Annaly Capital Management, Inc. NLY today announced financial results for the quarter ended December 31, 2013.
Financial Performance
GAAP net income for the quarter ended December 31, 2013 was $1.0 billion or $1.07 per average common share as compared to GAAP net income of $192.5 million or $0.18 per average common share for the quarter ended September 30, 2013, and GAAP net income of $700.5 million or $0.70 per average common share for the quarter ended December 31, 2012. The increase from both prior periods was largely attributable to higher unrealized gains on interest rate swaps, trading assets and interest-only Agency mortgage-backed securities. Core earnings for the quarter ended December 31, 2013 was $350.1 million or $0.35 per average common share as compared to $282.3 million or $0.28 per average common share for the quarter ended September 30, 2013, and $335.1 million or $0.32 per average common share for the quarter ended December 31, 2012. "Core earnings" represents a non-GAAP measure and is defined as net income (loss) excluding gains or losses on disposals of investments and termination of interest rate swaps, unrealized gains or losses on interest rate swaps and Agency interest-only mortgage-backed securities, net loss on extinguishment of the 4% Convertible Senior Notes due 2015, net gains and losses on trading assets, impairment losses and loss on previously held equity interest in CreXus Investment Corp.
GAAP net income for the years ended December 31, 2013 and 2012, respectively was $3.7 billion or $3.86 per average common share and $1.7 billion or $1.74 per average common share. Core earnings for the years ended December 31, 2013 and 2012, was $1.2 billion or $1.21 per average common share and $1.5 billion or $1.54 per average common share, respectively.
For the quarter ended December 31, 2013, the annualized yield on average interest-earning assets was 3.50% and the annualized cost of funds on average interest-bearing liabilities, including the net interest payments on interest rate swaps, was 2.07%, which resulted in an average interest rate spread of 1.43%. This was a 36 basis point increase from the 1.07% average interest rate spread for the quarter ended September 30, 2013, and a 49 basis point increase from the 0.94% average interest rate spread for the quarter ended December 31, 2012. Our annualized yield on average interest-earning assets increased for the quarter ended December 31, 2013 when compared to the quarter ended September 30, 2013 due to lower amortization expense on our Investment Securities, primarily driven by lower prepayment speeds experienced during the current quarter. Our annualized cost of funds on average interest-bearing liabilities increased for the quarter ended December 31, 2013 when compared to the quarter ended September 30, 2013 due to higher interest rate swap notional amounts and higher cost of interest rate swaps coupled with lower repurchase agreements balances during the current quarter.
Wellington J. Denahan, Chairman and Chief Executive Officer of Annaly, commented on the Company's results. “We are encouraged by the reduced uncertainty in the fixed income markets with the introduction of monetary policy tapering. Our commercial assets continue to build momentum, with commercial investments now representing 14% of our stockholders' equity. The lower leverage stance permits us to be opportunistic with capital deployment allowing us to strengthen earnings in future periods.”
Asset Portfolio
Investment Securities, which is comprised of Agency mortgage-backed securities and Agency debentures, were $73.4 billion at December 31, 2013, compared to $83.0 billion at September 30, 2013 and $127.0 billion at December 31, 2012. As of December 31, 2013, substantially all of the Company's Investment Securities were Fannie Mae, Freddie Mac and Ginnie Mae mortgage-backed securities and debentures. Fixed-rate Agency mortgage-backed securities and debentures comprised 91% of the Company's Investment Securities portfolio at December 31, 2013. Adjustable-rate Agency mortgage-backed securities and debentures comprised 9% of the Company's Investment Securities portfolio. During the quarter ended December 31, 2013, the Company disposed of $11.9 billion of Investment Securities, resulting in a realized gain of $49.6 million. During the quarter ended September 30, 2013, the Company disposed of $13.0 billion of Investment Securities, resulting in a realized gain of $43.6 million. During the quarter ended December 31, 2012, the Company disposed of $13.2 billion of Investment Securities, resulting in a realized gain of $121.4 million.
During the year ended December 31, 2013, the Company disposed of $56.8 billion of Investment Securities, resulting in a realized gain of $424.1 million. During the year ended December 31, 2012, the Company disposed of $32.2 billion of Investment Securities, resulting in a realized gain of $438.5 million.
The Constant Prepayment Rate for the quarters ended December 31, 2013, September 30, 2013, and December 31, 2012, was 7%, 13% and 20%, respectively. The net amortization of premiums and accretion of discounts on Investment Securities for the quarters ended December 31, 2013, September 30, 2013, and December 31, 2012, was $30.7 million, $201.9 million, and $433.3 million, respectively. The total net premium balance on Investment Securities at December 31, 2013, September 30, 2013, and December 31, 2012, was $4.6 billion, $4.7 billion, and $5.8 billion, respectively. The amortized cost basis of the Company's non-interest-only Investment Securities at December 31, 2013, September 30, 2013, and December 31, 2012, was 105.0%, 104.7%, and 104.3%, respectively. The amortized cost basis of the Company's interest-only Investment Securities at December 31, 2013, September 30, 2013, and December 31, 2012, was 14.1%, 13.8%, and 13.6%, respectively.
The Company's commercial investment portfolio consists of commercial real estate investments and corporate debt. At December 31, 2013, the Company's commercial investment portfolio represented 14% of stockholders' equity compared to 11% at September 30, 2013. Commercial real estate debt and preferred equity totaled $1.6 billion and investments in commercial real estate totaled $60.1 million at December 31, 2013. Total commercial real estate investments increased from $1.3 billion at September 30, 2013 to $1.6 billion at December 31, 2013.
Capital and Funding
At December 31, 2013 total stockholders' equity was $12.4 billion. Leverage at December 31, 2013, September 30, 2013, and December 31, 2012, was 5.0:1, 5.4:1 and 6.5:1, respectively. Leverage includes repurchase agreements, Convertible Senior Notes and non-recourse loan participation and mortgages payable. At December 31, 2013, September 30, 2013, and December 31, 2012, the Company's capital ratio, which represents the ratio of stockholders' equity to total assets, was 15.1%, 13.9%, and 11.9%, respectively. At December 31, 2013, September 30, 2013, and December 31, 2012, the Company's net capital ratio was 15.9%, 14.8%, and 12.3%, respectively. The Company's net capital ratio takes into account the net balances of its U.S. Treasury securities and U.S Treasury securities sold, not yet purchased, reverse repurchase agreements and repurchase agreements, and securities borrowed and securities loaned. On a GAAP basis, the Company produced an annualized return on average equity for the quarters ended December 31, 2013, September 30, 2013, and December 31, 2012 of 32.46%, 5.87%, and 16.97%, respectively. On a Core earnings basis, the Company provided an annualized return on average equity for the quarters ended December 31, 2013, September 30, 2013, and December 31, 2012, of 11.05%, 8.62%, and 8.12%, respectively.
At December 31, 2013, September 30, 2013, and December 31, 2012 the Company had outstanding $61.8 billion, $69.2 billion, and $102.8 billion of repurchase agreements, respectively, with weighted average borrowing rates of 2.33%, 2.02%, and 1.53%, respectively, after giving effect to the Company's interest rate swaps, and weighted average remaining maturities of 204 days, 200 days, and 191 days, respectively.
At December 31, 2013, September 30, 2013, and December 31, 2012, the Company had a common stock book value per share of $12.13, $12.70 and $15.85, respectively.
The following table presents the maturities of repurchase agreements at December 31, 2013:
Maturity | Principal Balance | Weighted Average Rate | ||||
(dollars in thousands) | ||||||
Within 30 days | $ | 21,171,574 | 0.36% | |||
30 to 59 days | 13,373,921 | 0.43% | ||||
60 to 89 days | 3,592,266 | 0.44% | ||||
90 to 119 days | 4,010,334 | 0.52% | ||||
Over 120 days(1) | 19,632,906 |
1.29% |
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Total | $ | 61,781,001 | 0.68% |
(1) Approximately 16% of the total repurchase agreements have a remaining maturity over 1 year. |
Hedge Portfolio
At December 31, 2013, the Company had entered into interest rate swaps with a notional amount of $52.4 billion and interest rate swaptions with a net notional amount of $4.2 billion, or 92% of the Company's repurchase agreements, compared to 85% of the Company's repurchase agreements at September 30, 2013 and 46% of the Company's repurchase agreements at December 31, 2012. Changes in the unrealized gains or losses on the interest rate swaps are reflected in the Company's consolidated statements of comprehensive income (loss). The purpose of the interest rate swaps is to mitigate the risk of rising interest rates that affect the Company's cost of funds. Since the Company pays a fixed rate and receives a floating rate on the notional amount of the swaps, the intended effect of the swaps is to lock in a cost of financing. As of December 31, 2013, the swap portfolio had a weighted average pay rate of 2.14%, a weighted average receive rate of 0.20% and weighted average maturity of 5.26 years.
At December 31, 2013, the Company had entered into interest rate swaptions with a net notional amount of $4.2 billion. Changes in the unrealized gains or losses on the interest rate swaptions are reflected in the Company's consolidated statements of comprehensive income (loss). The interest rate swaptions provide the Company with the option to enter into an interest rate swap agreement for a specified notional amount, duration, and pay and receive rates. As of December 31, 2013, the long swaption portfolio had a weighted average pay rate of 3.07% and weighted average maturity of 4.26 months. As of December 31, 2013, the short swaption portfolio had a weighted average receive rate of 2.83% and weighted average maturity of 23.71 months.
The following table summarizes certain characteristics of the Company's interest rate swaps at December 31, 2013:
Maturity | Current Notional | Weighted Average Pay Rate | Weighted Average Receive Rate | Weighted Average Years to Maturity | ||||||||||||
(dollars in thousands) | ||||||||||||||||
0 - 3 years | $ | 24,286,000 | 1.83 | % | 0.18 | % | 1 | .98 | ||||||||
3 - 6 years | 8,865,410 | 2.02 | % | 0.19 | % | 4 | .19 | |||||||||
6 - 10 years | 15,785,500 | 2.37 | % | 0.23 | % | 7 | .66 | |||||||||
Greater than 10 years | 3,490,000 | 3.62 | % | 0.20 | % | 19 | .93 | |||||||||
Total / Weighted Average | $ | 52,426,910 | 2.14 | % | 0.20 | % | 5 | .26 |
The following table summarizes certain characteristics of the Company's interest rate swaptions at December 31, 2013:
Current Underlying Notional | Weighted Average Underlying Pay Rate | Weighted Average Underlying Receive Rate | Weighted Average Underlying Years to Maturity | Weighted Average Months to Expiration | ||||||||||
(dollars in thousands) |
||||||||||||||
Long | $ 5,150,000 | 3.07% | 3M LIBOR | 10.10 | 4.26 | |||||||||
Short | $ 1,000,000 | 3M LIBOR | 2.83% | 5.96 | 23.71 | |||||||||
Key Metrics
The following table presents key metrics of the Company's portfolio, liabilities and hedging positions, and performance as of and for the quarters ended December 31, 2013, September 30, 2013, and December 31, 2012:
December 31, 2013 | September 30, 2013 | December 31, 2012 | ||||||||||
Portfolio Related Metrics: |
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Fixed-rate Agency mortgage-backed securities and debentures as a percentage of portfolio | 91 | % | 91 | % | 93 | % | ||||||
Adjustable-rate Agency mortgage-backed securities and debentures as a percentage of portfolio | 9 | % | 9 | % | 7 | % | ||||||
Weighted average yield on commercial real estate debt and preferred equity at period-end | 9.17 | % | 9.71 | % | N/A | |||||||
Weighted average net equity yield on investments in commercial real estate at period-end (1) | 12.69 | % | 14.13 | % | N/A | |||||||
Liabilities and Hedging Metrics: |
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Weighted average days to maturity on repurchase agreements outstanding at period-end | 204 | 200 | 191 | |||||||||
Notional amount of interest rate swaps and swaptions as a percentage of repurchase agreements | 92 | % | 85 | % | 46 | % | ||||||
Weighted average pay rate on interest rate swaps at period-end | 2.14 | % | 2.06 | % | 2.21 | % | ||||||
Weighted average receive rate on interest rate swaps at period-end | 0.20 | % | 0.21 | % | 0.24 | % | ||||||
Weighted average net rate on interest rate swaps at period-end | 1.94 | % | 1.85 | % | 1.97 | % | ||||||
Leverage at period-end (2) | 5.0:1 | 5.4:1 | 6.5:1 | |||||||||
Capital ratio at period end | 15.1 | % | 13.9 | % | 11.9 | % | ||||||
Net capital ratio at period end | 15.9 | % | 14.8 | % | 12.3 | % | ||||||
Performance Related Metrics: |
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Annualized yield on average interest earning assets during the quarter (3) | 3.50 | % | 2.88 | % | 2.44 | % | ||||||
Annualized cost of funds on average interest bearing liabilities during the quarter | 2.07 | % | 1.81 | % | 1.50 | % | ||||||
Annualized interest rate spread during the quarter | 1.43 | % | 1.07 | % | 0.94 | % | ||||||
Annualized return on average equity | 32.46 | % | 5.87 | % | 16.97 | % | ||||||
Annualized Core return on average equity | 11.05 | % | 8.62 | % | 8.12 | % | ||||||
Common dividend declared during the quarter | $0.30 | $0.35 | $0.45 | |||||||||
Book value per common share | $12.13 | $12.70 | $15.85 | |||||||||
(1) Excludes real estate held-for-sale. |
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(2) Includes non-recourse loan participations and mortgages payable. |
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(3) Average interest earning assets reflects the average amortized cost of our investments during the period. |
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The following table presents a reconciliation between GAAP net income and Core earnings for the quarters ended December 31, 2013, September 30, 2013, and December 31, 2012:
For the quarters ended | |||||||||||||||||
December 31, 2013 | September 30, 2013 | December 31, 2012 | |||||||||||||||
(dollars in thousands) | |||||||||||||||||
GAAP net income | $ | 1,028,749 | $ | 192,458 | $ | 700,495 | |||||||||||
Realized (gains) losses on termination of interest rate swaps | 13,177 | 36,658 | - | ||||||||||||||
Unrealized (gains) losses on interest rate swaps | (561,101 | ) | (6,343 | ) | (341,554 | ) | |||||||||||
Net (gains) losses on disposal of investments | (28,602 | ) | (43,602 | ) | (114,831 | ) | |||||||||||
Net loss on extinguishment of 4% Convertible Senior Notes | - | - | 75,012 | ||||||||||||||
Net (gains) losses on trading assets | (41,936 | ) | 96,022 | (15,181 | ) | ||||||||||||
Net unrealized (gains) losses on interest-only Agency mortgage-backed securities | (60,181 | ) | 7,099 | 31,148 | |||||||||||||
Core earnings | $ | 350,106 | $ | 282,292 | $ | 335,089 | |||||||||||
GAAP net income per average common share | $ | 1.07 | $ | 0.18 | $ | 0.70 | |||||||||||
Core earnings per average common share | $ | 0.35 | $ | 0.28 | $ | 0.32 | |||||||||||
The following table presents a reconciliation between GAAP net income and Core earnings for the years ended December 31, 2013 and 2012:
For the years ended | ||||||||||||
December 31, 2013 | December 31, 2012 | |||||||||||
(dollars in thousands) | ||||||||||||
GAAP net income | $ | 3,729,698 | $ | 1,735,900 | ||||||||
Realized (gains) losses on termination of interest rate swaps | 101,862 | 2,385 | ||||||||||
Unrealized (gains) losses on interest rate swaps | (2,002,200 | ) | 32,219 | |||||||||
Net (gains) losses on disposal of investments | (403,045 | ) | (432,139 | ) | ||||||||
Net loss on extinguishment of 4% Convertible Senior Notes | - | 162,340 | ||||||||||
Net (gains) losses on trading assets | (1,509 | ) | (22,910 | ) | ||||||||
Net unrealized (gains) losses on interest-only Agency mortgage-backed securities | (244,730 | ) | 59,937 | |||||||||
Impairment of goodwill | 23,987 | - | ||||||||||
Loss on previously held equity interest in CreXus | 18,896 | - | ||||||||||
Core earnings | $ | 1,222,959 | $ | 1,537,732 | ||||||||
GAAP net income per average common share | $ | 3.86 | $ | 1.74 | ||||||||
Core earnings per average common share | $ | 1.21 | $ | 1.54 |
Dividend Declarations
Common dividends declared for the quarters ended December 31, 2013, September 30, 2013, and December 31, 2012 were $0.30, $0.35, and $0.45 per common share, respectively. The Company distributes dividends based on its current estimate of taxable earnings per common share, not GAAP net income. Taxable earnings and GAAP net income will typically differ due to items such as non-taxable unrealized and realized gains and losses, differences in premium amortization and discount accretion, and non-deductible general and administrative expenses. The annualized dividend yield on the Company's common stock for the quarter ended December 31, 2013, based on the December 31, 2013 closing price of $9.97, was 12.04%, as compared to 12.09% for the quarter ended September 30, 2013, and 12.82% for the quarter ended December 31, 2012.
Other Information
Annaly's principal business objective is to generate net income for distribution to its shareholders from its investments. Annaly is a Maryland corporation that has elected to be taxed as a real estate investment trust (“REIT”). Annaly is managed and advised by Annaly Management Company LLC.
The Company prepares a supplement to provide additional quarterly information for the benefit of its shareholders. The supplement can be found at the Company's website in the Investor Relations section under “Quarterly Supplemental Information”.
Conference Call
The Company will hold the 2013 fourth quarter earnings conference call on February 26, 2014 at 10:00 a.m. EST. The number to call is 888-317-6003 for domestic calls and 412-317-6061 for international calls. The conference passcode is 1477019. There will also be an audio webcast of the call on www.annaly.com. The replay of the call is available for one week following the conference call. The replay number is 877-344-7529 for domestic calls and 412-317-0088 for international calls and the conference passcode is 10040001. If you would like to be added to the e-mail distribution list, please visit www.annaly.com, click on Investor Relations, then select Email Alerts and complete the email notification form.
This news release and our public documents to which we refer contain or incorporate by reference certain forward-looking statements which are based on various assumptions (some of which are beyond our control) and 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 and other securities for purchase; the availability of financing and, if available, the terms of any financings; changes in the market value of our assets; changes in business conditions and the general economy; our ability to grow the commercial mortgage business; credit risks related to our investments in commercial real estate assets and corporate debt; our ability to consummate any contemplated investment opportunities; changes in government regulations affecting our business; our ability to maintain our qualification as a REIT for federal income tax purposes; our ability to maintain our exemption from registration under the Investment Company Act of 1940, as amended; risks associated with the businesses of our subsidiaries, including the investment advisory business of our wholly-owned subsidiary; and risks associated with the broker-dealer business of our wholly-owned subsidiary. 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, except per share data) | |||||||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||||||||
2013 | 2013 | 2013 | 2013 |
2012(1) |
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(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||||||
ASSETS | |||||||||||||||||||||||||
Cash and cash equivalents | $ | 552,436 | $ | 1,122,722 | $ | 725,537 | $ | 1,862,550 | $ | 615,789 | |||||||||||||||
Reverse repurchase agreements | 100,000 | 31,074 | 171,234 | 4,933,465 | 1,811,095 | ||||||||||||||||||||
Securities borrowed | 2,582,893 | 3,439,954 | 2,425,024 | 2,688,485 | 2,160,942 | ||||||||||||||||||||
Investments, at fair value: | |||||||||||||||||||||||||
U.S. Treasury securities | 1,117,915 | 2,459,617 | - | 1,645,930 | 752,076 | ||||||||||||||||||||
Agency mortgage-backed securities | 70,388,949 | 79,902,834 | 92,487,318 | 108,256,671 | 123,963,207 | ||||||||||||||||||||
Agency debentures | 2,969,885 | 3,128,853 | 3,306,473 | 3,970,279 | 3,009,568 | ||||||||||||||||||||
Investment in affiliates | 139,447 | 136,748 | 134,948 | 267,547 | 234,120 | ||||||||||||||||||||
Commercial real estate debt and preferred equity | 1,583,969 | 1,227,182 | 938,357 | - | - | ||||||||||||||||||||
Investments in commercial real estate | 60,132 | 60,424 | 67,203 | - | - | ||||||||||||||||||||
Corporate debt, held for investment | 117,687 | 75,988 | 61,682 | 66,539 | 63,944 | ||||||||||||||||||||
Receivable for investments sold | 1,193,730 | 934,964 | 1,499,140 | 1,292,478 | 290,722 | ||||||||||||||||||||
Accrued interest and dividends receivable | 273,079 | 297,161 | 340,671 | 388,665 | 419,259 | ||||||||||||||||||||
Receivable for investment advisory income | 6,839 | 10,055 | 10,374 | 12,817 | 17,730 | ||||||||||||||||||||
Intangible for customer relationships | - | 4,572 | 6,474 | 6,731 | 6,989 | ||||||||||||||||||||
Goodwill | 94,781 | 103,245 | 102,783 | 55,417 | 55,417 | ||||||||||||||||||||
Interest rate swaps, at fair value | 559,044 | 360,373 | 38,950 | - | - | ||||||||||||||||||||
Other derivatives, at fair value | 146,725 | 85,180 | 91,270 | - | 9,830 | ||||||||||||||||||||
Other assets | 34,949 | 52,211 | 61,146 | 54,282 | 41,607 | ||||||||||||||||||||
Total assets | $ | 81,922,460 | $ | 93,433,157 | $ | 102,468,584 | $ | 125,501,856 | $ | 133,452,295 | |||||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||
U.S. Treasury securities sold, not yet purchased, at fair value | $ | 1,918,394 | $ | 2,403,524 | $ | - | $ | 611,167 | $ | 495,437 | |||||||||||||||
Repurchase agreements | 61,781,001 | 69,211,309 | 81,397,335 | 100,322,942 | 102,785,697 | ||||||||||||||||||||
Securities loaned | 2,527,668 | 3,299,090 | 2,284,245 | 2,330,060 | 1,808,315 | ||||||||||||||||||||
Payable for investments purchased | 764,131 | 2,546,467 | 2,833,214 | 3,203,461 | 8,256,957 | ||||||||||||||||||||
Payable for share buyback program | - | - | - | - | 141,149 | ||||||||||||||||||||
Convertible Senior Notes | 825,262 | 824,512 | 824,229 | 824,902 | 825,541 | ||||||||||||||||||||
Mortgages payable | 19,332 | 19,346 | 19,361 | - | - | ||||||||||||||||||||
Participation sold | 14,065 | 14,164 | 14,324 | - | - | ||||||||||||||||||||
Accrued interest payable | 160,921 | 162,755 | 164,190 | 175,749 | 186,896 | ||||||||||||||||||||
Dividends payable | 284,230 | 331,557 | 396,888 | 426,173 | 432,154 | ||||||||||||||||||||
Interest rate swaps, at fair value | 1,141,828 | 1,504,258 | 1,189,178 | 2,259,173 | 2,584,907 | ||||||||||||||||||||
Other derivatives, at fair value | 55,518 | 125,468 | - | 4,812 | - | ||||||||||||||||||||
Accounts payable and other liabilities | 25,055 | 44,983 | 82,316 | 37,048 | 10,798 | ||||||||||||||||||||
Total liabilities | 69,517,405 | 80,487,433 | 89,205,280 | 110,195,487 | 117,527,851 | ||||||||||||||||||||
Stockholders' Equity: | |||||||||||||||||||||||||
7.875% Series A Cumulative Redeemable Preferred Stock: 7,412,500 authorized, issued and outstanding |
177,088 | 177,088 | 177,088 | 177,088 | 177,088 | ||||||||||||||||||||
7.625% Series C Cumulative Redeemable Preferred Stock 12,650,000 authorized, 12,000,000 issued and outstanding |
290,514 | 290,514 | 290,514 | 290,514 | 290,514 | ||||||||||||||||||||
7.50% Series D Cumulative Redeemable Preferred Stock: 18,400,000 authorized, issued and outstanding |
445,457 | 445,457 | 445,457 | 445,457 | 445,457 | ||||||||||||||||||||
Common stock, par value $0.01 per share, 1,956,937,500 authorized, 947,432,862, 947,304,761, 947,483,487, 947,293,099 and 947,213,204 issued and outstanding, respectively | 9,474 | 9,473 | 9,475 | 9,473 | 9,472 | ||||||||||||||||||||
Additional paid-in capital | 14,765,761 | 14,759,738 | 14,754,681 | 14,746,579 | 14,740,774 | ||||||||||||||||||||
Accumulated other comprehensive income (loss) | (2,748,933 | ) | (1,454,790 | ) | (1,289,246 | ) | 2,003,248 | 3,053,242 | |||||||||||||||||
Accumulated deficit | (534,306 | ) | (1,281,756 | ) | (1,124,665 | ) | (2,365,990 | ) | (2,792,103 | ) | |||||||||||||||
Total stockholders' equity | 12,405,055 | 12,945,724 | 13,263,304 | 15,306,369 | 15,924,444 | ||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 81,922,460 | $ | 93,433,157 | $ | 102,468,584 | $ | 125,501,856 | $ | 133,452,295 | |||||||||||||||
(1) Derived from the audited consolidated financial statements at December 31, 2012 |
ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||||||||||||||||
(UNAUDITED) | |||||||||||||||||||||||||||
(dollars in thousands, except per share data) | |||||||||||||||||||||||||||
For the quarters ended | |||||||||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||||||||||
2013 | 2013 | 2013 | 2013 | 2012 | |||||||||||||||||||||||
Interest income: | |||||||||||||||||||||||||||
Investment Securities and corporate debt | $ | 723,248 | $ | 659,058 | $ | 686,577 | $ | 724,820 | $ | 748,122 | |||||||||||||||||
Commercial real estate debt and preferred equity | 36,124 | 26,066 | 13,906 | - | - | ||||||||||||||||||||||
U.S. Treasury securities | 8,125 | 7,718 | 7,242 | 5,996 | 3,819 | ||||||||||||||||||||||
Securities loaned | 2,087 | 1,787 | 2,302 | 2,612 | 2,106 | ||||||||||||||||||||||
Reverse repurchase agreements | 1,587 | 2,461 | 2,775 | 3,636 | 2,449 | ||||||||||||||||||||||
Other | 78 | 70 | 134 | 153 | 165 | ||||||||||||||||||||||
Total interest income | 771,249 | 697,160 | 712,936 | 737,217 | 756,661 | ||||||||||||||||||||||
Interest expense: | |||||||||||||||||||||||||||
Repurchase agreements | 111,038 | 120,123 | 141,945 | 157,064 | 165,600 | ||||||||||||||||||||||
Convertible Senior Notes | 17,788 | 17,092 | 16,364 | 15,813 | 15,503 | ||||||||||||||||||||||
U.S. Treasury securities sold, not yet purchased | 6,684 | 6,688 | 4,075 | 2,788 | 2,930 | ||||||||||||||||||||||
Securities borrowed | 1,718 | 1,405 | 1,737 | 1,925 | 1,458 | ||||||||||||||||||||||
Participation sold | 165 | 168 | 134 | - | - | ||||||||||||||||||||||
Total interest expense | 137,393 | 145,476 | 164,255 | 177,590 | 185,491 | ||||||||||||||||||||||
Net interest income | 633,856 | 551,684 | 548,681 | 559,627 | 571,170 | ||||||||||||||||||||||
Other income (loss): | |||||||||||||||||||||||||||
Realized gains (losses) on interest rate swaps(1) | (242,182 | ) | (227,909 | ) | (212,727 | ) | (225,476 | ) | (228,155 | ) | |||||||||||||||||
Realized gains (losses) on termination of interest rate swaps | (13,177 | ) | (36,658 | ) | (35,649 | ) | (16,378 | ) | - | ||||||||||||||||||
Unrealized gains (losses) on interest rate swaps | 561,101 | 6,343 | 1,109,022 | 325,734 | 341,554 | ||||||||||||||||||||||
Subtotal | 305,742 | (258,224 | ) | 860,646 | 83,880 | 113,399 | |||||||||||||||||||||
Investment advisory income | 8,490 | 9,558 | 12,187 | 13,408 | 18,773 | ||||||||||||||||||||||
Net gains (losses) on disposal of investments | 28,602 | 43,602 | 147,998 | 182,843 | 114,831 | ||||||||||||||||||||||
Net loss on extinguishment of 4% Convertible Senior Notes | - | - | - | - | (75,012 | ) | |||||||||||||||||||||
Dividend income from affiliates | 4,048 | 4,048 | 4,048 | 6,431 | 7,097 | ||||||||||||||||||||||
Net gains (losses) on trading assets | 41,936 | (96,022 | ) | 54,046 | 1,549 | 15,181 | |||||||||||||||||||||
Net unrealized gains (losses) on interest-only Agency mortgage-backed securities | 60,181 | (7,099 | ) | 111,521 | 80,127 | (31,148 | ) | ||||||||||||||||||||
Impairment of goodwill | - | - | (23,987 | ) | - | - | |||||||||||||||||||||
Loss on previously held equity interest in CreXus | - | - | (18,896 | ) | - | - | |||||||||||||||||||||
Other income (loss) | 3,945 | 4,212 | 7,192 | 132 | 161 | ||||||||||||||||||||||
Subtotal | 147,202 | (41,701 | ) | 294,109 | 284,490 | 49,883 | |||||||||||||||||||||
Total other income (loss) | 452,944 | (299,925 | ) | 1,154,755 | 368,370 | 163,282 | |||||||||||||||||||||
General and administrative expenses: | |||||||||||||||||||||||||||
Compensation and management fee | 43,385 | 41,774 | 43,764 | 38,443 | 25,842 | ||||||||||||||||||||||
Other general and administrative expenses | 12,909 | 16,970 | 21,367 | 13,469 | 14,242 | ||||||||||||||||||||||
Total general and administrative expenses | 56,294 | 58,744 | 65,131 | 51,912 | 40,084 | ||||||||||||||||||||||
Income (loss) before income taxes | 1,030,506 | 193,015 | 1,638,305 | 876,085 | 694,368 | ||||||||||||||||||||||
Income taxes | 1,757 | 557 | 92 | 5,807 | (6,127 | ) | |||||||||||||||||||||
Net income (loss) | 1,028,749 | 192,458 | 1,638,213 | 870,278 | 700,495 | ||||||||||||||||||||||
Dividends on preferred stock | 17,992 | 17,992 | 17,992 | 17,992 | 19,717 | ||||||||||||||||||||||
Net income (loss) available (related) to common shareholders | $ | 1,010,757 | $ | 174,466 | $ | 1,620,221 | $ | 852,286 | $ | 680,778 | |||||||||||||||||
Net income (loss) per share available (related) to common shareholders: | |||||||||||||||||||||||||||
Basic | $ | 1.07 | $ | 0.18 | $ | 1.71 | $ | 0.90 | $ | 0.70 | |||||||||||||||||
Diluted | $ | 1.03 | $ | 0.18 | $ | 1.64 | $ | 0.87 | $ | 0.68 | |||||||||||||||||
Weighted average number of common shares outstanding: | |||||||||||||||||||||||||||
Basic | 947,386,060 | 947,303,205 | 947,411,380 | 947,249,901 | 970,602,863 | ||||||||||||||||||||||
Diluted | 995,625,622 | 955,690,471 | 995,229,637 | 994,815,169 | 1,017,925,849 | ||||||||||||||||||||||
Net income (loss) | $ | 1,028,749 | $ | 192,458 | $ | 1,638,213 | $ | 870,278 | $ | 700,495 | |||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||||||
Unrealized gains (losses) on available-for-sale securities | (1,244,500 | ) | (121,942 | ) | (3,144,496 | ) | (867,151 | ) | (894,972 | ) | |||||||||||||||||
Reclassification adjustment for net (gains) losses included in net income (loss) | (49,643 | ) | (43,602 | ) | (147,998 | ) | (182,843 | ) | (121,393 | ) | |||||||||||||||||
Other comprehensive income (loss) | (1,294,143 | ) | (165,544 | ) | (3,292,494 | ) | (1,049,994 | ) | (1,016,365 | ) | |||||||||||||||||
Comprehensive income (loss) | $ | (265,394 | ) | $ | 26,914 | $ | (1,654,281 | ) | $ | (179,716 | ) | $ | (315,870 | ) | |||||||||||||
(1) Interest expense related to the Company's interest rate swaps is recorded in Realized gains (losses) on interest rate swaps on the Consolidated Statements of Comprehensive Income. |
ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES | ||||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||
(dollars in thousands, except per share data) | ||||||||||
For the years ended | ||||||||||
December 31, | December 31, | |||||||||
2013 |
2012(2) |
|||||||||
(Unaudited) | ||||||||||
Interest income: | ||||||||||
Investment Securities and corporate debt | $ | 2,793,703 | $ | 3,225,269 | ||||||
Commercial real estate debt and preferred equity | 76,096 | - | ||||||||
U.S. Treasury securities | 29,081 | 17,222 | ||||||||
Securities loaned | 8,788 | 9,903 | ||||||||
Reverse repurchase agreements | 10,459 | 6,218 | ||||||||
Other | 435 | 533 | ||||||||
Total interest income |
2,918,562 | 3,259,145 | ||||||||
Interest expense: | ||||||||||
Repurchase agreements | 530,170 | 577,243 | ||||||||
Convertible Senior Notes | 67,057 | 67,221 | ||||||||
U.S. Treasury securities sold, not yet purchased | 20,235 | 15,114 | ||||||||
Securities borrowed | 6,785 | 7,594 | ||||||||
Participation sold | 467 | - | ||||||||
Total interest expense | 624,714 | 667,172 | ||||||||
Net interest income | 2,293,848 | 2,591,973 | ||||||||
Other income (loss): | ||||||||||
Realized gains (losses) on interest rate swaps(1) | (908,294 | ) | (893,769 | ) | ||||||
Realized gains (losses) on termination of interest rate swaps | (101,862 | ) | (2,385 | ) | ||||||
Unrealized gains (losses) on interest rate swaps | 2,002,200 | (32,219 | ) | |||||||
Subtotal | 992,044 | (928,373 | ) | |||||||
Investment advisory income | 43,643 | 82,138 | ||||||||
Net gains (losses) on disposal of investments | 403,045 | 432,139 | ||||||||
Net loss on extinguishment of 4% Convertible Senior Notes | - | (162,340 | ) | |||||||
Dividend income from affiliates | 18,575 | 28,336 | ||||||||
Net gains (losses) on trading assets | 1,509 | 22,910 | ||||||||
Net unrealized gains (losses) on interest-only Agency mortgage-backed securities | 244,730 | (59,937 | ) | |||||||
Impairment of goodwill | (23,987 | ) | - | |||||||
Loss on previously held equity interest in CreXus | (18,896 | ) | - | |||||||
Other income (loss) | 15,481 | 525 | ||||||||
Subtotal | 684,100 | 343,771 | ||||||||
Total other income (loss) | 1,676,144 | (584,602 | ) | |||||||
General and administrative expenses: | ||||||||||
Compensation and management fee | 167,366 | 190,702 | ||||||||
Other general and administrative expenses | 64,715 | 44,857 | ||||||||
Total general and administrative expenses | 232,081 | 235,559 | ||||||||
Income (loss) before income taxes | 3,737,911 | 1,771,812 | ||||||||
Income taxes | 8,213 | 35,912 | ||||||||
Net income (loss) | 3,729,698 | 1,735,900 | ||||||||
Dividends on preferred stock | 71,968 | 39,530 | ||||||||
Net income (loss) available (related) to common shareholders | $ | 3,657,730 | $ | 1,696,370 | ||||||
Net income (loss) per share available (related) to common shareholders: | ||||||||||
Basic | $ | 3.86 | $ | 1.74 | ||||||
Diluted | $ | 3.74 | $ | 1.71 | ||||||
Weighted average number of common shares outstanding: | ||||||||||
Basic | 947,337,915 | 972,902,459 | ||||||||
Diluted | 995,557,026 | 1,005,755,057 | ||||||||
Net income (loss) | $ | 3,729,698 | $ | 1,735,900 | ||||||
Other comprehensive income (loss): | ||||||||||
Unrealized gains (losses) on available-for-sale securities | (5,378,089 | ) | 482,765 | |||||||
Reclassification adjustment for net (gains) losses included in net income (loss) | (424,086 | ) | (438,511 | ) | ||||||
Other comprehensive income (loss) | (5,802,175 | ) | 44,254 | |||||||
Comprehensive income (loss) | $ | (2,072,477 | ) | $ | 1,780,154 | |||||
(1) Interest expense related to the Company's interest rate swaps is recorded in Realized gains (losses) on interest rate swaps on the Consolidated Statements of Comprehensive Income. | ||||||||||
(2) Derived from the audited consolidated financial statements at December 31, 2012. |
Photos/Multimedia Gallery Available: http://www.businesswire.com/multimedia/home/20140225007054/en/
Annaly Capital Management, Inc.
Investor Relations
1-888-8Annaly
www.annaly.com
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