Anworth Mortgage Asset Corporation Announces Fourth Quarter 2007 Financial Results.Fourth Quarter Highlights: * Anworth earns $9.4 million in income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the before payment of preferred dividends during quarter * Company writes down remaining investment in Belvedere Trust during quarter * Agency securities constitute 99% of portfolio at December 31, 2007 SANTA MONICA, Calif. -- For the quarter ended December 31, 2007 and based on a weighted average of 48.9 million fully diluted shares outstanding, Anworth Mortgage Asset Corporation (NYSE NYSE See: New York Stock Exchange : ANH ANH Anhang (German: Appendix; used in designating Beethoven's music) ANH A New Hope ANH A New Hope (aka Star Wars Episode 4) ANH Alliance for Natural Health ) announced today an unaudited net loss to common stockholders of $7.3 million, or $(0.15) per share, consisting of $9.4 million of income from continuing operations, $1.5 million of dividends paid to our preferred stockholders and a $15.2 million loss from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. of Belvedere Trust Mortgage Corporation, or Belvedere Trust. This $15.2 million loss consists of the remaining $7.2 million write-off of Anworth's investment in Belvedere Trust and approximately $8 million from three claims against Belvedere Trust, which it has contested, that relate to repurchase agreement Repurchase agreement An agreement with a commitment by the seller (dealer) to buy a security back from the purchaser (customer) at a specified price at a designated future date. transactions. Relative to the contested claims, we believe that there will be an increase to earnings after the dissolution of Belvedere Trust, although there can be no assurances as to the timing of such dissolution. Anworth is neither a co-party to nor a guarantor of Belvedere Trust's repurchase agreements or any claims against Belvedere Trust. Anworth's investments consist primarily of agency mortgage-backed securities Mortgage-backed securities (MSBs) Securities backed by a pool of mortgage loans. , or Agency MBS See Mb/sec. MBS - mobile broadband services . At December 31, 2007, the Agency MBS portfolio was approximately $4.7 billion and was allocated as follows: approximately 20% agency adjustable-rate mortgages; approximately 62% agency hybrid adjustable-rate mortgages; approximately 18% agency fixed-rate MBS; and less than 1% agency floating-rate collateralized mortgage obligations, or CMOs. At December 31, 2007, the Non-Agency MBS portfolio was approximately $43 million, consisting of floating-rate CMOs at a current yield of 5.11% that were acquired at par value. This portfolio is not pledged to any repurchase agreement counterparties. At December 31, 2007, the current yield on Anworth's Agency MBS portfolio was 5.84%, based on a weighted average coupon Weighted average Coupon The weighted average of the gross interest rates of mortgages underlying a pool as of the pool issue date; the balance of each mortgage is used as the weighting factor. of 5.91% divided by the average amortized cost of 101.23%. The quarter-end unamortized premium was $56 million, or 1.2% of the par value. During the quarter ended December 31, 2007, the expense of amortizing the agency securities premium (based on prepayments and scheduled payments) was $3.4 million, compared to $5.5 million during the quarter ended September 30, 2007. During the quarter ended December 31, 2007, the constant prepayment rate, or 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 , of the Agency MBS and Non-Agency MBS was 18% and the CPR of the adjustable-rate and hybrid adjustable-rate Agency MBS was 20%. For the Agency MBS and Non-Agency MBS adjustable-rate mortgage and hybrid assets, the weighted average term to the next interest rate reset date was 36 months. Relative to Anworth's Agency MBS and Non-Agency MBS portfolios at December 31, 2007, the outstanding repurchase agreement balance was $4.2 billion with an average interest rate of 4.91% and an average maturity of 49 days. After adjusting for collateralized interest rate swap 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. transactions, the average interest rate was 4.77% with an average maturity of 418 days. At December 31, 2007, Agency MBS with a fair value of $4.48 billion have been pledged under the repurchase agreements. During the quarter ended December 31, 2007 and relative to average Agency MBS 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 , interest income earned was 5.77%, amortization of premium was (0.32)% and the average 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. was 4.89%, resulting in an interest rate spread of 0.56%. At December 31, 2007, Belvedere Trust is shown as a discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. . Its assets were $38 thousand. Its liabilities were approximately $8 million, consisting of three claims related to repurchase agreement transactions against Belvedere Trust. Anworth is neither a co-party to nor a guarantor of Belvedere Trust's repurchase agreements or any claims against Belvedere Trust. Stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. available to common stockholders of Anworth at quarter end was approximately $352.5 million, or $6.15 per share. The $352.5 million equals total stockholders' equity of $401.4 million less the Series A Preferred Stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. liquidating value of $46.9 million and less the difference between the Series B Preferred Stock liquidating value of $30.1 million and the proceeds from its sale of $28.1 million. About Anworth Mortgage Asset Corporation Anworth is a mortgage real estate investment trust, which invests in agency mortgage assets including mortgage pass-through certificates, collateralized mortgage obligations and other real estate securities. Anworth generates income for distribution to shareholders primarily based on the difference between the yield on its mortgage assets and the cost of its borrowings. Safe Harbor Statement under 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 This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based upon our current expectations and speak only as of the date hereof. Our actual results may differ materially and adversely from those expressed in any forward-looking statements as a result of various factors and uncertainties, including increases in the prepayment rates on the mortgage loans securing our mortgage-backed securities, our ability to use borrowings to finance our assets, increases in default rates of the mortgage loans acquired by our mortgage loan subsidiaries, risks associated with investing in mortgage-related assets, including changes in business conditions and the general economy, our ability to maintain our qualification as a real estate investment trust for federal income tax purposes, and management's ability to manage our growth. Our Annual Report on Form 10-K, recent and forthcoming Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other SEC filings discuss some of the important risk factors that may affect our business, results of operations and financial condition. We undertake no obligation to revise or update publicly any forward-looking statements for any reason. [TABLE OMITTED] [TABLE OMITTED] |
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