Exhibit 99.1
Annaly Mortgage Management, Inc. Announces 1st Quarter 2005 Earnings
NEW YORK--(BUSINESS WIRE)--April 26, 2005--Annaly Mortgage
Management, Inc. (NYSE: NLY) today reported net income for the quarter
ended March 31, 2005 of $59.3 million or $0.46 basic net income per
share available to common shareholders, as compared to $58.8 million
or $0.52 basic net income per share available to common shareholders
for the quarter ended March 31, 2004 and $59.3 million or $0.46 basic
net income per share available to common shareholders for the quarter
ended December 31, 2004.
The Company was able to provide an annualized return on average
equity of 14.34% for the quarter ended March 31, 2005, as compared to
16.59% for the quarter ended March 31, 2004 and 14.12% for the quarter
ended December 31, 2004. Common dividends declared for the quarter
ended March 31, 2005 were $0.45 per share, as compared to $0.50 per
share for each of the quarters ended March 31, 2004 and December 31,
2004. The annualized dividend yield on common stock for the quarter,
based on the March 31, 2005 closing price of $18.76, was 9.59%.
Michael A.J. Farrell, Chairman, Chief Executive Officer and
President of Annaly, commented on the Company's results. "The Company
continues to manage through volatile markets and deliver superior
absolute and relative results. During the quarter the Federal Funds
rate was raised twice, the 10-year Treasury yield swung from a low of
3.99% to a high of 4.64%, and most asset classes--investment grade
fixed income, speculative grade bonds and equities--had negative
returns. With this type of economic and investment background going
forward, we expect to continue to perform well in comparison to other
investment categories."
For the quarter ended March 31, 2005, the annualized yield on
average earning assets was 3.75% and the annualized cost of funds on
the average repurchase balance was 2.57%, which equates to an interest
rate spread of 1.18%. This is a 50 basis point decrease over the 1.68%
annualized interest rate spread for the quarter ended March 31, 2004
and a 9 basis point decrease over the 1.27% annualized interest rate
spread for the quarter ended December 31, 2004. For the quarter ended
March 31, 2004, the annualized yield on average earning assets was
3.16% and the annualized cost of funds on the average repurchase
balance was 1.48%. 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%.
"Market conditions are challenging but the fundamentals in the
mortgage market are positive," said Wellington Denahan-Norris, Vice
Chairman and Chief Investment Officer of Annaly. "Our cost of funds
continues to rise with each tightening by the Federal Reserve, and our
portfolio is designed to respond over time to the change in short-term
rates through the resetting of coupons on our floating-rate and
adjustable-rate assets and the reinvestment of amortizing principal
into the new interest rate environment."
For the quarters ended March 31, 2005, March 31, 2004, and
December 31, 2004, the Company's gain on sale of Mortgage-Backed
Securities was $580,000, $595,000, and $1.1 million, respectively.
General and administrative expenses as a percentage of average
assets were 0.14%, 0.15%, and 0.14% for the quarters ended March 31,
2005, March 31, 2004, and December 31, 2004, respectively. In
addition, the Company's Dividend Efficiency Ratio, calculated as
general and administrative expenses divided by dividends paid, was
11.4%, 9.4%, and 11.8% for the quarters ended March 31, 2005, March
31, 2004, and December 31, 2004, respectively.
The Constant Prepayment Rate was 25% during the first quarter of
2005, as compared to 31% during the first quarter of 2004, and 27%
during the fourth quarter of 2004. The weighted average purchase price
of the Company's portfolio was 102.3 at March 31, 2005, 102.5 at March
31, 2004 and 102.3 at December 31, 2004. The net amortization of
premiums and accretion of discounts on investment securities for the
quarters ended March 31, 2005, March 31, 2004, and December 31, 2004
was $36.1 million, $41.5 million, and $42.3 million, respectively. The
total net unamortized premium at March 31, 2005, March 31, 2004, and
December 31, 2004 was $416.5 million, $412.5 million, and $425.8
million, respectively. Leverage at March 31, 2005 was 10.8:1, in
comparison to 8.7:1 at March 31, 2004 and 9.8:1 at December 31, 2004.
At March 31, 2005, March 31, 2004, and December 31, 2004, the
Company had a common stock book value per share of $11.81, $13.45, and
$12.56, 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 March 31, 2005. The
balance of the portfolio was comprised of 63% adjustable rate
mortgages and 8% LIBOR floating rate collateralized mortgage
obligations. The Company has continued to avoid the introduction of
credit risk into its portfolio. As of March 31, 2005, 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.
At March 31, 2005, FIDAC, Annaly's wholly-owned registered
investment advisor, had under management approximately $2.3 billion in
net assets and $18.6 billion in gross assets, as compared to $1.9
billion in net assets and $15.9 billion in gross assets at December
31, 2004. For the quarter ended March 31, 2005, FIDAC earned
investment advisory and service fees, net of fees paid to
distributors, of $4.7 million, as compared to $4.6 million for the
quarter ended December 31, 2004. FIDAC, organized as a taxable REIT
subsidiary of Annaly, generally receives investment advisory fees of
approximately 10 to 15 basis points of the gross assets it manages,
assists in managing or supervises.
"In our FIDAC-managed funds, we aim to generate high current
income for investors using low credit-risk, short duration assets,"
said Mr. Farrell. "These are compelling investment attributes,
particularly in the current market environment. During the March
quarter, we saw steady growth in net assets in our FIDAC-managed
funds, and subsequent to the end of the quarter we launched two new
exchange-listed funds on the London and Toronto stock exchanges. The
full-run rate of the fee income from these will be evidenced in
forthcoming quarters."
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 dividends Annaly receives from FIDAC, which
earns investment advisory fee income. The Company, a Maryland
corporation that has elected to be taxed as a real estate investment
trust ("REIT"), currently has 121,277,698 shares of common stock
outstanding.
The Company will hold the first quarter 2005 earnings conference
call on Wednesday April 27, 2005 at 10:00 a.m. EST. The number to call
is 1-800-599-9795 for domestic and 1-617-786-2905 for international
calls and the pass code is 28853622. The re-play number is
1-888-286-8010 for domestic and 1-617-801-6888 for international calls
and the pass code is 57136260. There will be a web cast of the call on
www.annaly.com which will be available for 48 hours. 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, 2004. 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)
MARCH 31, DEC. 31,
2005 2004
(Consolidated (Consolidated)
and
Unaudited)
------------ --------------
ASSETS
Cash and cash equivalents $2,417 $5,853
Mortgage-Backed Securities, at fair value 18,702,470 19,038,386
Agency Debentures, at fair value 388,593 390,509
Receivable for preferred stock proceeds - -
Receivable for Mortgage-Backed Securities
sold - 1,025
Accrued interest receivable 80,172 81,557
Receivable for advisory and service fees 2,883 2,359
Intangible for customer relationships 15,613 15,613
Goodwill 23,122 23,122
Other assets 1,873 1,875
------------ --------------
Total assets $19,217,143 $19,560,299
============ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Repurchase agreements $17,438,609 $16,707,879
Payable for Mortgage-Backed Securities
purchased 75,165 1,044,683
Accrued interest payable 33,770 35,721
Dividends payable 54,575 60,632
Other liabilities 1,569 2,819
Accounts payable 4,079 8,095
------------ --------------
Total liabilities 17,607,767 17,859,829
------------ --------------
Stockholders' Equity:
7.875% Series A Cumulative Redeemable
Preferred Stock: 8,000,000 authorized,
7,412,500, 7,412,500, 4,250,000,
4,250,000, and 4,250,000 shares issued
and outstanding, respectively 177,077 177,077
Common stock: par value $.01 per share;
500,000,000 authorized, 121,277,698,
121,263,000, 121,235,702, 120,148,709,
and 117,866,932 shares issued and
outstanding, respectively 1,213 1,213
Additional paid-in capital 1,638,911 1,638,635
Accumulated other comprehensive income
(loss) (213,280) (120,800)
Retained earnings 5,455 4,345
------------ --------------
Total stockholders' equity 1,609,376 1,700,470
------------ --------------
Total liabilities and stockholders' equity $19,217,143 $19,560,299
============ ==============
SEPT. 30, JUNE 30, MARCH 31,
2004 2004 2004
(Consolidated (Consolidated (Unaudited)
and 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:
8,000,000 authorized,
7,412,500, 7,412,500,
4,250,000, 4,250,000, and
4,250,000 shares issued and
outstanding, respectively 102,708 102,708 102,870
Common stock: par value $.01
per share; 500,000,000
authorized, 121,277,698,
121,263,000, 121,235,702,
120,148,709, and 117,866,932
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
============ ============ ============
ANNALY MORTGAGE MANAGEMENT, INC.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(dollars in thousands)
For the quarter ended
March 31, December 31,
2005 2004
(Consolidated)(Consolidated)
------------- --------------
Interest income $176,289 $156,783
Interest expense 113,993 93,992
------------- --------------
Net interest income 62,296 62,791
------------- --------------
Other income
Investment advisory and service fees 6,309 6,143
Gain on sale of Mortgage-Backed
Securities 580 1,144
------------- --------------
Total other income 6,889 7,287
------------- --------------
Expenses
Distribution fees 1,610 1,538
General and administrative expenses 6,664 6,862
------------- --------------
Total expenses 8,274 8,400
------------- --------------
Income before income taxes 60,911 61,678
Income taxes 1,578 2,384
------------- --------------
Net income 59,333 59,294
Dividend on preferred stock 3,648 3,665
------------- --------------
Net income available to common
shareholders $55,685 $55,629
============= ==============
Net income per share available to common
shareholders:
Basic $0.46 $0.46
============= ==============
Diluted $0.46 $0.46
============= ==============
Weighted average number of shares
outstanding:
Basic 121,270,867 121,246,246
============= ==============
Diluted 121,564,320 121,514,941
============= ==============
Net income $59,333 $59,294
------------- --------------
Comprehensive income (loss):
Unrealized gain (loss) on available-for-
sale securities (91,900) (27,669)
Less: reclassification adjustment for
net gains included in net income (580) (1,144)
------------- --------------
Other comprehensive income (loss) (92,480) (28,813)
------------- --------------
Comprehensive income (loss) ($33,147) $30,481
============= ==============
For the quarter 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
------------- ------------- ------------
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 -
------------- ------------- ------------
Net 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
============= ============= ============
CONTACT: Annaly Mortgage Management, Inc.
Investor Relations:
1-888-8Annaly
www.annaly.com