Annaly Increases Per ShareEarnings by 115% and Book Value by 37% from the Prior Year

Annaly Mortgage Management, Inc. (NYSE: NLY) (the “Company”) today reported earnings for the quarter ended September 30, 2001 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 September 30, 2000, which equates to a 115% increase in earnings per share. Net income per share for the quarter ended September 30, 2001 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 September 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 September 30, 2001 was $474.2 million.

For the quarter ended September 30, 2001, 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 September 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 September 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 September 30, 2001, 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 September 30, 2001 and 2000. Leverage at quarter end September 30, 2001 was 8.1:1, in comparison to 12.9:1 at September 30, 2000.

The Company was able to provide a return on average equity of 23.26% for the quarter ended September 30, 2001. Dividends declared for the quarter were $0.45 per share. The dividend yield for the quarter, based on the September 28, 2001 closing price of $14.45, was 12.46%. This dividend was paid on all shares, including the 14,991,600 shares issued on September 26, 2001. Even without the use of theadditional $179.6 million in capital for the entire quarter, the Company was able to provide a dividend yield of 12.46%.

At September 30, 2001, the Company had a book value of $11.41, which was a 37% increase from the September 30, 2000 book value of $8.30. The book value increased by 13% from the June 30, 2001 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 September 30, 2001. The balance of the portfolio was comprised of 57% adjustable 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 September 30, 2001, all of the assets in the Company's portfolio were FNMA, GNMA or FHLMC securities, which carry an implied “AAA” rating. As of September 30, 2001, all assets in the portfolio were REIT eligible assets. 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 costs of borrowing to finance its acquisition of mortgage-backed securities. The Company has elected to be taxed as a real estate investment trust (“REIT”) and currently has 59,762,511 shares of common stock outstanding.

The Company will hold the quarterly earnings conference call Tuesday October 23, 2001 at 2:00 p.m. EST. The number to call is 1-800-360-9865. The re-play number is 1-800-428-6051 and the pass code is 214291. If you would like to be added to the e-mail distribution list, please e-mail [email protected]. 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. 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, 2000. 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.

Please Contact: 
Investor Relations at
1-888-826-6259 (1-888-8Annaly) or
[email protected]