Exhibit 99.1
Annaly Mortgage Management, Inc. Announces 2nd Quarter 2005 Earnings
NEW YORK--(BUSINESS WIRE)--July 26, 2005--Annaly Mortgage
Management, Inc. (NYSE: NLY) today reported net income for the quarter
ended June 30, 2005 of $47.0 million, or $0.36 basic net income per
share available to common shareholders, as compared to $63.8 million
or $0.52 basic net income per share available to common shareholders
for the quarter ended June 30, 2004 and $59.3 million, or $0.46 basic
net income per share available to common shareholders for the quarter
ended March 31, 2005.
The Company was able to provide an annualized return on average
equity of 11.36% for the quarter ended June 30, 2005, as compared to
15.76% for the quarter ended June 30, 2004 and 14.34% for the quarter
ended March 31, 2005. Common dividends declared for the quarter ended
June 30, 2005 were $0.36 per share, as compared to $0.48 per share for
the quarter ended June 30, 2004 and $0.45 per share for the quarter
ended March 31, 2005. The annualized dividend yield on common stock
for the quarter, based on the June 30, 2005 closing price of $17.93,
was 8.03%.
"The short term results of Annaly reflect the persistence of
current market conditions," said Michael A.J. Farrell, Chairman, Chief
Executive Officer and President of the Company. "Financial
institutions of all stripes are finding their performances affected by
the steady drumbeat of Federal Reserve rate increases coupled with
long-term interest rates remaining in a narrow and low trading range.
As legacy portfolios and investment strategies adapt to the lower
profit potential in this environment, the return expectations of
investors have been managed accordingly. Nevertheless, our company
continues to deliver competitive results. We are excited about
opportunities for new capital in our strategy, and our success in
growing assets under management at FIDAC, our registered investment
advisor subsidiary, is a testament to the market's understanding that
the opportunities for new capital in our strategy are compelling."
For the quarter ended June 30, 2005, the annualized yield on
average earning assets was 3.63% and the annualized cost of funds on
the average repurchase balance was 3.03%, which equates to an interest
rate spread of 0.60%. This is a 94 basis point decrease over the 1.54%
annualized interest rate spread for the quarter ended June 30, 2004
and a 58 basis point decrease over the 1.18% annualized interest rate
spread for the quarter ended March 31, 2005. For the quarter ended
June 30, 2004, the annualized yield on average earning assets was
2.94% and the annualized cost of funds on the average repurchase
balance was 1.40%. 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%.
At June 30, 2005, the annualized yield on earning assets was 3.78% and
the annualized cost of funds on the repurchase balance was 3.20%,
which equates to an interest rate spread of 0.58%.
For the quarters ended June 30, 2005, June 30, 2004, and March 31,
2005, the Company's gain on sale of Mortgage-Backed Securities was
$11.4 million, $2.1 million, and $580,000, respectively .
The Constant Prepayment Rate was 27% during the second quarter of
2005, as compared to 33% during the second quarter of 2004, and 25%
during the first quarter of 2005. The weighted average purchase price
of the Company's portfolio was 102.2 at June 30, 2005, 102.4 at June
30, 2004 and 102.3 at March 31, 2005. The net amortization of premiums
and accretion of discounts on investment securities for the quarters
ended June 30, 2005, June 30, 2004, and March 31 2005 was $42.7
million, $56.1 million, and $36.1 million, respectively. The total net
unamortized premium at June 30, 2005, June 30, 2004, and December 31,
2004 was $401.4 million, $384.7 million, and $416.5 million,
respectively. Leverage at June 30, 2005 was 10.1:1, in comparison to
9.9:1 at June 30, 2004 and 10.8:1 at March 31, 2005.
"Our team has done a fine job through this challenging
environment," said Wellington Denahan-Norris, Vice Chairman and Chief
Investment Officer of Annaly. "Our net interest spread narrowed in the
quarter as a portion of our repurchase agreements rolled into the new
interest rate environment and higher amortization expense lowered
yields. We continue to manage the portfolio to perform in a wide range
of interest rate environments, including the one we are in, by
executing our barbell strategy of maintaining a mix of fixed-rate and
adjustable- and floating-rate mortgage-backed securities. In this
strategy, there will be short-term volatility in results as the
portfolio adapts to changing market conditions, but over the long-term
this process of adapting--through coupons resetting, reinvestment of
principal and harvesting of gains--is designed to provide returns that
are competitive."
General and administrative expenses as a percentage of average
assets were 0.14%, 0.13%, and 0.14% for the quarters ended June 30,
2005, June 30, 2004, and March 31, 2005, respectively. In addition,
the Company's Dividend Efficiency Ratio, calculated as general and
administrative expenses divided by dividends paid, was 14.2%, 9.8%,
and 11.4% for the quarters ended June 30, 2005, June 30, 2004, and
March 31, 2005, respectively.
At June 30, 2005, June 30, 2004, and March 31, 2005, the Company
had a common stock book value per share of $12.43, $12.07, and $11.81,
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 33% of the Company's portfolio at June 30, 2005. The
balance of the portfolio was comprised of 63% adjustable rate
mortgages and 4% LIBOR floating rate collateralized mortgage
obligations. The Company has continued to avoid the introduction of
credit risk into its portfolio. As of June 30, 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 June 30, 2005, FIDAC, Annaly's wholly-owned registered
investment advisor, had under management approximately $3.1 billion in
net assets and $27.8 billion in gross assets, as compared to $2.3
billion in net assets and $18.6 billion in gross assets at March 31,
2005 and $1.9 billion in net assets and $15.9 billion in gross assets
at December 31, 2004. For the quarter ended June 30 2005, FIDAC earned
investment advisory and service fees, net of fees paid to
distributors, of $7.5 million, as compared to $4.7 million for the
quarter ended March 31, 2005. FIDAC, organized as a taxable REIT
subsidiary of Annaly, generally receives net investment advisory fees
of approximately 10 to 20 basis points of the gross assets it manages,
assists in managing or supervises.
"With strong momentum in the second quarter, FIDAC's net and gross
assets under management have grown since year-end 2004 by 63% and 75%,
respectively," said Mr. Farrell. "Growth has come in both existing
funds and new funds, as we continue to work to deliver high current
income using high credit-quality assets. This investment proposition
is finding acceptance with investors in the US and around the world,
and we believe we are well-positioned to continue to grow our asset
management business."
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 122,554,831 shares of common stock
outstanding.
The Company will hold the second quarter 2005 earnings conference
call on Wednesday, July 27, 2005 at 10:00 a.m. EST. The number to call
is 1-866-700-7101 for domestic and 1-617-213-8837 for international
calls and the pass code is 63224598. The re-play number is
1-888-286-8010 for domestic and 1-617-801-6888 for international calls
and the pass code is 38606574. 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.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
June 30, March 31, Dec. 31, Sept. 30, June 30,
2005 2005 2004 2004 2004
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
------------------------------------------------------------
ASSETS
Cash and cash
equivalents $3,669 $2,417 $5,853 $6,772 $4,499
Mortgage-Backed
Securities, at
fair
value 19,165,744 18,702,470 19,038,386 17,571,593 16,142,801
Agency Debentures,
at fair
value 391,092 388,593 390,509 639,437 978,994
Receivable for
Mortgage-Backed
Securities sold - - 1,025 - -
Accrued interest
receivable 87,960 80,172 81,557 74,291 74,874
Receivable for
advisory and
service fees 4,334 2,883 2,359 1,637 1,644
Intangible for
customer
relationships 15,552 15,613 15,613 15,613 15,613
Goodwill 23,122 23,122 23,122 23,122 22,905
Other assets 1,472 1,873 1,875 1,371 1,427
---------------------------------------------------------
Total
assets $19,692,945 $19,217,143 $19,560,299 $18,333,836 $17,242,757
===========================================================
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Liabilities:
Repurchase
agreements $17,251,594 $17,438,609 $16,707,879 $15,579,196 $15,342,123
Payable for
Mortgage-Backed
Securities
purchased 659,325 75,165 1,044,683 999,380 263,207
Accrued
interest
payable 29,654 33,770 35,721 24,483 19,959
Dividends
payable 44,120 54,575 60,632 60,618 57,674
Other
liabilities 1,241 1,569 2,819 4,061 3,294
Accounts
payable 6,523 4,079 8,095 6,508 3,989
----------------------------------------------------------
Total
liabilities 17,992,457 17,607,767 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,
7,412,500,
4,250,000,
4,250,000, and
4,250,000
shares issued
and
outstanding,
respectively 177,088 177,077 177,077 102,708 102,708
Common stock:
par value $.01
per share;
500,000,000
authorized,
122,554,831,
121,277,698,
121,263,000,
121,235,702,
and
120,148,709
shares
issued and
outstanding,
respectively 1,226 1,213 1,213 1,212 1,201
Additional
paid-in
capital 1,662,347 1,638,911 1,638,635 1,638,309 1,620,666
Accumulated
other
comprehensive
loss (144,853) (213,280) (120,800) (91,987) (177,489)
Retained
earnings 4,680 5,455 4,345 9,348 5,425
---------------------------------------------------------
Total
stockholders'
equity 1,700,488 1,609,376 1,700,470 1,659,590 1,552,511
---------------------------------------------------------
Total liabilities
and stockholders'
equity $19,692,945 $19,217,143 $19,560,299 $18,333,836 $17,242,757
===========================================================
ANNALY MORTGAGE MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(dollars in thousands)
For the quarter ended
June 30, March 31, December 31, September 30, June 30,
2005 2005 2004 2004 2004
---------------------------------------------------------
Interest
income $171,595 $176,289 $156,783 $138,970 $122,234
Interest
expense 133,758 113,993 93,992 70,173 55,648
---------------------------------------------------------
Net interest
income 37,837 62,296 62,791 68,797 66,586
---------------------------------------------------------
Other income
Investment
advisory and
service fees 9,669 6,309 6,143 4,811 1,558
Gain on sale of
Mortgage-Backed
Securities 11,435 580 1,144 1,350 2,126
--------------------------------------------------------
Total other
income 21,104 6,889 7,287 6,161 3,684
--------------------------------------------------------
Expenses
Distribution
fees 2,126 1,610 1,538 1,024 298
General and
administrative
expenses 6,800 6,664 6,862 6,159 5,643
--------------------------------------------------------
Total
expenses 8,926 8,274 8,400 7,183 5,941
--------------------------------------------------------
Income before
income taxes 50,015 60,911 61,678 67,775 64,329
Income taxes 3,022 1,578 2,384 1,155 494
--------------------------------------------------------
Net income 46,993 59,333 59,294 66,620 63,835
Dividend on
preferred stock 3,648 3,648 3,665 2,082 1,998
--------------------------------------------------------
Net income
available to
common
shareholders $43,345 $55,685 $55,629 $64,538 $61,837
=========================================================
Net income per
share available
to common
shareholders:
Basic $0.36 $0.46 $0.46 $0.53 $0.52
=========================================================
Diluted $0.36 $0.46 $0.46 $0.53 $0.52
=========================================================
Weighted average
number of shares
outstanding:
Basic 121,740,256 121,270,867 121,246,246 120,802,814 118,276,509
===========================================================
Diluted 122,013,050 121,564,320 121,514,941 120,994,191 118,469,756
===========================================================
Net income $46,993 $59,333 $59,294 $66,620 $63,835
-----------------------------------------------------------
Comprehensive
income (loss):
Unrealized gain
(loss) on
available-for-
sale
securities 79,862 (91,900) (27,669) 86,852 (179,863)
Less:
reclassification
adjustment for
net gains
included in
net income (11,435) (580) (1,144) (1,350) (2,126)
-----------------------------------------------------------
Other
comprehensive
income
(loss) 68,427 (92,480) (28,813) 85,502 (181,989)
-----------------------------------------------------------
Comprehensive
income
(loss) $115,420 ($33,147) $30,481 $152,122 ($118,154)
===========================================================
ANNALY MORTGAGE MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(dollars in thousands)
For the six months ended
June 30, June 30,
2005 2004
------------------------
Interest income $347,884 $236,575
Interest expense 247,751 105,951
------------------------
Net interest income 100,133 130,624
------------------------
Other income
Investment advisory and service fees 15,978 1,558
Gain on sale of Mortgage-Backed Securities 12,016 2,721
------------------------
Total other income 27,994 4,279
------------------------
Expenses
Distribution fees 3,737 298
General and administrative expenses 13,464 11,008
------------------------
Total expenses 17,201 11,306
------------------------
Income before income taxes 110,926 123,597
Income taxes 4,600 919
------------------------
Net income 106,326 122,678
Dividend on preferred stock 7,297 1,998
------------------------
Net income available to common shareholders $99,029 $120,680
========================
Net income per share available to common
shareholders:
Basic $0.82 $1.05
========================
Diluted $0.81 $1.04
========================
Weighted average number of shares outstanding:
Basic 121,506,858 115,391,357
========================
Diluted 121,785,918 115,659,173
========================
Net income $106,326 $122,678
------------------------
Comprehensive income (loss):
Unrealized gain (loss) on available-for-sale
securities (12,037) (127,507)
Less: reclassification adjustment for net
gains
included in net income (12,016) (2,721)
------------------------
Other comprehensive income (loss) (24,053) (130,228)
------------------------
Comprehensive income (loss) $82,273 ($7,550)
========================
CONTACT: Annaly Mortgage Management, Inc.
Investor Relations
1-888-8Annaly
www.annaly.com