Annaly Mortgage Management reports 3Q earnings

Real Estate Weekly, Oct 31, 2001

Annaly Mortgage Management, Inc. reported earnings for the quarter ended Sept. 30 of $26,345,168 or $0.58 per average share outstanding, as compared to $3,806,097, or $0.27 per average share outstanding for the quarter ended Sept. 30, 2000, which equates to a 115% increase in earnings per share.

Net income per share for the quarter ended Sept. 30 increased by 21% over the prior quarter net income of $0.48 per average share outstanding. Weighted average shares outstanding were 45,503,179 and 14,238,680 for the quarters ended Sept. 30, 2001 and 2000, respectively.

As previously reported, the Company completed an offering of common stock during the third quarter of 2001 issuing 14,991,600 shares, with aggregate net proceeds of $179.6 million. The total capital raised during the nine months ended Sept. 30, 2001 was $474.2 million.

For the quarter ended Sept. 30, the yield on average earnings assets was 5.76% and the cost of funds on the average repurchase balance was 3.89%. For the quarter ended Sept. 30, 2000, the yield on average assets was 7.10% and the cost of funds on the average repurchase balance was 6.71%.

The interest rate spread increased to 1.87% for the quarter ended September 30, 2001 from 0.39% for the quarter ended Sept. 30, 2000. The interest rate spread this quarter increased by 27 basis points over the second quarter of 2001, which was 1.60%. For the quarter ended Sept. 30, the company's gain on sale of assets was $1,184,399, as compared to the prior year of $872,949. General and administrative expenses, as a percent of average assets was 0.13% for the quarters ended Sept. 30, 2001 and 2000. Leverage at quarter end Sept. 30 was 8.1:1, in comparison to 12.9:1 at Sept. 30.

The company was able to provide a return on average equity of 23.26% for the quarter ended Sept. 30. Dividends declared for the quarter were $0.45 per share.

The dividend yield for the quarter, based on the Sept. 28 closing price of $14.45, was 12.46%. This dividend was paid on all shares, including the 14,991,600 shares issued on Sept. 26. Even without the use of the additional $179.6 million in capital for the entire quarter, the company was able to provide a dividend yield of 12.46%.

At Sept. 30, the company had a book value of $11.41, which was a 37% increase from the Sept. 30, 2000 book value of $8.30. The book value increased by 13% from the June 30 book value of $10.07. The company classifies all investment securities as "available for sale;" therefore requiring the company to record the entire portfolio at market value. Fixed rate mortgage-backed securities comprised approximately 24% of the company's portfolio at Sept. 30. The balance of the portfolio was comprised of 57% adjust able rate mortgages and 19% LIBOR floating rate collateralized mortgage obligations. The company has continued to avoid the introduction of credit risk to its portfolio.

As of Sept. 30, all of the assets in the company's portfolio were FNMA, GNMA or FHLMC securities, which carry an implied "AAA" rating. As of Sept. 30, all assets in the portfolio were REIT eligible assets.