Exhibit 99.1
Annaly Mortgage Management, Inc. Announces
4th Quarter and Annual 2004 Earnings
NEW YORK--(BUSINESS WIRE)--Feb. 3, 2005--Annaly Mortgage
Management, Inc. (NYSE: NLY) today reported net income for the quarter
ended December 31, 2004 of $59.3 million or $0.46 basic net income per
share available to common shareholders, as compared to $42.7 million
or $0.44 basic net income per share available to common shareholders
for the quarter ended December 31, 2003 and $66.6 million or $0.53
basic net income per share available to common shareholders for the
quarter ended September 30, 2004. Net income for the year ended
December 31, 2004 was $248.6 million or $2.04 basic net income per
share available to common shareholders, as compared to $180.1 million
or $1.95 basic net income per share available to common shareholders
for the year ended December 31, 2003.
The Company was able to provide an annualized return on average
equity of 14.12% for the quarter ended December 31, 2004, as compared
to 14.88% for the quarter ended December 31, 2003 and 16.59% for the
quarter ended September 30, 2004. The return on average equity was
16.04% for the year ended December 31, 2004 and 16.04% for the year
ended December 31, 2003. Dividends declared for the quarter ended
December 31, 2004 were $0.50 per share, as compared to $0.47 per share
for the quarter ended December 31, 2003 and $0.50 for the quarter
ended September 30, 2004. Dividends declared for the year ended
December 31, 2004 were $1.98 per share, as compared to $1.95 per share
for the year ended December 31, 2003. The dividend yield on common
stock for the quarter, based on the December 31, 2004 closing price of
$19.62, was 10.19%.
Michael A.J. Farrell, Chairman, Chief Executive Officer and
President of Annaly, commented on the Company's results. "Our
portfolio management team navigated successfully through a volatile
bond market in 2004. The Federal Reserve directly affected our cost of
funds by raising the Federal Funds rate five times since June 30, and
the 10-year Treasury, which is the principal driver of prepayment
rates, ranged in yield from 3.68% to 4.87%. In our low interest rate
environment, these are sizeable moves on a percentage basis.
Nevertheless, our return on average equity for the year was consistent
with our historical track record. We are also proud of the
contribution made by our wholly-owned asset manager, FIDAC, which
increased fee income by 27.7% from the third quarter to the fourth
quarter. Looking ahead to 2005, we expect nominal interest rates to
remain at historically low levels, and in this environment the returns
that we generate--both in Annaly and in our FIDAC-managed
funds--should be very competitive with those of other investment asset
classes."
For the quarter ended December 31, 2004, the annualized yield on
average earning assets was 3.50% and the annualized cost of funds on
the average repurchase balance was 2.23%, which equates to an interest
rate spread of 1.27%. This is a 25 basis point decrease over the 1.52%
annualized interest rate spread for the quarter ended December 31,
2003 and a 29 basis point decrease over the 1.56% annualized interest
rate spread for the quarter ended September 30, 2004. For the year
ended December 31, 2004, the yield on average earning assets was 3.25%
and the cost of funds on the average repurchase balance was 1.74%. 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%. The interest rate spread for the year ended December 31, 2004
increased by 28 basis points, when compared to the previous year.
For the quarter ended December 31, 2004, the Company's gain on
sale of Mortgage-Backed Securities was $1.1 million . There were no
gains or losses for the quarter ended December 31, 2003 and $1.4
million in gains for the quarter ended September 30, 2004. For the
year ended December 31, 2004, the Company's gain on sale of
Mortgage-Backed Securities was $5.2 million, as compared to $40.9
million for the year ended December 31, 2003.
General and administrative expenses as a percentage of average
assets were 0.14%, 0.13%, and 0.14% for the quarters ended December
31, 2004, December 31, 2003, and September 30, 2004, respectively.
General and administrative expenses, as a percent of average assets
were 0.14% and 0.13% for the years ended December 31, 2004 and 2003,
respectively. In addition, the Company's Dividend Efficiency Ratio,
calculated as general and administrative expenses divided by dividends
paid, was 9.8%, and 9.1% for the years ended December 31, 2004 and
December 31, 2003, respectively.
"We continue to keep expenses low," said Mr. Farrell, "even as we
consolidated the operating expenses of FIDAC. We keep expenses low for
the benefit of our investors. Our industry-low G&A expense ratio and
Dividend Efficiency Ratio means that on a comparative basis,
shareholders receive in dividends more of each dollar we make."
The Constant Prepayment Rate was 27% during the fourth quarter of
2004, as compared to 37% during the fourth quarter of 2003, and 25%
during the third quarter of 2004. The weighted average purchase price
of the portfolio was 102.3 at December 31, 2004, 102.5 at December 31,
2003 and 102.4 at September 30, 2004. The net amortization of premiums
and accretion of discounts on investment securities for the quarters
ended December 31, 2004, December 31, 2003, and September 30, 2004 was
$42.3 million, $38.4 million, and $39.7 million, respectively. The
total net amortization for the year ended December 31, 2004 was $179.6
million and for the year ended December 31, 2003 was $216.6 million.
Leverage at December 31, 2004 was 9.8:1, in comparison to 9.6:1 at
December 31, 2003 and 9.4:1 at September 30, 2004.
"Our interest-rate spread narrowed in the fourth quarter," said
Wellington Denahan-Norris, Vice Chairman and Chief Investment Officer
for Annaly. "As expected, the rally in rates in the third quarter led
to prepayments increasing modestly in the fourth quarter. Even as the
premium amortization related to the faster prepayments and the rise in
our cost of funding more than offset the upward resetting of coupons
on our CMO floaters and ARMs during the quarter, we are satisfied with
portfolio performance. We take a longer-term view than just one
quarter because our Barbell Strategy--in which we utilize a blend of
floating-rate, adjustable-rate and fixed-rate assets to manage through
different interest rate environments--is meant to respond and adjust
to changes in rates over time."
At December 31, 2004, December 31, 2003, and September 30, 2004,
the Company had a common stock book value per share of $12.56, $11.96,
and $12.84, 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 December 31,
2004. The balance of the portfolio was comprised of 62% adjustable
rate mortgages and 9% LIBOR floating rate collateralized mortgage
obligations. The Company has continued to avoid the introduction of
credit risk into its portfolio. As of December 31, 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 December 31, 2004, FIDAC had under management
approximately $1.9 billion in net assets and $15.9 billion in gross
assets, compared to $1.7 billion in net assets and $13.9 billion in
gross assets at September 30, 2004 and $1.5 billion in net assets and
$13.6 billion in gross assets at December 31, 2003.
Annaly manages assets on behalf of institutional and individual
investors worldwide through Annaly and through the funds managed by
its wholly-owned registered investment advisor, FIDAC. The Company's
principal business objective is to generate net income for
distribution to investors from the spread between the interest income
on its mortgage-backed securities and the cost of borrowing to finance
their acquisition and from fee income earned by FIDAC. The Company, a
Maryland Corporation that has elected to be taxed as a real estate
investment trust ("REIT"), currently has 121,272,198 shares of common
stock outstanding.
The Company will hold the Annual 2004 earnings conference call on
Friday February 4, 2004 at 10:00 a.m. EST. The number to call is
1-800-510-0146 for domestic calls and 617-614-3449 for international
calls and the pass code is 93615017. The re-play number is
1-888-286-8010 for domestic calls and 617-801-6888 for international
calls and the pass code is 24564798. 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)
DEC. 31, 2004 SEPT. 30, 2004 JUNE 30, 2004
(Consolidated (Consolidated (Consolidated
and Unaudited) and Unaudited) and Unaudited)
-------------------------------------------
ASSETS
Cash and cash equivalents $ 5,853 $ 6,772 $ 4,499
Mortgage-Backed Securities,
at fair value 19,038,386 17,571,593 16,142,801
Agency Debentures, at fair
value 390,509 639,437 978,994
Receivable for preferred
stock proceeds - - -
Receivable for Mortgage-
Backed Securities sold 1,025 - -
Accrued interest receivable 81,557 74,291 74,874
Receivable for advisory and
service fees 2,359 1,637 1,644
Intangible for customer
relationships 15,613 15,613 15,613
Goodwill 23,122 23,122 22,905
Other assets 1,875 1,371 1,427
----------- ------------ -----------
Total assets $19,560,299 $ 18,333,836 $17,242,757
=========== ============ ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Liabilities:
Repurchase agreements $16,707,879 $ 15,579,196 $15,342,123
Payable for Mortgage-
Backed Securities
purchased 1,044,683 999,380 263,207
Accrued interest payable 35,721 24,483 19,959
Dividends payable 60,632 60,618 57,674
Other liabilities 2,819 4,061 3,294
Accounts payable 8,095 6,508 3,989
----------- ------------ -----------
Total liabilities 17,859,829 16,674,246 15,690,246
----------- ------------ -----------
Stockholders' Equity:
7.875% Series A Cumulative
Redeemable Preferred Stock:
8,000,000 authorized, 7,412,500,
4,250,000, 4,250,000, and
4,250,000 shares issued and
outstanding, respectively 177,077 102,708 102,708
Common stock: par value $.01
per share; 500,000,000
authorized, 121,263,000,
121,235,702, 120,148,709,
117,866,932, and 96,074,096
shares issued and outstanding,
respectively 1,213 1,212 1,201
Additional paid-in
capital 1,638,635 1,638,309 1,620,666
Accumulated other
comprehensive income
(loss) (120,800) (91,987) (177,489)
Retained earnings 4,345 9,348 5,425
----------- ------------ -----------
Total stockholders' equity 1,700,470 1,659,590 1,552,511
----------- ------------ -----------
Total liabilities and
stockholders' equity $19,560,299 $ 18,333,836 $17,242,757
=========== ============ ===========
MARCH 31, 2004
(Unaudited) DEC. 31, 2003
----------------------------
ASSETS
Cash and cash equivalents $ 738 $ 247
Mortgage-Backed Securities, at fair value 17,046,117 11,956,512
Agency Debentures, at fair value 1,033,481 978,167
Receivable for preferred stock proceeds 102,903 -
Receivable for Mortgage-Backed Securities
sold 81,200 -
Accrued interest receivable 71,446 53,743
Receivable for advisory and service fees - -
Intangible for customer relationships - -
Goodwill - -
Other assets 2,808 1,617
----------- -----------
Total assets $18,338,693 $12,990,286
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Repurchase agreements $14,689,300 $11,012,903
Payable for Mortgage-Backed Securities
purchased 1,873,813 761,115
Accrued interest payable 21,299 14,989
Dividends payable 58,942 45,155
Other liabilities 4,664 4,017
Accounts payable 2,087 2,887
----------- -----------
Total liabilities 16,650,105 11,841,066
----------- -----------
Stockholders' Equity:
7.875% Series A Cumulative Redeemable
Preferred Stock: 8,000,000 authorized,
7,412,500, 4,250,000, 4,250,000, and
4,250,000 shares issued and outstanding,
respectively 102,870 -
Common stock: par value $.01 per share;
500,000,000 authorized, 121,263,000,
121,235,702, 120,148,709, 117,866,932,
and 96,074,096 shares issued and
outstanding, respectively 1,179 961
Additional paid-in capital 1,578,778 1,194,159
Accumulated other comprehensive income
(loss) 4,500 (47,261)
Retained earnings 1,261 1,361
----------- -----------
Total stockholders' equity 1,688,588 1,149,220
----------- -----------
Total liabilities and stockholders' equity $18,338,693 $12,990,286
=========== ===========
ANNALY MORTGAGE MANAGEMENT, INC.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(dollars in thousands)
For the Quarter Ended
December 31, September 30, June 30,
2004 2004 2004
(Consolidated)(Consolidated)(Consolidated)
------------------------------------------
Interest income $ 156,783 $ 138,970 $ 122,234
Interest expense 93,992 70,173 55,648
------------ ------------ ------------
Net interest income 62,791 68,797 66,586
------------ ------------ ------------
Other income
Investment advisory and
service fees 6,143 4,811 1,558
Gain on sale of Mortgage-
Backed Securities 1,144 1,350 2,126
------------ ------------ ------------
Total other income 7,287 6,161 3,684
------------ ------------ ------------
Expenses
Distribution fees 1,538 1,024 298
General and administrative
expenses 6,862 6,159 5,643
------------ ------------ ------------
Total expenses 8,400 7,183 5,841
------------ ------------ ------------
Income before income taxes 61,678 67,775 64,329
Income taxes 2,384 1,155 494
------------ ------------ ------------
Net income 59,294 66,620 63,835
Dividend on preferred stock 3,665 2,082 1,998
------------ ------------ ------------
Net income available to
common shareholders $ 55,629 $ 64,538 $ 61,837
============ ============ ============
Net income per share
available to common
shareholders:
Basic $ 0.46 $ 0.53 $ 0.52
============ ============ ============
Diluted $ 0.46 $ 0.53 $ 0.52
============ ============ ============
Weighted average number of
shares outstanding:
Basic 121,246,246 120,802,814 118,276,509
============ ============ ============
Diluted 121,514,941 120,994,191 118,489,470
============ ============ ============
Net income $ 59,294 $ 66,620 $ 63,835
------------ ------------ ------------
Comprehensive income (loss):
Unrealized gain (loss) on
available-for-sale
securities (27,669) 86,852 (179,863)
Less: reclassification
adjustment for net gains
included in net income (1,144) (1,350) (2,126)
------------ ------------ ------------
Other comprehensive
income (loss) (28,813) 85,502 (181,989)
------------ ------------ ------------
Comprehensive income (loss) $ 30,481 $ 152,122 ($118,154)
============ ============ ============
For the Quarter Ended
March 31, December 31,
2004 2003
-------------- ------------
Interest income $ 114,341 $ 89,186
Interest expense 50,303 42,264
------------ -----------
Net interest income 64,038 46,922
------------ -----------
Other income
Investment advisory and service fees - -
Gain on sale of Mortgage-Backed
Securities 595 -
------------ ------------
Total other income 595 -
------------ ------------
Expenses
Distribution fees
General and administrative expenses 5,365 4,225
------------ -----------
Total expenses 5,365 4,225
------------ -----------
Income before income taxes 59,268 42,697
Income taxes 425 -
------------ ------------
Net income 58,843 42,697
Dividend on preferred stock - -
-------------- ------------
Net income available to common
shareholders $ 58,843 $ 42,697
============ ===========
Net income per share available to common
shareholders:
Basic $ 0.52 $ 0.44
============ ===========
Diluted $ 0.52 $ 0.44
============ ===========
Weighted average number of shares
outstanding:
Basic 112,506,206 96,027,468
============ ===========
Diluted 112,804,001 96,232,899
============ ===========
Net income $ 58,843 $ 42,697
------------ -----------
Comprehensive income (loss):
Unrealized gain (loss) on available-for-
sale securities 52,356 4,609
Less: reclassification adjustment for
net gains included in net income (595) -
------------ ------------
Other comprehensive income (loss) 51,761 4,609
------------ -----------
Comprehensive income (loss) $ 110,604 $ 47,306
============ ===========
ANNALY MORTGAGE MANAGEMENT, INC.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(dollars in thousands)
For the Year Ended
December 31, December 31,
2004 2003
(Consolidated
and Unaudited)
-------------------------
Interest income $ 532,328 $ 337,433
Interest expense 270,116 182,004
------------ -----------
Net interest income 262,212 155,429
------------ -----------
Other income
Investment advisory and service fees 12,512 -
Gain on sale of Mortgage-Backed Securities 5,215 40,907
------------ -----------
Total other income 17,727 40,907
------------ -----------
Expenses
Distribution fees 2,860 -
General and administrative expenses 24,029 16,233
------------ -----------
Total expenses 26,889 16,233
------------ -----------
Income before income taxes 253,050 180,103
Income taxes 4,458 -
------------ -----------
Net income 248,592 180,103
Dividend on preferred stock 7,745 -
------------ -----------
Net income available to common shareholders $ 240,847 $ 180,103
============ ===========
Net income per share available to common
shareholders:
Basic $ 2.04 $ 1.95
============ ===========
Diluted $ 2.03 $ 1.94
============ ===========
Weighted average number of shares
outstanding:
Basic 118,223,330 92,215,352
============ ===========
Diluted 118,459,145 93,031,253
============ -----------
Net income $ 248,592 $ 180,103
------------ -----------
Comprehensive loss:
Unrealized loss on available-for-sale
securities (68,324) (81,865)
Less: reclassification adjustment for net
gains included in net income (5,215) (40,907)
------------ -----------
Other comprehensive loss (73,539) (122,772)
------------ -----------
Comprehensive income $ 175,053 $ 57,331
============ ===========
CONTACT: Annaly Mortgage Management, Inc.
Investor Relations
1-(888)8Annaly
www.annaly.com