Exhibit 99.1
Annaly Mortgage Management, Inc. Announces 3rd Quarter 2004 Earnings
NEW YORK--(BUSINESS WIRE)--Oct. 25, 2004--Annaly Mortgage
Management, Inc. (NYSE: NLY) today reported net income for the quarter
ended September 30, 2004 of $66,620,000 or $0.53 basic net income per
share available to common shareholders, as compared to $28,479,000 or
$0.30 basic net income per share available to common shareholders for
the quarter ended September 30, 2003 and $63,835,000 or $0.52 basic
net income per share available to common shareholders for the quarter
ended June 30, 2004.
The Company was able to provide an annualized return on average
equity of 16.59% for the quarter ended September 30, 2004, as compared
to 9.88% for the quarter ended September 30, 2003 and 15.76% for the
quarter ended June 30, 2004. Dividends declared for the quarter ended
September 30, 2004 were $0.50 per share, as compared to $0.28 per
share for the quarter ended September 30, 2003 and $0.48 for the
quarter ended June 30, 2004. The annualized dividend yield for the
quarter, based on the September 30, 2004 closing price of $17.13, was
11.68%.
Michael A.J. Farrell, Chairman, Chief Executive Officer and
President of Annaly, said, "While I am pleased with the performance
delivered by our team in this particularly challenging quarter, I want
to reiterate that it is our long-term approach to management that
rewards our investors. Careful observers of our track record of
delivering consistently strong returns understand that what
differentiates us from other participants in the market place is the
resiliency of our barbell strategy, our non-correlation with mortgage
origination cycles and our industry-low cost structure. Furthermore,
the recent addition of our growing asset management business has been
immediately accretive to shareholders, adds a smoothing, tax-efficient
component to our earnings stream and will serve to further set us
apart going forward as we continue to operate in this volatile, low
interest rate market."
For the quarter ended September 30, 2004, the yield on average
earning assets was 3.36% and the cost of funds on the average
repurchase balance was 1.80%, which equates to an interest rate spread
of 1.56%. This is an 87 basis point increase over the 0.69% interest
rate spread for the quarter ended September 30, 2003 and a 2 basis
point increase over the 1.54% interest rate spread for the quarter
ended June 30, 2004. For the quarter ended September 30, 2004, the
Company's gain on sale of Mortgage-Backed Securities was $1.4 million
as compared to $9.7 million for the quarter ended September 30, 2003
and $2.1 million for the quarter ended June 30, 2004.
General and administrative expenses as a percentage of average
assets were 0.14%, 0.12%, and 0.13% for the quarters ended September
30, 2004, September 30, 2003, and June 30, 2004, respectively. In
addition, the Company's dividend efficiency ratio, calculated as
general and administrative expenses divided by dividends declared, was
9.8%, 15.3% and 9.5% for the quarters ended September 30, 2004,
September 30, 2003, and June 30, 2004, respectively.
The Constant Prepayment Rate was 25% during the third quarter of
2004, as compared to 48% during the third quarter of 2003, and 33%
during the second quarter of 2004. The weighted average purchase price
of the portfolio was 102.4 at September 30, 2004, 102.6 at September
30, 2003 and 102.4 at June 30, 2004. The net amortization of premiums
and accretion of discounts on investment securities for the quarters
ended September 30, 2004, September 30, 2003, and June 30, 2004 was
$39.7 million, $72.0 million, and $56.1 million, respectively.
Leverage at September 30, 2004 was 9.4:1, in comparison to 9.8:1 at
September 30, 2003 and 9.9:1 at June 30, 2004.
"In the third quarter, the Fed continued its 'measured' pace of
interest rate hikes," said Wellington Denahan-Norris, Vice Chairman
and Chief Investment Officer of Annaly, "however our interest rate
spread improved over the prior quarter since our increased cost of
financing was more than offset by the decline in amortization expense
due to slowing prepayment speeds as well as the upward resetting of
coupons on our adjustable-rate and floating-rate assets. Looking ahead
to the fourth quarter, we are likely to see prepayments increase
somewhat in response to lower mortgage rates, but our portfolio is
designed to adjust to each new interest rate scenario. While we see
the opportunity to put capital to work in these volatile markets, we
continue to be prudent in our use of leverage and in our asset
selection."
At September 30, 2004, September 30, 2003, and June 30, 2004, the
Company had a common stock book value per share of $12.84, $11.94, and
$12.07, respectively. The Company classifies all investment securities
as "available for sale," thus requiring the Company to record the
entire portfolio at market value. Fixed rate securities comprised
approximately 29% of the Company's portfolio at September 30, 2004.
The balance of the portfolio was comprised of 61% adjustable rate
mortgages and 10% LIBOR floating rate collateralized mortgage
obligations. The Company has continued to avoid the introduction of
credit risk into its portfolio. As of September 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.
FIDAC operates 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 September 30, 2004, FIDAC had under management
approximately $1.7 billion in net assets and $13.9 billion in gross
assets, compared to $1.7 billion in net assets and $12.8 billion in
gross assets at June 30, 2004 and $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 121,235,702 shares of
common stock outstanding.
The Company will hold the third quarter 2004 earnings conference
call on Tuesday, October 26, 2004 at 10:00 a.m. EST. The number to
call is 1-800-510-0146 and the pass code is 91350454. The re-play
number is 1-888-286-8010 for domestic calls and 617-801-6888 for
international calls and the pass code is 89162800. 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)
SEPT. 30, 2004 JUNE 30, 2004 MARCH 31, 2004
(Consolidated (Consolidated
and Unaudited) and Unaudited) (Unaudited)
---------------------------------------------
ASSETS
Cash and cash equivalents $6,772 $4,499 $738
Mortgage-Backed
Securities, at fair
value 17,571,593 16,142,801 17,046,117
Agency Debentures, at
fair value 639,437 978,994 1,033,481
Receivable for preferred
stock proceeds - - 102,903
Receivable for Mortgage-
Backed Securities sold - - 81,200
Accrued interest
receivable 74,291 74,874 71,446
Receivable for advisory
and service fees 1,637 1,644 -
Intangible for customer
relationships 15,613 15,613 -
Goodwill 23,122 22,905 -
Other assets 1,371 1,427 2,808
----------------------------------------------
Total assets $18,333,836 $17,242,757 $18,338,693
==============================================
LIABILITIES AND
STOCKHOLDERS' EQUITY
Liabilities:
Repurchase agreements $15,579,196 $15,342,123 $14,689,300
Payable for Mortgage-
Backed Securities
purchased 999,380 263,207 1,873,813
Accrued interest
payable 24,483 19,959 21,299
Dividends payable 60,618 57,674 58,942
Other liabilities 4,061 3,294 4,664
Accounts payable 6,508 3,989 2,087
----------------------------------------------
Total liabilities 16,674,246 15,690,246 16,650,105
----------------------------------------------
Stockholders' Equity:
7.875% Series A Cumulative
Redeemable Preferred
Stock: 9,000,000
authorized, 4,250,000
shares issued and
outstanding 102,708 102,708 102,870
Common stock: par value
$.01 per share;
500,000,000 authorized,
121,235,702, 120,148,709,
117,866,932, 96,074,096,
and 95,964,915 shares
issued and outstanding,
respectively 1,212 1,201 1,179
Additional paid-in
capital 1,638,309 1,620,666 1,578,778
Accumulated other
comprehensive income
(loss) (91,987) (177,489) 4,500
Retained earnings 9,348 5,425 1,261
----------------------------------------------
Total stockholders'
equity 1,659,590 1,552,511 1,688,588
----------------------------------------------
Total liabilities and
stockholders' equity $18,333,836 $17,242,757 $18,338,693
==============================================
SEPT. 30, 2003
DEC. 31, 2003 (Unaudited)
------------------------------
ASSETS
Cash and cash equivalents $247 $3,381
Mortgage-Backed Securities, at fair value 11,956,512 11,628,271
Agency Debentures, at fair value 978,167 976,814
Receivable for preferred stock proceeds - -
Receivable for Mortgage-Backed Securities
sold - 177,304
Accrued interest receivable 53,743 53,955
Receivable for advisory and service fees - -
Intangible for customer relationships - -
Goodwill - -
Other assets 1,617 1,233
----------------------------
Total assets $12,990,286 $12,840,958
============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Repurchase agreements $11,012,903 $11,201,897
Payable for Mortgage-Backed Securities
purchased 761,115 445,148
Accrued interest payable 14,989 13,868
Dividends payable 45,155 26,876
Other liabilities 4,017 4,294
Accounts payable 2,887 3,147
----------------------------
Total liabilities 11,841,066 11,695,230
----------------------------
Stockholders' Equity:
7.875% Series A Cumulative Redeemable
Preferred Stock: 9,000,000 authorized,
4,250,000 shares issued and outstanding - -
Common stock: par value $.01 per share;
500,000,000 authorized, 121,235,702,
120,148,709, 117,866,932, 96,074,096, and
95,964,915 shares issued and outstanding,
respectively 961 960
Additional paid-in capital 1,194,159 1,192,819
Accumulated other comprehensive income
(loss) (47,261) (51,870)
Retained earnings 1,361 3,819
----------------------------
Total stockholders' equity 1,149,220 1,145,728
----------------------------
Total liabilities and stockholders'
equity $12,990,286 $12,840,958
============================
ANNALY MORTGAGE MANAGEMENT, INC.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)
(dollars in thousands)
For the Quarters Ended
September 30, June 30, March 31,
2004 2004 2004
(Consolidated) (Consolidated)
----------------------------------------
Interest income $138,970 $122,234 $114,341
Interest expense 70,173 55,648 50,303
----------------------------------------
Net interest income 68,797 66,586 64,038
----------------------------------------
Other income
Investment advisory and
service fees 4,811 1,558 -
Gain on sale of Mortgage-
Backed Securities 1,350 2,126 595
----------------------------------------
Total other income 6,161 3,684 595
----------------------------------------
Expenses
Distribution fees 1,024 298
General and administrative
expenses 6,159 5,643 5,365
----------------------------------------
Total expenses 7,183 5,841 5,365
----------------------------------------
Net income before income taxes 67,775 64,329 59,268
Income taxes 1,155 494 425
----------------------------------------
Net income 66,620 63,835 58,843
Dividend on preferred stock 2,082 1,998 -
----------------------------------------
Income available to common
shareholders $64,538 $61,837 $58,843
========================================
Net income per share available
to common shareholders:
Basic $0.53 $0.52 $0.52
========================================
Diluted $0.53 $0.52 $0.52
========================================
Weighted average number of
shares outstanding:
Basic 120,802,814 118,276,509 112,506,206
========================================
Diluted 120,994,191 118,489,470 112,804,001
========================================
Net income $66,620 $63,835 $58,843
----------------------------------------
Comprehensive income (loss):
Unrealized gain (loss) on
available-for-sale
securities 86,852 (179,863) 52,356
Less: reclassification
adjustment for net gains
included in net income (1,350) (2,126) (595)
----------------------------------------
Other comprehensive income
(loss): 85,502 (181,989) 51,761
----------------------------------------
Comprehensive income (loss) $152,122 ($118,154) $110,604
========================================
December 31, September 30,
2003 2003
--------------------------
Interest income $89,186 $66,855
Interest expense 42,264 43,922
--------------------------
Net interest income 46,922 22,933
--------------------------
Other income
Investment advisory and service fees - -
Gain on sale of Mortgage-Backed Securities - 9,656
--------------------------
Total other income - 9,656
--------------------------
Expenses
Distribution fees
General and administrative expenses 4,225 4,110
--------------------------
Total expenses 4,225 4,110
--------------------------
Net income before income taxes 42,697 28,479
Income taxes - -
--------------------------
Net income 42,697 28,479
Dividend on preferred stock - -
--------------------------
Income available to common shareholders $42,697 $28,479
==========================
Net income per share available to common
shareholders:
Basic $0.44 $0.30
==========================
Diluted $0.44 $0.30
==========================
Weighted average number of shares
outstanding:
Basic 96,027,468 94,685,685
==========================
Diluted 96,232,899 95,500,486
==========================
Net income $42,697 $28,479
--------------------------
Comprehensive income (loss):
Unrealized gain (loss) on
available-for-sale securities 4,609 (43,405)
Less: reclassification adjustment for net
gains included in net income - (9,656)
--------------------------
Other comprehensive income (loss): 4,609 (53,061)
--------------------------
Comprehensive income (loss) $47,306 ($24,582)
==========================
ANNALY MORTGAGE MANAGEMENT, INC.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)
(dollars in thousands)
For the nine-months ended
September 30, September 30,
2004 2003
(Consolidated)
---------------------------
Interest income $375,545 $248,247
Interest expense 176,124 139,740
---------------------------
Net interest income 199,421 108,507
---------------------------
Other income
Investment advisory and service fees 6,369 -
Gain on sale of Mortgage-Backed
Securities 4,071 40,907
---------------------------
Total other income 10,440 40,907
---------------------------
Expenses
Distribution fees 1,322 -
General and administrative expenses 17,167 12,008
---------------------------
Total expenses 18,489 12,008
---------------------------
Income before income taxes 191,372 137,406
Income taxes 2,074 -
---------------------------
Net income 189,298 137,406
Dividend on preferred stock 4,080 -
---------------------------
Net income available to common shareholders $185,218 137,406
===========================
Net income per share available to common
shareholders:
Basic $1.58 $1.51
===========================
Diluted $1.58 $1.50
===========================
Weighted average number of shares
outstanding:
Basic 117,208,336 90,929,196
===========================
Diluted 117,439,248 91,750,472
===========================
Net income 189,298 137,406
---------------------------
Comprehensive income:
Unrealized loss on available-for-sale
securities (40,655) (86,474)
Less: reclassification adjustment for net
gains included in net income (4,071) (40,907)
---------------------------
Other comprehensive loss (44,726) (127,381)
---------------------------
Comprehensive income $144,572 $10,025
===========================
CONTACT: Annaly Mortgage Management, Inc.
Investor Relations, 1- (888) 8Annaly
www.annaly.com