Exhibit 99.1
Annaly Mortgage Management, Inc.
Announces 4th Quarter and Year End 2003 Earnings
NEW YORK--(BUSINESS WIRE)--Feb. 6, 2004--Annaly Mortgage
Management, Inc. (NYSE: NLY) today reported earnings for the quarter
ended December 31, 2003 of $42,697,000 or $0.44 per average share
outstanding, as compared to $50,426,000 or $0.60 per average share
outstanding for the quarter ended December 31, 2002. Earnings for the
year ended December 31, 2003 were $180,103,000 or $1.95 per average
share outstanding, as compared to $219,407,000 or $2.68 per average
share outstanding for the year ended December 31, 2002.
The Company was able to provide an annualized return on average
equity of 14.88% for the quarter ended December 31, 2003, as compared
to 18.63% for the quarter ended December 31, 2002. The return on
average equity for the year ended December 31, 2003 was 16.04%, as
compared to 22.44% for the previous year. Dividends declared for the
quarter ended December 31, 2003 were $0.47 per share, compared to
$0.28 for the quarter ended September 30, 2003 and $0.68 per share for
the quarter ended December 31, 2002. Dividends declared for 2003 were
$1.95, compared to $2.67 for 2002. The annualized dividend yield for
the quarter, based on the December 31, 2003 closing price of $18.40,
was 10.22%.
"The improving fundamentals in the mortgage market--most notably
the substantial reduction in prepayment speeds and premium
amortization--enabled us to increase fourth quarter earnings per share
by 47% and net interest income by 105% over the prior quarter," said
Michael A.J. Farrell, Chairman, Chief Executive Officer and President
of Annaly Mortgage Management. "The return to more hospitable
operating conditions notwithstanding, the macroeconomic picture
remains cloudy, nominal interest rates are at generational lows and
refinancing activity, while down substantially from last spring and
summer, is still at historically high levels. We remain vigilant for
continued volatility in the markets."
For the quarter ended December 31, 2003, the yield on average
earning assets was 3.02% and the cost of funds on the average
repurchase balance was 1.50%, which equates to an interest rate spread
of 1.52%. This is an 83 basis point increase over the 0.69% interest
rate spread for the quarter ended September 30, 2003, and a 6 basis
point decrease over the 1.58% interest rate spread for the quarter
ended December 31, 2002. For the quarter ended September 30, 2003, the
yield on average earning assets was 2.13% and the cost of funds on the
average repurchase balance was 1.44%, and for the quarter ended
December 31, 2002 the yield on average earning assets was 3.56% and
the cost of funds on the average repurchase balance was 1.98%. For the
year ended December 31, 2003, the yield on average earning assets was
2.81% and the cost of funds on the average repurchase balance was
1.58%. For the year ended December 31, 2002, the yield on average
earning assets was 4.22% and the cost of funds on the average
repurchase balance was 2.10%. The interest rate spread decreased 89
basis points to 1.23% in 2003 from 2.12% for the prior year.
The Constant Prepayment Rate decreased to 37% during the quarter
ended December 31, 2003, as compared to 48% in the third quarter of
2003 and 43% for the quarter ended December 31, 2002. The Constant
Prepayment Rate increased to 42% for the year ended December 31, 2003,
as compared to 33% for the year ended December 31, 2002. The
homeowners' prepayment option makes the average term, yield and
performance of a mortgage-backed security uncertain because of the
uncertainty in timing the return of principal. In general, an increase
in amortization will decrease the total yield on a bond purchased at a
premium, because over the life of the bond that premium has to be
amortized. Conversely, a decrease in amortization will increase the
total yield on a bond purchased at a premium. The total amount of
amortization for the quarters ended December 31, 2003, September 30,
2003, and December 31, 2002 were $38,390,000, $72,047,000, and
$40,281,000, respectively. The total amortization for the year ended
December 31, 2003 was $216,570,000 and for the year ended December 31,
2002 was $106,198,000. The weighted average purchase price of the
portfolio was 102.5 at December 31, 2003, 102.6 at September 30, 2003,
and 102.6 at December 31, 2002. Leverage at December 31, 2003 was
9.6:1, in comparison to 9.8:1 at September 30, 2003 and 9.4:1 at
December 31, 2002.
Commenting on the portfolio, Wellington Denahan, Vice Chairman and
Chief Investment Officer, said, "The MBS market has begun to reflect
the changing mortgage landscape. The decline in refinancing activity
has moderated the effect of prepayments on the portfolio, resulting in
improved yields. The CPR fell 11 percentage points from the third
quarter to the fourth quarter, while the average yield on securities
rose 89 basis points. We have also seen better investment
opportunities due to the change in market fundamentals. Going forward,
further declines in CPR will continue to help yields, but the low
nominal level of rates will remain an issue."
For the quarter ended December 31, 2003, the Company did not
realize gains, as compared to $9.7 million in gains for the quarter
ended September 30, 2003 and $11.6 million in gains for the quarter
ended December 31, 2002. For the year ended December 31, 2003, the
Company's gain on sale of assets was $40.9 million as compared to the
prior year of $21.1 million.
General and administrative expenses, as a percent of average
assets was 0.13% for the quarter ended December 31, 2003, 0.12% for
the quarter ended September 30, 2003 and 0.13% for the quarter ended
December 31, 2002. General and administrative expenses, as a percent
of average assets was 0.13% for the years ended December 31, 2003 and
2002. In addition, the Company's Dividend Efficiency Ratio, calculated
as general and administrative expenses divided by dividends paid, was
9.4%, 15.3% and 6.8% for the quarters ended December 31, 2003,
September 30, 2003, and December 31, 2002, respectively.
"With our low expense ratio," said Mr. Farrell, "the increase in
asset yield that comes about from slower prepayment speeds essentially
drops to the bottom line. Our exercise of prudent portfolio management
during the challenges of 2003 has left us well-positioned to take
advantage of investment opportunities going forward."
At December 31, 2003, September 30, 2003 and December 31, 2002,
respectively, the Company had a book value of $11.96, $11.94 and
$12.77. The Company classifies all investment securities as "available
for sale;" which requires the Company to record the entire portfolio
at market value. Fixed rate securities comprised approximately 27% of
the Company's portfolio at December 31, 2003. The balance of the
portfolio was comprised of 56% adjustable rate mortgages and 17% LIBOR
floating rate collateralized mortgage obligations. The Company has
continued to avoid the introduction of credit risk into its portfolio.
As of December 31, 2003, all of the assets in the Company's portfolio
were FNMA, GNMA, FHLMC mortgage-backed securities, and agency
debentures, which carry an actual or implied "AAA" rating.
Subsequent to year end, the Company announced that it signed a
definitive merger agreement to acquire Fixed Income Discount Advisory
Company upon shareholder approval, and the Company raised
approximately $363.5 million in net proceeds through a follow-on
offering of 20,700,000 shares of common stock.
The Company is a Maryland 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") and currently has 116,803,031 shares of
common stock outstanding.
The Company will hold the fourth quarter 2003 earnings conference
call on Monday, February 9, 2004 at 10:00 EST. The number to call is
1-800-915-4836. The re-play number is 1-800-428-6051 for domestic
calls and 1-973-709-2089 for international calls and the pass code is
336911. There will be a web cast of the call on www.annaly.com. The
re-play will be available for 48 hour after the call. 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
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
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 for the fiscal year ended December
31, 2002. We do not undertake, and specifically disclaim 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 after the date of
such statements.
ANNALY MORTGAGE MANAGEMENT, INC.
STATEMENTS OF FINANCIAL CONDITION
(dollars in the thousands)
DEC. 31, SEPT. 30, JUNE 30,
2003 2003 2003
(Unaudited) (Unaudited)
------------------------------------
ASSETS
Cash and cash equivalents $247 $3,381 $304
Mortgage-Backed Securities, at
fair value 11,956,512 11,628,271 12,887,495
Agency Debentures, at fair value 978,167 976,814 1,375,980
Receivable for Mortgage-Backed
Securities sold - 177,304 387,218
Accrued interest receivable 53,743 53,955 58,026
Other assets 1,617 1,233 1,104
------------------------------------
Total assets $12,990,286 $12,840,958 $14,710,127
====================================
LIABILITIES AND STOCKHOLDERS'
EQUITY
Liabilities:
Repurchase agreements $11,012,903 $11,201,897 $12,162,333
Payable for Mortgage-Backed
Securities purchased 761,115 445,148 1,306,238
Accrued interest payable 14,989 13,868 16,788
Dividends payable 45,155 26,876 56,420
Other liabilities 4,017 4,294 4,708
Accounts payable 2,887 3,147 2,202
------------------------------------
Total liabilities 11,841,066 11,695,230 13,548,689
------------------------------------
Stockholders' Equity:
Common stock: par value $.01 per
share;
500,000,000 authorized,
96,074,096, 95,964,915,
94,030,753, 84,647,484, and
84,569,206
shares issued and
outstanding, respectively 961 960 940
Additional paid-in capital 1,194,159 1,192,819 1,157,092
Accumulated other comprehensive
income (loss) (47,261) (51,870) 1,190
Retained earnings 1,361 3,819 2,216
------------------------------------
Total stockholders' equity 1,149,220 1,145,728 1,161,438
------------------------------------
Total liabilities and
stockholders' equity $12,990,286 $12,840,958 $14,710,127
====================================
MARCH 31, DEC. 31,
2003 2002
(Unaudited)
------------------------
ASSETS
Cash and cash equivalents $945 $726
Mortgage-Backed Securities, at fair value 11,674,910 11,551,857
Agency 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, 96,074,096,
95,964,915,
94,030,753, 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 income
(loss) 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)
(dollars in thousands)
For the Quarters Ended
December 31, September 30, June 30,
2003 2003 2003
---------------------------------------------------
INTEREST INCOME $89,186 $66,855 $93,892
INTEREST EXPENSE 42,264 43,922 51,770
---------------------------------------------------
NET INTEREST INCOME 46,922 22,933 42,122
GAIN ON SALE OF
MORTGAGE-BACKED
SECURITIES - 9,656 20,231
GENERAL AND
ADMINISTRATIVE
EXPENSES 4,225 4,110 4,201
---------------------------------------------------
NET INCOME 42,697 28,479 58,152
---------------------------------------------------
OTHER COMPREHENSIVE
INCOME (LOSS):
Unrealized gain
(loss) on
available-for-
sale securities 4,609 (43,405) (49,579)
Less:
reclassification
adjustment for
net gains
included
in net income - (9,656) (20,231)
---------------------------------------------------
Other
comprehensive
income (loss) 4,609 (53,061) (69,810)
---------------------------------------------------
COMPREHENSIVE
INCOME (LOSS) $47,306 ($24,582) ($11,658)
===================================================
NET INCOME PER
SHARE:
Basic $0.44 $0.30 $0.62
===================================================
Diluted $0.44 $0.30 $0.62
===================================================
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING:
Basic 96,027,468 94,685,685 93,384,128
===================================================
Diluted 96,232,899 95,500,486 93,588,024
===================================================
For the Quarters Ended
March 31, December 31,
2003 2002
---------------------------------------------------
INTEREST INCOME $87,500 $92,641
INTEREST EXPENSE 44,048 49,874
---------------------------------------------------
NET INTEREST INCOME 43,452 42,767
GAIN ON SALE OF
MORTGAGE-BACKED
SECURITIES 11,020 11,563
GENERAL AND
ADMINISTRATIVE
EXPENSES 3,697 3,904
---------------------------------------------------
NET INCOME 50,775 50,426
---------------------------------------------------
OTHER COMPREHENSIVE
INCOME (LOSS):
Unrealized gain
(loss) on
available-for-
sale securities 6,509 12,692
Less:
reclassification
adjustment for
net gains
included
in net income (11,020) (11,563)
---------------------------------------------------
Other
comprehensive
income (loss) (4,511) 1,129
---------------------------------------------------
COMPREHENSIVE
INCOME (LOSS) $46,264 $51,555
===================================================
NET INCOME PER
SHARE:
Basic $0.60 $0.60
===================================================
Diluted $0.60 $0.60
===================================================
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING:
Basic 84,606,786 84,525,171
===================================================
Diluted 84,837,390 84,766,747
===================================================
ANNALY MORTGAGE MANAGEMENT, INC.
STATEMENTS OF OPERATIONS
(dollars in thousands)
For the For the
year year
ended ended
December December
31, 2003 31, 2002
----------------------
INTEREST INCOME $337,433 $404,165
INTEREST EXPENSE 182,004 191,758
----------------------
NET INTEREST INCOME 155,429 212,407
GAIN ON SALE OF MORTGAGE-BACKED SECURITIES 40,907 21,063
GENERAL AND ADMINISTRATIVE EXPENSES 16,233 13,963
----------------------
NET INCOME 180,103 219,507
----------------------
OTHER COMPREHENSIVE INCOME (LOSS):
Unrealized gain (loss) on available-for-sale
securities (81,865) 58,405
Less: reclassification adjustment for net
gains included in net income (40,907) (21,063)
----------------------
Other comprehensive income (loss) (122,772) 37,342
----------------------
COMPREHENSIVE INCOME (LOSS) $57,331 $256,849
======================
NET INCOME PER SHARE:
Basic $1.95 $2.68
======================
Diluted $1.94 $2.67
======================
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic 92,215,352 82,044,141
======================
Diluted 93,031,253 82,282,883
======================
CONTACT: Annaly Mortgage Management, Inc.
Kathryn Fagan, 212-696-0100
www.annaly.com
1-888-8Annaly