NEW YORK--(BUSINESS WIRE)--
Annaly Capital Management, Inc. (NYSE: NLY) today reported Core Earnings
for the quarter ended March 31, 2009 of $309.3 million or $0.56 per
average share available to common shareholders as compared to Core
Earnings of $233.6 million or $0.51 per average share available to
common shareholders for the quarter ended March 31, 2008, and Core
Earnings of $261.8 million or $0.47 per average share available to
common shareholders for the quarter ended December 31, 2008. "Core
Earnings" represents a non-GAAP measure and is defined as net income
(loss) excluding impairment losses, gains or losses on sales of
securities and termination of interest rate swaps and unrealized gain or
loss on interest rate swaps. On a GAAP basis, net income for the quarter
ended March 31, 2009 was $349.9 million or $0.64 per average share
available to common shareholders, as compared to net income of $243.0
million or $0.54 per average share available to common shareholders for
the quarter ended March 31, 2008 and net loss of $507.0 million or $0.95
per average share related to common shareholders for the quarter ended
December 31, 2008.
During the quarter ended March 31, 2009, the Company sold $835.7 million
of Mortgage-Backed Securities, resulting in a realized gain of $5.0
million. During the quarter ended March 31, 2008, the Company sold $4.1
billion of Mortgage-Backed Securities, resulting in a realized gain of
$9.4 million. During the quarter ended December 31, 2008, the Company
sold $4.3 billion of Mortgage-Backed Securities, resulting in a realized
loss of $468,000.
Common dividends declared for the quarter ended March 31, 2009 were
$0.50 per share, as compared to $0.48 per share for the quarter ended
March 31, 2008 and $0.50 per share for the quarter ended December 31,
2008. The annualized dividend yield on the Company's common stock for
the quarter ended March 31, 2009, based on the March 31, 2009 closing
price of $13.87, was 14.42%. On a Core Earnings basis, the Company
provided an annualized return on average equity of 15.96% for the
quarter ended March 31, 2009, as compared to 16.01% for the quarter
ended March 31, 2008 and 14.52% for the quarter ended December 31, 2008.
On a GAAP basis, the Company provided an annualized return on average
equity of 18.06% for the quarter ended March 31, 2009, as compared to an
annualized return on average equity of 16.66% for the quarter ended
March 31, 2008, and an annualized loss of 28.12% on average equity for
the quarter ended December 31, 2008.
Michael A.J. Farrell, Chairman, Chief Executive Officer and President of
Annaly, commented on the Company's results. "The first quarter saw the
positive response to a flurry of government program announcements,
including an increase in the Federal Reserve's Agency MBS buying
program, proposals on an expanded TALF, and the new Public-Private
Investment Program for eligible assets. These announcements should
continue to have a salutary effect on our markets, whether as a direct
participant or an indirect beneficiary. In this environment, we have
been able to generate strong risk-adjusted returns for our shareholders.
We will continue to prudently manage our company for long-term
performance as we vigilantly monitor the intended and unintended
consequences of these government programs."
For the quarter ended March 31, 2009, the annualized yield on average
earning assets was 5.23% and the annualized cost of funds on the average
repurchase balance was 3.12%, which resulted in an average interest rate
spread of 2.11%. This is a 65 basis point increase over the 1.46%
annualized interest rate spread for the quarter ended March 31, 2008,
and a 40 basis point increase over the 1.71% annualized interest rate
spread for the quarter ended December 31, 2008. At March 31, 2009, the
weighted average yield on assets was 4.86% and the cost of funds,
including the effect of interest rate swaps, was 2.78%, which resulted
in an interest rate spread of 2.08%. Leverage at March 31, 2009, was
6.0:1, compared to 8.1:1 at March 31, 2008, and 6.4:1 at December 31,
2008.
Fixed-rate securities comprised 66% of the Company's portfolio at March
31, 2009. The balance of the portfolio was comprised of 27%
adjustable-rate mortgages and 7% LIBOR floating-rate collateralized
mortgage obligations. At March 31, 2009, the Company had entered into
interest rate swaps with a notional amount of $17.3 billion, or 31% of
the portfolio. The purpose of the swaps is to mitigate the risk of
rising interest rates that affect the Company's cost of funds. Since the
Company receives a floating rate on the notional amount of the swaps,
the effect of the swaps is to lock in a spread relative to the cost of
financing. As of March 31, 2009, all of the Company's Investment
Securities were Fannie Mae, Freddie Mac and Ginnie Mae mortgage-backed
securities, which carry an actual or implied "AAA" rating.
"Our portfolio is performing well in the current environment, and
investment opportunities for new capital remain attractive on a relative
basis," said Wellington Denahan-Norris, Annaly's Vice Chairman, Chief
Investment Officer and Chief Operating Officer. "Lower primary mortgage
rates have sparked an increase in refinancing application activity and,
although we have yet to see a significant pickup in prepayment speeds,
we continue to manage for that potential outcome by maintaining a
balanced portfolio composition. After taking into account the effect of
interest rate swaps, at March 31, 2009, our portfolio of Investment
Securities was comprised of 38% floating-rate, 27% adjustable-rate and
35% fixed-rate assets."
The following table summarizes portfolio information for the Company:
March 31, March 31, December 31,
2009 2008 2008
Leverage at period-end 6.0:1 8.1:1 6.4:1
Fixed-rate investment securities as % of 66% 69% 64%
portfolio
Adjustable-rate investment securities as % 27% 21% 28%
of portfolio
Floating-rate investment securities as % of 7% 10% 8%
portfolio
Notional amount of interest rate swaps as % 31% 30% 32%
of portfolio
Annualized yield on average earning assets 5.23% 5.64% 5.50%
during the quarter
Annualized cost of funds on average 3.12% 4.18% 3.79%
repurchase balance during the quarter
Annualized interest rate spread during the 2.11% 1.46% 1.71%
quarter
Weighted average yield on assets at 4.86% 5.36% 5.03%
period-end
Weighted average cost of funds at period-end 2.78% 3.85% 4.08%
Interest rate spread at period-end 2.08% 1.51% 0.95%
Weighted average receive rate on interest 0.55% 2.85% 1.18%
rate swaps at period-end
Weighted average pay rate on interest rate 4.55% 4.90% 4.66%
swaps at period-end
The Constant Prepayment Rate was 16% during the first quarter of 2009,
as compared to 15% during the first quarter of 2008, and 10% during the
fourth quarter of 2008. The weighted average cost basis of the Company's
Investment Securities was 101.3 at March 31, 2009. The net amortization
of premiums and accretion of discounts on Investment Securities for the
quarters ended March 31, 2009, March 31, 2008 and December 31, 2008 was
$41.0 million, $27.5 million, and $26.8 million, respectively. The total
net premium remaining unamortized at March 31, 2009, March 31, 2008 and
December 31, 2008 was $668.3 million, $383.3 million, and $555.0
million, respectively.
General and administrative expenses as a percentage of average assets
were 0.20%, 0.17% and 0.18% for the quarters ended March 31, 2009, March
31, 2008, and December 31, 2008, respectively. At March 31, 2009, March
31, 2008, and December 31, 2008, the Company had a common stock book
value per share of $14.67, $12.95 and $12.94, respectively.
At March 31, 2009, Annaly's wholly-owned registered investment advisors
had under management approximately $8.5 billion in net assets and $16.3
billion in gross assets, as compared to $3.2 billion in net assets and
$12.7 billion in gross assets at March 31, 2008 and $7.0 billion in net
assets and $15.3 billion in gross assets at December 31, 2008. For the
quarter ended March 31, 2009, the investment advisors earned investment
advisory and service fees, net of fees paid to distributors, of $7.3
million, as compared to $6.0 million for the quarter ended March 31,
2008 and $6.9 million for the quarter ended December 31, 2008.
Annaly manages assets on behalf of institutional and individual
investors worldwide. The Company's principal business objective is to
generate net income for distribution to investors from its Investment
Securities and from dividends it receives from its subsidiaries. Annaly
is a Maryland corporation that has elected to be taxed as a real estate
investment trust ("REIT"), and currently has 544,344,030 shares of
common stock outstanding.
The Company will hold the first quarter 2009 earnings conference call on
April 30, 2009 at 10:00 a.m. EST. The number to call is 866-831-6270 for
domestic calls and 617-213-8858 for international calls and the pass
code is 38270330. The replay number is 888-286-8010 for domestic calls
and 617-801-6888 for international calls and the pass code is 73428940.
The replay is available for 48 hours after the earnings call. 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
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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, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
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 the 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, changes in the market value of
our assets, changes in business conditions and the general economy,
changes in government regulations affecting our business, our ability to
maintain our qualification as a REIT for federal income tax purposes,
risks associated with the broker-dealer business of our subsidiary, and
risks associated with the investment advisory business of our
subsidiaries, including the removal by clients of assets they manage,
their regulatory requirements and competition in the investment advisory
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 most recent Annual
Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q.
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 CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
March 31, September June 30, March 31,
30,
2009 December 2008 2008
31, 2008(1) 2008
(Unaudited) (Unaudited) (Unaudited)
(Unaudited)
ASSETS
Cash and cash $1,035,118 $ 909,353 $ 1,083,814 $ 1,462,737 $ 1,549,041
equivalents
Reverse repurchase
agreements with 452,480 562,119 619,657 49,964 800,000
affiliate
Mortgage-Backed
Securities, at 58,785,456 55,046,995 54,840,928 58,017,305 56,115,025
fair value
Agency debentures, - 598,945 618,352 731,995 738,837
at fair value
Available-for-sale
equity securities, 51,418 52,795 22,490 32,631 44,546
at fair value
Trading
securities, at - - 2,199 23,478 1,836
fair value
Receivable for
Investment 33,009 75,546 2,446,342 824,308 174,413
Securities sold
Accrued interest
and dividends 291,347 282,532 295,925 303,228 287,261
receivable
Receivable from 16,886 16,886 - - -
Prime Broker(2)
Receivable for
advisory and 6,507 6,103 3,581 4,703 4,581
service fees
Intangible for
customer 11,399 12,380 6,726 7,604 8,840
relationships
Goodwill 27,917 27,917 22,966 22,966 22,966
Other assets 5,717 6,044 2,602 3,216 4,347
Total assets $60,717,254 $57,597,615 $59,965,582 $61,484,135 $59,751,693
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Liabilities:
Repurchase $48,951,178 $46,674,885 $51,075,758 $51,839,663 $51,324,007
agreements
Payable for
Investment 2,121,670 2,062,030 839,235 1,405,109 828,235
Securities
purchased
Trading securities
sold, not yet - - 30,903 48,718 37,268
purchased, at fair
value
Accrued interest 112,457 199,985 168,361 154,615 172,575
payable
Dividends payable 272,170 270,736 296,254 296,201 224,823
Accounts payable
and other 23,970 8,380 26,385 36,625 20,123
liabilities
Interest rate
swaps, at fair 1,012,574 1,102,285 384,258 400,998 789,859
value
Total liabilities 52,494,019 50,318,301 52,821,154 54,181,929 53,396,890
6.00% Series B
Cumulative
Convertible
Preferred Stock:
4,600,000 shares
authorized,
2,607,564, 63,185 96,042 108,957 108,957 111,405
3,963,525,
4,496,525,
4,496,525, and
4,597,550, shares
issued and
outstanding,
respectively
Stockholders'
Equity:
7.875% Series A
Cumulative
Redeemable
Preferred
Stock: 7,412,500 177,088 177,088 177,088 177,088 177,088
authorized,
7,412,500
shares issued and
outstanding
Common stock, par
value $.01 per
share, 987,987,500
authorized,
544,339,785,
541,475,366, 5,443 5,415 5,402 5,385 4,684
540,189,101,
538,546,666 and
468,380,797,
issued and
outstanding,
respectively
Additional paid-in 7,667,769 7,633,438 7,616,528 7,592,161 6,506,494
capital
Accumulated other
comprehensive 1,121,551 252,230 (661,498) (478,791) (335,814)
income (loss)
Accumulated (811,801) (884,899) (102,049) (102,594) (109,054)
deficit
Total
stockholders' 8,160,050 7,183,272 7,035,471 7,193,249 6,243,398
equity
Total liabilities,
minority interest,
Series B
Cumulative
$60,717,254 $57,597,615 $59,965,582 $61,484,135 $59,751,693
Convertible
Preferred Stock
and stockholders'
equity
(1) Derived from the audited consolidated financial statements at December 31,
2008.
(2) The Company invested $45,000,000 in an equity fund and has redeemed
$56,000,000. Net unrealized gains in the fund valued at September 15, 2008 still
remain at the prime broker, Lehman Brothers International (Europe), which is in
bankruptcy and the ultimate recovery of such amount remains uncertain.
ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)
(dollars in thousands, except per share data)
For the quarters ended
March 31, December September June 30, March 31,
31, 30,
2009 2008 2008 2008 2008
Interest income $716,015 $740,282 $810,659 $773,359 $791,128
Interest expense 378,625 450,805 458,250 442,251 537,606
Net interest income 337,390 289,477 352,409 331,108 253,522
Other income (loss)
Investment advisory 7,761 7,224 7,663 6,406 6,598
and service fees
Gain (loss)on sale of
Mortgage-Backed 5,023 (468) (1,066) 2,830 9,417
Securities
(Loss)income from - (2,010) 7,671 2,180 1,854
trading securities
Dividend income from
available-for-sale 918 612 580 580 941
equity securities
Loss on
other-than-temporarily - - (31,834) - -
impaired securities(1)
Unrealized gain (loss)
on interest rate swaps 35,545 (768,268) - - -
(2)
Total other income 49,247 (762,910) (16,986) 11,996 18,810
(loss)
Expenses
Distribution fees 428 287 299 370 633
General and
administrative 29,882 26,957 25,455 27,215 23,995
expenses
Total expenses 30,310 27,244 25,754 27,585 24,628
Income (loss) before
income taxes and 356,327 (500,677) 309,669 315,519 247,704
minority interest
Income taxes 6,434 6,302 7,538 7,527 4,610
Income (loss) before 349,893 (506,979) 302,131 307,992 243,094
minority interest
Minority interest - - - - 58
Net income (loss) 349,893 (506,979) 302,131 307,992 243,036
Dividend on preferred 4,626 5,135 5,335 5,334 5,373
stock
Net income (loss)
available (related) to $345,267 ($512,114) $296,796 $302,658 $237,663
common shareholders
Net income (loss)
available (related)
per share to common
shareholders:
Basic $0.64 ($0.95) $0.55 $0.60 $0.54
Diluted $0.63 ($0.95) $0.54 $0.59 $0.53
Weighted average
number of common
shares outstanding:
Basic 542,903,110 541,099,147 538,706,131 503,758,079 443,812,432
Diluted 548,551,328 541,099,147 547,882,488 512,678,975 452,967,457
Net income (loss) $349,893 ($506,979) $302,131 $307,992 $243,036
Other comprehensive
income (loss):
Unrealized gain (loss)
on available-for-sale 820,178 863,018 (232,347) (529,008) 217,563
securities
Unrealized gain (loss) 54,166 50,242 16,740 388,861 (391,763)
on interest rate swaps
Reclassification
adjustment for (gains)
losses included in net (5,023) 468 32,900 (2,830) (9,417)
income
Other comprehensive 869,321 913,728 (182,707) (142,977) (183,617)
income (loss)
Comprehensive income $1,219,214 $406,749 $119,424 $165,015 $ 59,419
(1) Although the Company has the intent and ability to retain its
investment in Chimera Investment Corporation, the Company determined
that it is appropriate to recognize an other-than-temporary impairment
charge of $31.8 million. Recognition of such impairment charges does not
reduce the taxable income of the Company. The non-cash charge is the
difference between the purchase price for the shares and their fair
value at September 30, 2008.
(2) Beginning in the fourth quarter of 2008, the Company no longer
applies hedge accounting to its interest rate swaps under SFAS 133. As a
result, changes in unrealized gains and losses in interest rate swaps
are reported in the income statement for GAAP purposes.
Source: Annaly Capital Management, Inc.
Contact: Annaly Capital Management, Inc.
Investor Relations
1-888-8Annaly
www.annaly.com