efficiency Ratio, calculated as general and administrative expenses divided by dividends paid, was 7.3% and 6.2% for the quarters ended March 31, 2003 and 2002, respectively. At March 31, 2003 and 2002, respectively, the Company had a book value of $12.72 and $12.17. The Company classifies all investment securities as "available for sale;" therefore requiring the Company to record the entire portfolio at market value. Fixed rate securities comprised approximately 38% of the Company's portfolio at March 31, 2003. The balance of the portfolio was comprised of 33% 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. and 29% 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. . The Company has continued to avoid the introduction of credit risk into its portfolio. As of March 31, 2003, all of the assets in the Company's portfolio were 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 , FHLMC See Federal Home Loan Mortgage Corporation. mortgage-backed securities, and FHLB FHLB Federal Home Loan Bank debentures, which carry an actual or 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. The Company is a Maryland Maryland (mâr`ələnd), one of the Middle Atlantic states of the United States. It is bounded by Delaware and the Atlantic Ocean (E), the District of Columbia (S), Virginia and West Virginia (S, W), and Pennsylvania (N). corporation which 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 cost of borrowing to finance their acquisition. The Company has elected to be taxed as a real estate investment trust ("REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). ") and currently has 93,969,451 shares of common stock outstanding. The Company will hold the first quarter 2003 earnings conference call on Monday, April 28, 2003 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 1-800-915-4836. The re-play number is 1-800-428-6051 and the pass code is 291732. There will be a web cast of the call on www.annaly.com. If you would like to be added to the e-mail distribution list, please visit www.annaly.com, click on E-Mail alerts, enter your e-mail address See Internet address. e-mail address - electronic mail address where indicated and click the Subscribe button. This news release and our public documents to which we refer contain or incorporate by reference certain 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 Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements which are based on various assumptions (some of which are beyond our control) may be identified by reference to a future period or periods or by the use of forward-looking terminology, such as "may," "will," "believe," "expect," "anticipate," "continue," or similar terms or variations on those terms or the negative of those terms. Actual results could differ materially from those set forth in forward-looking statements due to a variety of factors, including, but not limited to, changes in interest rates, changes in yield curve, changes in prepayment rates, the availability of mortgage-backed securities for purchase, the availability of financing and, if available, the terms of any financing. For a discussion of the risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see "Risk factors" in our Annual Report on 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. for the fiscal year ended December 31, 2002. We do not undertake, and specifically disclaim dis·claim v. dis·claimed, dis·claim·ing, dis·claims v.tr. 1. To deny or renounce any claim to or connection with; disown. 2. To deny the validity of; repudiate. 3. any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date of such statements.
ANNALY MORTGAGE MANAGEMENT, INC.
STATEMENTS OF FINANCIAL CONDITION
MARCH 31, DECEMBER 31,
2003 2002
(Unaudited)
(dollars in thousands)
-------------------------
ASSETS
Cash and cash equivalents $ 945 $ 726
Mortgage-Backed Securities, at fair value 11,674,910 11,551,857
Federal Home Loan Bank Debentures, at fair
value 643,160 -
Receivable for Mortgage-Backed Securities
sold 304,766 55,954
Accrued interest receivable 50,087 49,707
Other assets 873 840
------------ ------------
Total assets $12,674,741 $11,659,084
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Repurchase agreements $10,192,049 $10,163,174
Payable for Mortgage-Backed Securities
purchased 1,335,427 338,691
Accrued interest payable 15,915 14,935
Dividends payable 50,789 57,499
Other liabilities 2,816 2,812
Accounts payable 1,033 1,907
------------ ------------
Total liabilities 11,598,029 10,579,018
------------ ------------
Stockholders' Equity:
Common stock: par value $.01 per share;
500,000,000 authorized, 84,647,484 and
84,569,206 shares issued and
outstanding, respectively 846 846
Additional paid-in capital 1,004,370 1,003,200
Accumulated other comprehensive gain 71,000 75,511
Retained earnings 496 509
------------ ------------
Total stockholders' equity 1,076,712 1,080,066
------------ ------------
Total liabilities and stockholders' equity $12,674,741 $11,659,084
============ ============
ANNALY MORTGAGE MANAGEMENT, INC
STATEMENTS OF OPERATIONS
(Unaudited)
For the For the
Quarter Quarter
Ended Ended
March 31, March 31,
2003 2002
(dollars in the
thousands, except per
share data)
-----------------------
INTEREST INCOME $ 87,500 $ 92,900
INTEREST EXPENSE 44,048 40,012
----------- -----------
NET INTEREST INCOME 43,452 52,888
GAIN ON SALE OF MORTGAGE-BACKED SECURITIES 11,020 3,410
GENERAL AND ADMINISTRATIVE EXPENSES 3,697 3,255
----------- -----------
NET INCOME 50,775 53,043
----------- -----------
OTHER COMPREHENSIVE INCOME
Unrealized gain (loss) on available-for-sale
securities 6,509 (4,257)
Less: reclassification adjustment
for net gains included in net income (11,020) (3,410)
----------- -----------
Other comprehensive loss (4,511) (7,667)
----------- -----------
COMPREHENSIVE INCOME $ 46,264 $ 45,376
=========== ===========
NET INCOME PER SHARE:
Basic $ 0.60 $ 0.69
=========== ===========
Diluted $ 0.60 $ 0.69
=========== ===========
AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic 84,606,786 76,709,836
=========== ===========
Diluted 84,837,390 77,017,431
=========== ===========
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