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CYS Investments, Inc. Announces Third Quarter 2012 Financial Results

Stocks in this article: CYS

Forward-Looking Statements Disclaimer

This press release contains statements that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including those relating to CPR. Forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. These beliefs, assumptions and expectations are subject to risks and uncertainties and can change as a result of many possible events or factors, not all of which are known to us, including those described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011, which has been filed with the Securities and Exchange Commission. If a change occurs, these forward-looking statements may vary materially from those expressed in this release. All forward-looking statements speak only as of the date on which they are made. Except as required by law, we are not obligated to, and do not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

                 

 

CYS INVESTMENTS, INC.

STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)

 
(In thousands, except per share numbers)

September 30, 2012

June 30, 2012

March 31, 2012

December 31, 2011*

ASSETS:
Investments in securities, at fair value (including pledged assets of $14,752,504, $10,066,807, $8,806,898 and $8,412,295, respectively) $ 22,646,305 $ 14,162,935 $ 13,388,839 $ 9,466,128
Interest rate cap contracts, at fair value 125,331 43,871 4,548 5,966
Cash and cash equivalents 20,496 13,846 10,643 11,508
Receivable for securities sold and principal repayments (including pledged assets of $0, $354,838, $0 and $0, respectively) 20,423 365,583 116,918 5,550
Interest receivable 50,433 35,472 34,152 27,815
Other assets 1,129   1,421   805   1,090
Total assets 22,864,117   14,623,128   13,555,905   9,518,057
 
LIABILITIES:
Repurchase agreements 13,911,977 9,763,313 8,234,669 7,880,814
Interest rate swap contracts, at fair value 111,725 93,337 84,941 79,476
Payable for securities purchased 6,084,047 3,058,300 3,634,983 463,302
Payable for cash received as collateral 47,960
Distribution payable 79,677 59,465 58,069
Accrued interest payable (including accrued interest on repurchase agreements of $5,086, $3,920, $2,425 and $3,747, respectively) 19,389 15,696 15,564 15,617
Accrued expenses and other liabilities 4,606   3,163   1,887   1,390
Total liabilities 20,259,381   12,993,274   12,030,113   8,440,599
NET ASSETS $ 2,604,736   $ 1,629,854   $ 1,525,792   $ 1,077,458
Net assets consist of:
Series A Cumulative Redeemable Preferred Stock, $0.01 par value, 50,000 shares authorized (3,000 and 0 shares issued and outstanding, respectively, liquidation preference of $25.00 per share or $75,000 and $0 in aggregate, respectively) $ 72,488 $ $ $
Common Stock, $0.01 par value, 500,000 shares authorized (174,942, 120,595, 116,139 and 82,753 shares issued and outstanding, respectively) 1,749 1,206 1,161 828
Additional paid in capital 2,236,234 1,496,613 1,434,836 997,884
Retained earnings 294,265   132,035   89,795   78,746
NET ASSETS $ 2,604,736   $ 1,629,854   $ 1,525,792   $ 1,077,458
NET ASSET VALUE PER COMMON SHARE $ 14.46   $ 13.52   $ 13.14   $ 13.02
________
* Derived from audited financial statements.
 

 

CYS INVESTMENTS, INC.

STATEMENTS OF OPERATIONS (UNAUDITED)

       
Three Months Ended Nine Months Ended
(In thousands, except per share numbers)

September 30, 2012

   

June 30, 2012

   

March 31, 2012

September 30, 2012
INVESTMENT INCOME
Interest income from Agency RMBS $ 75,609 $ 70,352 $ 64,147 $ 210,108
Other income 1,022   1,395   1,222   3,639  
Total investment income 76,631   71,747   65,369   213,747  
EXPENSES:
Interest 11,893 8,993 6,853 27,739
Compensation and benefits 3,068 3,346 3,164 9,578
General, administrative and other 2,272   1,933   1,955   6,160  
Total expenses 17,233   14,272   11,972   43,477  
Net investment income 59,398   57,475   53,397   170,270  
GAINS AND (LOSSES) FROM INVESTMENTS:
Net realized gain (loss) on investments 27,049 61,113 5,173 93,335
Net unrealized appreciation (depreciation) on investments 194,078   7,473   27,977   229,528  
Net gain (loss) from investments 221,127   68,586   33,150   322,863  
GAINS AND (LOSSES) FROM SWAP AND CAP CONTRACTS:
Net swap and cap interest income (expense) (17,255 ) (12,687 ) (11,506 ) (41,448 )
Net unrealized appreciation (depreciation) on swap and cap contracts (21,363 ) (11,669 ) (5,923 ) (38,955 )
Net gain (loss) from swap and cap contracts (38,618 ) (24,356 ) (17,429 ) (80,403 )
NET INCOME $ 241,907   $ 101,705   $ 69,118   $ 412,730  
DIVIDEND ON PREFERRED STOCK (953 )     (953 )
NET INCOME AVAILABLE TO COMMON SHARES $ 240,954   $

101,705

  $ 69,118   $ 411,777  
NET INCOME PER COMMON SHARE - DILUTED $ 1.46   $ 0.87   $ 0.66   $ 3.19  

Core Earnings:

Core Earnings represents a non-GAAP financial measure and is defined as net income (loss) available to common shares excluding net gain (loss) from investments, net gain (loss) on termination of swap contracts and net unrealized appreciation (depreciation) on swap and cap contracts. In order to evaluate the effective yield of the portfolio, management uses Core Earnings to reflect the net investment income of our portfolio as adjusted to include the net swap and cap interest income (expense). Core Earnings allows management to isolate the interest income (expense) associated with our swaps and caps in order to monitor and project our borrowing costs and interest rate spread. In addition, management utilizes Core Earnings as a key metric in conjunction with other portfolio and market factors to determine the appropriate leverage and hedging ratios, as well as the overall structure of the portfolio.

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