Exhibit 99.1
Annaly Mortgage Management, Inc. Announces 2nd Quarter 2004 Earnings
NEW YORK--(BUSINESS WIRE)--July 23, 2004--Annaly Mortgage Management, Inc.
(NYSE: NLY) today reported net income for the quarter ended June 30, 2004 of
$63,835,000 or $0.52 basic earnings per common share, as compared to $58,152,000
or $0.62 basic earnings per common share for the quarter ended June 30, 2003 and
$58,843,000 or $0.52 basic earnings per common share for the quarter ended March
31, 2004.
The Company was able to provide an annualized return on average equity of
15.76% for the quarter ended June 30, 2004, as compared to 20.79% for the
quarter ended June 30, 2003 and 16.59% for the quarter ended March 31, 2004.
Dividends declared for the quarter ended June 30, 2004 were $0.48 per share, as
compared to $0.60 per share for the quarter ended June 30, 2003 and $0.50 for
the quarter ended March 31, 2004. The annualized dividend yield for the quarter,
based on the June 30, 2004 closing price of $16.96, was 11.32%.
Michael A.J. Farrell, Chairman, Chief Executive Officer and President of
Annaly, said, "The second quarter started with a surprisingly strong employment
report and ended with the first rate hike in four years. In between, the bond
market suffered some of its worst returns since 1980. In addition, investors in
mortgage-backed securities saw a peaking in amortization expense related to the
mini refinancing boom of the first quarter--a sequential quarterly increase of
35.2% in our case. Even with this background, I am pleased with our performance
in the quarter, as our investment strategy has delivered solid results. We are
likely to see more volatility in the bond market going forward as the Federal
Reserve changes from its accommodative monetary policy stance, but investors in
our strategy should see the benefits of improving mortgage market fundamentals,
particularly the decline in refinancing activity."
For the quarter ended June 30, 2004, the yield on average earning assets
was 2.94% and the cost of funds on the average repurchase balance was 1.40%,
which equates to an interest rate spread of 1.54%. This is a 29 basis point
increase over the 1.25% interest rate spread for the quarter ended June 30, 2003
and a 14 basis point decrease over the 1.68% interest rate spread for the
quarter ended March 31, 2004. For the quarter ended June 30, 2004, the Company's
gain on sale of Mortgage-Backed Securities was $2.1 million as compared to $20.2
million for the quarter ended June 30, 2003 and $595,000 for the quarter ended
March 31, 2004.
General and administrative expenses as a percentage of average assets were
0.13%, 0.12%, and 0.15% for the quarters ended June 30, 2004, June 30, 2003, and
March 31, 2004, respectively. In addition, the Company's dividend efficiency
ratio, calculated as general and administrative expenses divided by dividends
declared, was 9.5%, 7.4% and 9.8% for the quarters ended June 30, 2004, June 30,
2003, and March 31, 2004, respectively.
The Constant Prepayment Rate was 33% during the second quarter of 2004, as
compared to 44% during the second quarter of 2003, and 31% during the first
quarter of 2004. The weighted average purchase price of the portfolio was 102.4
at June 30, 2004, 102.5 at June 30, 2003 and 102.5 at March 31, 2004. The net
amortization of premiums and accretion of discounts on investment securities for
the quarters ended June 30, 2004, June 30, 2003, and March 31, 2004 was $56.1
million, $57.6 million, and $41.5 million, respectively. Leverage at June 30,
2004 was 9.9:1, in comparison to 10.5:1 at June 30, 2003 and 8.7:1 at March 31,
2004.
"During the quarter, the yield on the 2-year Treasury rose 111 basis
points, from 1.57% to 2.68%, and the 10-year Treasury rose 75 basis points, from
3.83% to 4.58%," said Wellington Denahan-Norris, Vice Chairman and Chief
Investment Officer of Annaly. "Our investment discipline not only served us well
during this significant market move, but it also should provide us with the
foundation to take advantage of opportunities going forward. Our portfolio is
designed to perform in a wide range of interest rate environments. For example,
in a rising rate environment, asset yields should be helped by declining
amortization expense as well as the adjustable-rate feature of approximately 70%
of our portfolio. In addition, principal amortization and new capital can be
reinvested into the higher interest rate environment."
At June 30, 2004, June 30, 2003, and March 31, 2004, the Company had a
common stock book value of $12.07, $12.35, and $13.45, respectively. 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 30% of the Company's portfolio at June 30,
2004. The balance of the portfolio was comprised of 58% adjustable rate
mortgages and 12% LIBOR floating rate collateralized mortgage obligations. The
Company has continued to avoid the introduction of credit risk into its
portfolio. As of June 30, 2004, 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.
The merger of Fixed Income Discount Advisory Company ("FIDAC"), as approved
by the shareholders on May 27, 2004, was completed on June 4, 2004. Annaly
issued 2,201,080 shares, based on the December 31, 2003 closing price of $18.40.
As was previously disclosed, following completion of the transaction Annaly will
continue to operate as a self-managed and self-advised real estate investment
trust, and FIDAC will operate as Annaly's wholly-owned taxable REIT subsidiary.
FIDAC is a registered investment advisor which generally receives annual net
investment advisory fees of approximately 10 to 15 basis points of the gross
assets it manages, assists in managing or supervises. At June 30, 2004, FIDAC
had under management approximately $1.7 billion in net assets and $12.8 billion
in gross assets, compared to $1.5 billion in net assets and $13.6 billion in
gross assets at December 31, 2003.
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 120,348,768 shares of common stock
outstanding.
The Company will hold the second quarter 2004 earnings conference call on
July 26, 2004 at 10:00 a.m. EST. The number to call is 1-800-915-4836. The
re-play number is 1-800-428-6051 for domestic calls and 973-709-2089 for
international calls and the pass code is 367515. 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 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,
FIDAC's clients removal of assets FIDAC manages, FIDAC's regulatory
requirements, and competition in the investment management business. 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, 2003. 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 thousands)
JUNE 30, 2004
(Consolidated MARCH 31,
and 2004
Unaudited) (Unaudited)
-------------------------
ASSETS
Cash and cash equivalents $4,499 $738
Mortgage-Backed Securities, at fair value 16,142,801 17,046,117
Agency Debentures, at fair value 978,994 1,033,481
Receivable for preferred stock proceeds - 102,903
Receivable for Mortgage-Backed Securities
sold - 81,200
Accrued interest receivable 74,874 71,446
Receivable for advisory fees and services 1,644 -
Intangible for customer relationships 15,613 -
Goodwill 22,905 -
Other assets 1,427 2,808
-------------------------
Total assets $17,242,757 $18,338,693
=========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Repurchase agreements $15,342,123 $14,689,300
Payable for Mortgage-Backed Securities
purchased 263,207 1,873,813
Accrued interest payable 19,959 21,299
Dividends payable 57,674 58,942
Other liabilities 3,294 4,664
Accounts payable 3,989 2,087
-------------------------
Total liabilities 15,690,246 16,650,105
-------------------------
Stockholders' Equity:
7.875% Series A Cumulative Redeemable
Preferred Stock: 4,250,000 shares
authorized, issued and outstanding 102,708 102,870
Common stock: par value $.01 per share;
500,000,000 authorized, 120,148,709,
117,866,932, 96,074,096, 95,964,915,
and 94,030,753 shares issued and
outstanding, respectively 1,201 1,179
Additional paid-in capital 1,620,666 1,578,778
Accumulated other comprehensive
income (loss) (177,489) 4,500
Retained earnings 5,425 1,261
-------------------------
Total stockholders' equity 1,552,511 1,688,588
-------------------------
Total liabilities and stockholders' equity $17,242,757 $18,338,693
=========================
SEPT. 30, JUNE 30,
DEC. 31, 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 preferred stock
proceeds - - -
Receivable for Mortgage-Backed
Securities sold - 177,304 387,218
Accrued interest receivable 53,743 53,955 58,026
Receivable for advisory fees and
services - - -
Intangible for customer relationships - - -
Goodwill - - -
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:
7.875% Series A Cumulative
Redeemable Preferred Stock:
4,250,000 shares authorized,
issued and outstanding - - -
Common stock: par value $.01 per
share; 500,000,000 authorized,
120,148,709, 117,866,932,
96,074,096, 95,964,915, and
94,030,753 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
====================================
ANNALY MORTGAGE MANAGEMENT, INC.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)
(dollars in thousands)
For the quarters ended
June 30, March 31,
2004 2004
(Consolidated)
--------------------------
Interest income $122,234 $114,341
Interest expense 55,648 50,303
--------------------------
Net interest income 66,586 64,038
Investment advisory and service fees 1,260 -
Gain on sale of Mortgage-Backed Securities 2,126 595
General and administrative expenses 5,643 5,790
--------------------------
Net income before income taxes 64,329 58,843
Income taxes 494 -
--------------------------
Net income 63,835 58,843
Dividend on preferred stock 1,998 -
--------------------------
Net income available to common shareholders $61,837 $58,843
==========================
Net income per share available to common
shareholders:
Basic $0.52 $0.52
==========================
Diluted $0.52 $0.52
==========================
Weighted average number of shares
outstanding:
Basic 118,276,509 112,506,206
==========================
Diluted 118,489,470 112,804,001
==========================
Net income $63,835 $58,843
--------------------------
Comprehensive income (loss):
Unrealized gain (loss) on available-for-
sale securities (179,863) 52,356
Less: reclassification adjustment for net
gains included in net income (2,126) (595)
--------------------------
Other comprehensive income (loss): (181,989) 51,761
--------------------------
Comprehensive income (loss) ($118,154) $110,604
==========================
For the quarters ended
December September June
31, 2003 30, 2003 30, 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
Investment advisory and service fees - - -
Gain on sale of Mortgage-Backed Securities - 9,656 20,231
General and administrative expenses 4,225 4,110 4,201
---------------------------------
Net income before income taxes 42,697 28,479 58,152
Income taxes - - -
---------------------------------
Net income 42,697 28,479 58,152
Dividend on preferred stock - - -
---------------------------------
Net income available to common
shareholders $42,697 $28,479 $58,152
=================================
Net income per share available to
common shareholders:
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
=================================
Net income $42,697 $28,479 $58,152
---------------------------------
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)
=================================
ANNALY MORTGAGE MANAGEMENT, INC.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)
(dollars in thousands)
For the six-months ended
June 30, June 30,
2004 2003
(Consolidated)
-------------------------
Interest income $236,575 $181,392
Interest expense 105,951 95,818
-------------------------
Net interest income 130,624 85,574
Investment advisory and service fees 1,260 -
Gain on sale of Mortgage-Backed Securities 2,721 31,252
General and administrative expenses 11,433 7,898
-------------------------
Net income before income taxes 123,172 108,928
Income taxes 494 -
-------------------------
Net income 122,678 108,928
Dividend on preferred stock 1,998 -
-------------------------
Net income available to common shareholders $120,680 $108,928
=========================
Net income per share available to common
shareholders:
Basic $1.05 $1.22
=========================
Diluted $1.04 $1.22
=========================
Weighted average number of shares
outstanding:
Basic 115,391,357 89,109,821
=========================
Diluted 115,638,943 89,231,272
=========================
Net income $122,678 $108,928
-------------------------
Comprehensive income (loss):
Unrealized loss on available-for-sale
securities (127,507) (43,069)
Less: reclassification adjustment for net
gains included in net income (2,721) (31,252)
-------------------------
Other comprehensive loss (130,228) (74,321)
-------------------------
Comprehensive income (loss) ($7,548) $34,607
=========================
CONTACT: Annaly Mortgage Management, Inc.
Investor Relations:
1- (888) 8Annaly
www.annaly.com