Hatteras Financial Corp. (NYSE: HTS) (“Hatteras” or the “Company”) today announced financial results for the quarter ended June 30, 2013.
Second Quarter 2013 Highlights
- GAAP net income of $0.66 per weighted average share
- Net income of $0.60 per weighted average share excluding Eurodollar gains
- Declared a $0.70 per share dividend
- Quarter end book value of $22.18 per share
- Equity decline of 19.3 % for quarter and year-to-date
- Maintained earning assets
- Realized average net interest spread of 0.93%
- Weighted average constant prepayment rate (“CPR”) of 20.8
- Annualized total expense ratio of 0.92% of average shareholders’ equity
- Return on average common equity of 9.47%
- Weighted average repurchase agreement rate of 0.38%
Second Quarter 2013 Results
During the quarter ended June 30, 2013, the Company earned net income available to common shareholders of $65.3 million, or $0.66 per diluted common share, compared to net income of $61.8 million, or $0.62 per diluted common share, during the quarter ended March 31, 2013. The Company realized gains of $8.8 million on sales of its agency securities during the quarter. In addition, $5.5 million of net income was attributable to the mark-to-market of the positive move in the hedge related Eurodollar futures contracts during the quarter. Net interest income for the quarter ended June 30, 2013 was $63.4 million, compared to $71.4 million for the quarter ended March 31, 2013 reflecting the decreasing yield on the portfolio. The Company’s average earning assets increased to $24.8 billion for the second quarter of 2013 from $24.1 billion in the first quarter of 2013. The Company’s net interest margin decreased to 0.93% for the second quarter of 2013 from 1.11% in the first quarter of 2013. The Company’s cost of funds (including hedges) was 0.92% compared to 0.95% in the first quarter of 2013. The Company’s average repurchase agreement (repo) rate for the second quarter of 2013 was 0.38% compared to 0.41% in the first quarter of 2013. The weighted average interest rate on the Company’s interest rate swaps declined from 1.43% in the first quarter of 2013 to 1.41% in the second quarter of 2013. Operating expenses increased slightly to $6.9 million from the prior quarter amount of $6.7 million. Total annualized expenses were 0.92% of average shareholders’ equity for the quarter ended June 30, 2013, slightly above the previous quarter at 0.88%, mostly a reflection of the decrease in average equity.