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Hatteras Financial Corp. Announces Second Quarter 2012 Financial Results

Hatteras Financial Corp. (NYSE: HTS) (“Hatteras” or the “Company”) today announced financial results for the quarter ended June 30, 2012.

Second Quarter 2012 Highlights
  • Generated net income of $0.91 per weighted average share
  • Declared a $0.90 per share dividend
  • Quarter end book value $27.45 per share
  • Earned a net return on average equity of 12.91%
  • Realized average net interest spread of 1.49%
  • Weighted average constant prepayment rate of 19.7
  • Annualized total expense ratio of 0.88% of average shareholders’ equity

Second Quarter 2012 Results

During the quarter ended June 30, 2012, the Company earned net income of $89.1 million, or $0.91 per diluted common share, compared to net income of $69.3 million, or $0.89 per diluted common share, during the quarter ended March 31, 2012. Net interest income for the quarter ended June 30, 2012 was $83.0 million, compared to $72.0 million for the quarter ended March 31, 2012 reflecting the growth in the portfolio from the common stock offering completed at the end of March. The Company’s average earning assets increased to $21.1 billion for the second quarter of 2012 from $17.3 billion in the first quarter of 2012 as the Company deployed the proceeds from its common stock issuances completed in the first quarter of 2012. The Company’s net interest margin decreased to 1.49% for the second quarter of 2012 from 1.58% in the first quarter of 2012 as portfolio yield dropped. The Company’s cost of funds (including hedges) decreased .09% to 0.94% in the second quarter of 2012. The Company’s average repurchase agreement (repo) rate on outstanding short-term (less than 30 days) repo positions increased to 0.41% in the second quarter of 2012, from 0.35% in the first quarter of 2012. The increase in the short term repo rate was offset by a decrease in weighted average interest rate on interest rate swaps, which declined from 1.72% in the first quarter of 2012 to 1.54% in the second quarter as a result of new swap positions added during the quarter. Operating expenses were $6.1 million for the second quarter of 2012 versus $5.2 million for the first quarter of 2012, due to the increase in shareholder’s equity. Total annualized expenses were 0.88% of average shareholders’ equity for the quarter ended June 30, 2012, down from 0.98% the previous quarter.

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