EX-99.1 2 am5107ex991.htm EXHIBIT 99.1

EXHIBIT 99.1

Message

NEWS RELEASE

 

For release March 10, 2006

 

Contact:  John T. Hillman @ 310/255-4438 or 310/255-4493

ANWORTH MORTGAGE ASSET CORPORATION REPORTS
EARNINGS OF $0.00 PER SHARE FOR FOURTH QUARTER OF 2005

          SANTA MONICA, California – (March 10, 2006) – For the fourth quarter ended December 31, 2005 and based on a weighted average of 46.1 million fully diluted shares outstanding, Anworth Mortgage Asset Corporation (NYSE: ANH) announced today unaudited net income of $25 thousand, or $0.00 net income per share available to common stockholders.

          Agency mortgage-backed securities held at December 31, 2005 were approximately $4.52 billion and were allocated as follows:  33% agency ARMs, 57% agency hybrid ARMs, 10% agency fixed-rate mortgage-backed securities and less than 1% agency floating-rate CMOs.       

          At December 31, 2005, the weighted average coupon of the agency mortgage-backed securities was 4.73% and the quarter end unamortized premium was $84 million, or 1.8% of the par value.  During the quarter, the expense of amortizing the agency securities premium (based on prepayments and scheduled payments) was $9.5 million, compared to $11.6 million during the third quarter of 2005. During the quarter ended December 31, 2005, the constant prepayment rate (“CPR”) of the agency mortgage-backed securities was 32% and the CPR of the adjustable-rate and hybrid adjustable-rate agency mortgage-backed securities was 33%.  For the agency ARM and hybrid assets, the weighted average term to the next interest rate reset date was 22 months.  During the quarter ended December 31, 2005, the CPR of the mortgage-related assets held by Belvedere was 34% and the weighted average coupon on its mortgage-related assets was 5.12%. The average cost of Belvedere’s mortgage-related assets was 101.8%.

          Relative to the Company’s agency MBS portfolio at quarter end, the outstanding repurchase agreement balance was $4.1 billion with an average interest rate of 3.99% and an average maturity of 126 days.  After adjusting for collateralized interest rate swap transactions, the average interest rate was 3.90% with an average maturity of 213 days.  For the quarter ended December 31, 2005, the yield on average agency earning assets after amortization of premium was 3.74%, while the average cost of funds was 3.71%, resulting in an interest rate spread of 0.03%.

          During the fourth quarter of 2005, Anworth’s average equity investment in Belvedere Trust, or Belvedere, was $100 million.  At quarter end, Belvedere’s residential mortgage loans held for securitization were $613 thousand and securitized mortgage loans were $2.50 billion.  Belvedere lost $651 thousand during the fourth quarter, which includes the write-off of their offering costs of $725 thousand. At December 31, 2005, the average FICO score of its loan portfolio was 725 and the average LTV was 72%.

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          Total stockholders’ equity at December 31, 2005 was $483 million, consisting of preferred stockholders’ equity of approximately $47 million and common stockholders’ equity of approximately $436 million.  The common stockholders’ equity resulted in a book value per share of $9.61 based on 45.4 million shares of common stock outstanding at December 31, 2005.

          Average common stockholders’ equity for the quarter was $448 million.

About Anworth Mortgage Asset Corporation

          Anworth is a mortgage real estate investment trust (REIT) which invests in mortgage assets, including mortgage pass-through certificates, collateralized mortgage obligations, mortgage loans and other real estate securities.  Anworth generates income for distribution to shareholders primarily based on the difference between the yield on its mortgage assets and the cost of its borrowings.  Through its wholly-owned subsidiary, Belvedere Trust Mortgage Corporation, Anworth also invests in high quality jumbo adjustable-rate mortgages and finances these loans though securitizations.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

          This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are based upon our current expectations and speak only as of the date hereof. Our actual results may differ materially and adversely from those expressed in any forward-looking statements as a result of various factors and uncertainties, including increases in the prepayment rates on the mortgage loans securing our mortgage-backed securities, our ability to use borrowings to finance our assets, increases in default rates of the mortgage loans acquired by our mortgage loan subsidiaries, risks associated with investing in mortgage-related assets, including changes in business conditions and the general economy, our ability to maintain our qualification as a real estate investment trust for federal income tax purposes, and management’s ability to manage our growth. Our Annual Report on Form 10-K, recent and forthcoming Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other SEC filings discuss some of the important risk factors that may affect our business, results of operations and financial condition. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

Contact:
Anworth Mortgage Asset Corporation
John T. Hillman
(310) 255-4438 or (310) 255-4493

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ANWORTH MORTGAGE ASSET CORPORATION

CONSOLIDATED BALANCE SHEETS
(in thousands)

 

 

December 31,
2005

 

December 31,
2004

 

 

 

 

 

 

 

(unaudited)

 

(audited)

 

ASSETS

 

 

 

 

 

 

 

Agency mortgage-backed securities:

 

 

 

 

 

 

 

Agency mortgage-backed securities pledged to counterparties at fair value

 

$

4,302,139

 

$

4,399,036

 

Agency mortgage-backed securities at fair value

 

 

222,544

 

 

189,505

 

 

 

 

 

 

 

$

4,524,683

 

$

4,588,541

 

Other mortgage-backed securities pledged to counterparties at fair value

 

 

91,153

 

 

62,764

 

Other mortgage-backed securities at fair value

 

 

4,776

 

 

706

 

Residential real estate loans

 

 

2,497,881

 

 

2,622,321

 

Allowance for loan losses

 

 

(1,655

)

 

(591

)

Cash and cash equivalents

 

 

8,248

 

 

3,042

 

Restricted cash

 

 

1,250

 

 

1,250

 

Interest and dividends receivable

 

 

32,740

 

 

28,141

 

Derivative instruments at fair value

 

 

12,948

 

 

6,399

 

Prepaid expenses and other

 

 

12,225

 

 

6,497

 

 

 

 

 

 

 

$

7,184,249

 

$

7,319,070

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

Accrued interest payable

 

$

43,084

 

$

23,244

 

Repurchase agreements (Anworth)

 

 

4,099,410

 

 

4,172,930

 

Repurchase agreements (Belvedere Trust)

 

 

429,919

 

 

544,506

 

Whole loan financing facilities

 

 

493

 

 

556,233

 

Mortgage-backed securities issued

 

 

2,069,634

 

 

1,494,851

 

Junior subordinated notes

 

 

37,380

 

 

—  

 

Derivative instruments at fair value

 

 

—  

 

 

2,278

 

Dividends payable on preferred stock

 

 

1,011

 

 

369

 

Dividends payable on common stock

 

 

908

 

 

12,555

 

Accrued expenses and other

 

 

19,167

 

 

4,837

 

 

 

 

 

 

 

$

6,701,006

 

$

6,811,803

 

 

 

 

 

Minority interest

 

 

144

 

 

231

 

Stockholders’ equity:

 

 

 

 

 

 

 

Series A Cumulative Preferred Stock, par value $0.01 per share, liquidation preference $25.00 per share; authorized 20,000 shares; 1,876 and 1,101 shares issued and outstanding

 

 

19

 

 

11

 

Common Stock, par value $0.01 per share; authorized 100,000 shares; 45,397 and 46,497 shares issued and outstanding

 

 

454

 

 

465

 

Additional paid-in capital

 

 

572,398

 

 

560,745

 

Accumulated other comprehensive loss consisting of unrealized losses

 

 

(75,620

)

 

(42,598

)

Accumulated deficit

 

 

(12,125

)

 

(10,991

)

Unearned restricted stock

 

 

(2,027

)

 

(596

)

 

 

 

 

 

 

 

483,099

 

 

507,036

 

 

 

 

 

 

 

$

7,184,249

 

$

7,319,070

 

 

 

 

 

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ANWORTH MORTGAGE ASSET CORPORATION

CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except for per share amounts)
(unaudited)

 

 

For the
Quarter Ended
December 31, 2005

 

For the
Quarter Ended
December 31, 2004

 

For the
Year Ended
December 31, 2005

 

For the
Year Ended
December 31, 2004

 

 

 

 

 

 

 

Interest income net of amortization of premium and discount

 

$

72,023

 

$

52,679

 

$

281,752

 

$

163,378

 

Interest expense

 

 

(68,154

)

 

(36,261

)

 

(242,509

)

 

(98,304

)

 

 

 

 

 

 

Net interest income

 

 

3,869

 

 

16,418

 

 

39,243

 

 

65,074

 

 

 

 

 

 

 

Gain on sale of securities

 

 

129

 

 

(1

)

 

129

 

 

259

 

Net gain on derivative instruments

 

 

—  

 

 

70

 

 

—  

 

 

340

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

(812

)

 

(730

)

 

(3,450

)

 

(2,262

)

Incentive compensation

 

 

—  

 

 

(853

)

 

(708

)

 

(2, 956

)

Provision for loan losses

 

 

(228

)

 

(356

)

 

(1,086

)

 

(591

)

Other expenses

 

 

(1,197

)

 

(933

)

 

(4,242

)

 

(3,766

)

Belvedere Trust offering costs

 

 

(725

)

 

—  

 

 

(725

)

 

—  

 

 

 

 

 

 

 

Total expenses

 

$

(2,962

)

$

(2,872

)

$

(10,211

)

$

(9,575

)

 

 

 

 

 

 

Income from operations before income taxes and minority interest

 

 

1,036

 

 

13,615

 

 

29,161

 

 

56,098

 

Income taxes

 

 

—  

 

 

79

 

 

—  

 

 

—  

 

Minority interest in net income of a subsidiary

 

 

—  

 

 

(118

)

 

(276

)

 

(293

)

 

 

 

 

 

 

Net Income

 

$

1,036

 

$

13,576

 

$

28,885

 

$

55,805

 

 

 

 

 

 

 

Dividend on Series A Cumulative Preferred Stock

 

$

(1,011

)

$

(369

)

$

(3,901

)

$

(369

)

 

 

 

 

 

 

Net income available to common stockholders

 

$

25

 

$

13,207

 

$

24,984

 

$

55,436

 

 

 

 

 

 

 

Basic earnings per share available to common stockholders

 

$

0.00

 

$

0.29

 

$

0.53

 

$

1.23

 

 

 

 

 

 

 

Weighted average number of shares outstanding

 

 

46,069

 

 

46,383

 

 

47,103

 

 

45,244

 

 

 

 

 

 

 

Diluted earnings per share available to common stockholders

 

$

0.00

 

$

0.28

 

$

0.53

 

$

1.22

 

 

 

 

 

 

 

Weighted average number of diluted shares outstanding

 

 

46,069

 

 

46,434

 

 

47,128

 

 

45,329

 

 

 

 

 

 

 

Dividends declared per preferred share

 

$

0.539063

 

$

0.27

 

$

2.156252

 

$

0.335417

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.02

 

$

0.27

 

$

0.55

 

$

1.25

 

 

 

 

 

 

 

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