This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

CYS Investments, Inc. Announces Third Quarter 2012 Financial Results

Drop income is a component of our net income accounted for as net gain from investments on our statement of operations and therefore excluded from our Core Earnings. During the third quarter of 2012, the Company generated drop income of approximately $36.9 million, or $0.23 per diluted share, compared to approximately $15.0 million, or $0.13 per diluted share, during the second quarter of 2012. Core Earnings plus drop income was $0.48 per diluted share during the third quarter of 2012 compared to $0.51 during the second quarter of 2012. The $0.03 quarter-over-quarter decrease in Core Earnings plus drop income per diluted share was generally the result of a lower adjusted interest rate spread net of hedge, which decreased to 1.41% during the third quarter of 2012, compared to 1.82% during the second quarter of 2012. The Company sold approximately $5.5 billion of Agency RMBS during the third quarter of 2012 generating $27.3 million in net realized gain. By making these sales, the Company was able to reinvest in the forward market to take advantage of favorable pricing of Agency RMBS. As a result, drop income increased during third quarter of 2012. The Company made $10.9 billion of forward purchases during the third quarter of 2012, with weighted average drop of approximately $0.19 per $100.00 par value per month, compared to $5.1 billion of Agency RMBS forward purchases in the second quarter of 2012 with weighted average drop of approximately $0.18 per $100.00 par value per month.

The Company utilizes forward settling transactions for the majority of its purchases. This enables the Company to purchase assets with specified stipulations, such as average loan size and/or age, and/or percentage of loans in a particular state. This customization enables the Company to more effectively manage prepayments. In addition, forward settling purchases allow the Company to obtain an asset at a discount (also referred to as “drop”) to its current market value; however, the Company does not receive interest income on the asset until the forward transaction settles. Obtaining assets at a discount to market value reduces the prepayment impact and is accretive to net asset value.

2 of 10

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG

Markets

DOW 18,073.64 -6.50 -0.04%
S&P 500 2,114.74 -2.95 -0.14%
NASDAQ 5,071.74 -20.3450 -0.40%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs