EXHIBIT 99.1
[LOGO]
NEWS RELEASE
For release July 17, 2003
Contact: John T. Hillman @ 310/255-4438 or 310/255-4493
ANWORTH MORTGAGE ASSET CORPORATION
REPORTS EARNINGS OF $0.45 PER SHARE AND DIVIDEND OF $0.45 PER SHARE
FOR SECOND QUARTER 2003
SANTA MONICA, California – (July 17, 2003) – For the second quarter ended June 30, 2003 and based on a weighted average of 30,147,028 fully diluted shares outstanding, Anworth Mortgage Asset Corporation (NYSE: ANH) today reported unaudited net income of $13,572,478, or $0.45 per share.
The Company also declared a dividend of $0.45 per share. The dividend is payable on August 11, 2003 to holders of record as of the close of business on July 28, 2003 and the ex-dividend date is July 23, 2003.
Mortgage assets held at June 30, 2003 were approximately $3.4 billion and were allocated as follows: 24% Agency ARMS, 64% Agency hybrid ARMS, 11% Agency fixed-rate MBS, and 1% Agency floating-rate CMO. Approximately 72% of the assets were invested in FNMA securities with the balance invested in FHLMC and GNMA securities.
At June 30, 2003, the weighted average coupon of the mortgage assets was 4.6% and the unamortized premium was $92 million, or 2.7% of the par value of the mortgage assets. During the quarter ended June 30, 2003, the Constant Prepayment Rate (CPR) of the mortgage assets was 40%, which consists of ARMS at 33% CPR, hybrid ARMS at 45% CPR and fixed-rate MBS at 25% CPR. For the ARM and hybrid ARM assets, the weighted average term to the next interest rate reset date was 24 months.
At June 30, 2003, the outstanding repurchase agreement balance was $3.0 billion with a weighted average interest rate of 1.48% and an average maturity of 210 days.
For the quarter ended June 30, 2003, the yield on average earning assets after amortization of premium was 3.33% while the cost of funds on average borrowings was 1.59%, resulting in an interest rate spread of 1.74%.
The book value on June 30, 2003 was $368 million, or $11.21 per share, based on 32,827,641 shares outstanding on that date. The impact, however, of the $0.45 per share dividend declared on July 17, 2003 will reduce book value to approximately $10.76 per share.
Average shareholder equity for the quarter was $335 million. The return on average equity for the quarter was 4.1%, or 17.2% on an annualized compounded basis.
Commenting on the Company’s operations, Lloyd McAdams, Chairman and CEO, stated, “As residential mortgage interest rates have declined, the result has been higher refinancing rates which have produced higher premium amortization that has had a negative impact on the yield of our portfolio. In addition, lower mortgage rates result in our reinvestment of the prepaid principal in other mortgage-backed securities with lower expected yields than those being replaced. While pleased that the portfolio has continued to experience smaller increases in prepayments than the mortgage-backed securities market as a whole, we would expect to see high levels of premium amortization and lower yields in the portfolio if the current low levels of mortgage rates persist.
“Nonetheless, we are pleased with our second quarter’s overall results and continue to believe that the current market environment presents our company with opportunities to produce attractive levels of investment income.”
Mr. McAdams will host a conference call today at 5:00 PM Eastern Time, 2:00 PM Pacific Time, to discuss second quarter 2003 results.
The dial-in number for the conference call is 800-901-5231 and the passcode is 14349189. Replays of the call will be available commencing at approximately 7:00 PM Eastern Time, 4:00 PM Pacific Time, through July 21. The dial-in number for the replay is 888-286-8010 and the passcode is 33160659.
About Anworth Mortgage Asset Corporation
Anworth is a mortgage real estate investment trust (REIT) which invests in mortgage assets, including mortgage pass-through certificates, collateralized mortgage obligations, mortgage loans and other real estate securities. Anworth generates income for distribution to shareholders 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 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, 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 Forms 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.
ANWORTH MORTGAGE ASSET CORPORATION
BALANCE SHEETS
(in thousands)
June 30, 2003 | June 30, 2002 | |||||||
| (unaudited) | (audited) | |||||||
ASSETS | ||||||||
Mortgage backed securities | $ | 3,444,182 | $ | 1,686,643 | ||||
Other marketable securities | — | — | ||||||
Cash and cash equivalents | 267 | 12,924 | ||||||
Interest and dividend receivable | 13,878 | 9,116 | ||||||
Prepaid expenses and other | 674 | 44 | ||||||
| $ | 3,459,001 | $ | 1,708,727 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Liabilities | ||||||||
Reverse repurchase agreements | $ | 3,008,008 | $ | 1,449,537 | ||||
Payable for purchase of mortgage-backed securities | 70,681 | 21,560 | ||||||
Accrued interest payable | 10,848 | 4,182 | ||||||
Dividends payable | — | 6,268 | ||||||
Accrued expenses and other | 1,554 | 1,873 | ||||||
| $ | 3,091,091 | $ | 1,483,420 | |||||
Stockholders’ Equity | ||||||||
Common stock, par value $.01 per share; authorized 100,000 shares; 26,609 and 25,396 issued and 26,559 and 25,346 outstanding respectively | 328 | 229 | ||||||
Additional paid in capital | 354,339 | 227,097 | ||||||
Accumulated other comprehensive income, unrealized gain on available-for-sale securities | 6,369 | 3,440 | ||||||
Retained earnings (deficit) | 7,818 | (4,436 | ) | |||||
Unearned restricted stock | (715 | ) | (794 | ) | ||||
Treasury stock at cost (50 shares) | (229 | ) | (229 | ) | ||||
| 367,910 | 225,307 | |||||||
| $ | 3,459,001 | $ | 1,708,727 | |||||
ANWORTH MORTGAGE ASSET CORPORATION
STATEMENTS OF OPERATIONS
(in thousands, except for per share amounts)
(unaudited)
| Three months ended June 30, | ||||||||
| 2003 | 2002 | |||||||
Interest and dividend income net of amortization of premium and discount | $ | 24,370 | $ | 12,217 | ||||
Interest expense | (10,802 | ) | (5,114 | ) | ||||
Net interest income | 13,568 | 7,103 | ||||||
Gain on sales | 2,140 | 1,433 | ||||||
Expenses: | ||||||||
External base management fee | — | (192 | ) | |||||
External incentive fee | — | (1,013 | ) | |||||
Compensation and benefits | (361 | ) | (18 | ) | ||||
Incentive compensation | (1,191 | ) | (324 | ) | ||||
Cost incurred in acquiring external manager | — | (3,180 | ) | |||||
Other expenses | (583 | ) | (120 | ) | ||||
Total expenses | (2,135 | ) | (4,847 | ) | ||||
Net income | $ | 13,572 | $ | 3,689 | ||||
Basic earnings per share | $ | 0.45 | $ | 0.29 | ||||
Dividends declared per share | — | 1.00 | ||||||
Average number of shares outstanding | 29,925 | 12,733 | ||||||
Diluted earnings per share | $ | 0.45 | $ | 0.29 | ||||
Average number of diluted shares outstanding | 30,147 | 12,823 | ||||||