- GAAP net income of $1.0 billion, $1.07
earnings per common share
- Core earnings of $350.1 million, $0.35
earnings per common share
- Strong capital position with capital
ratio of 15.1%, net capital ratio of 15.9%, and leverage of
5.0:1
- Commercial investment portfolio doubled
since CXS acquisition, now representing 14% of stockholders’
equity
- Book value of $12.13
Annaly Capital Management, Inc. (NYSE: 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%
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:
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:
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:
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.
(2) Includes non-recourse loan
participations and mortgages payable.
(3) Average interest earning assets
reflects the average amortized cost of our investments during the
period.
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)
(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.
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Annaly Capital Management, Inc.Investor
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