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CYS Investments, Inc. Announces Third Quarter 2013 Financial Results

CYS Investments, Inc. (NYSE: CYS) (“CYS” or the “Company”) today announced financial results for the quarter ended September 30, 2013.

Third Quarter 2013 Summary Results

  • September 30, 2013 net asset value per common share of $10.10 after declaring a $0.34 dividend per common share on September 9, 2013.
  • September 30, 2013 leverage ratio of 6.5 to 1.
  • GAAP net income available to common shares of $25.4 million, or $0.14 per diluted common share.
  • Core Earnings plus Drop Income of $61.2 million, or $0.36 per diluted common share ($0.23 Core Earnings and $0.13 Drop Income).
  • Operating expenses of 1.13% of average net assets.
  • Interest rate spread net of hedge including drop income of 1.66%.
  • Weighted average amortized cost of Agency RMBS of $102.57.
  • The Company repurchased 5.9 million shares under its share repurchase program, with a weighted average purchase price of $7.77, for approximately $46.1 million in the aggregate.

Leverage & Liquidity

The Company continued to reduce its leverage during the quarter to minimize the adverse impacts of expected volatility in interest rates, ending the third quarter of 2013 with a leverage ratio of 6.5 to 1, compared to 7.5 to 1 at June 30, 2013.

At September 30, 2013, the Company’s liquidity position, consisting of unpledged Agency RMBS, U.S. Treasuries and cash and cash equivalents, was approximately $1.3 billion, or 65.9% of net assets, compared to $1.3 billion, or 65.4% of net assets at June 30, 2013.

Portfolio

During the third quarter of 2013, the Company reduced its Agency RMBS portfolio from $17.2 billion at June 30, 2013 to $14.4 billion at September 30, 2013. The following table details the Company's portfolio at June 30, 2013 and September 30, 2013.

  September 30, 2013     June 30, 2013  
Fair Value (in billions)   % of Total Fair Value (in billions)   % of Total
15 Year Fixed Rate $ 6.2 43 % $ 5.8 34 %
20 Year Fixed Rate 0.1 1 % 1.0 6 %
30 Year Fixed Rate 6.0 42 % 7.8 45 %
Hybrid ARMs 2.1   14 % 2.6   15 %
Total $ 14.4   100 % $ 17.2   100 %
 

At September 30, 2013, the Company’s Agency RMBS portfolio was backed by fixed-rate mortgages and hybrid adjustable-rate mortgages (“Hybrid ARMs”) with 0 to 120 months to reset. The portfolio is comprised of 68.1% 2013 production; 19.1% 2012 production; 9.8% 2011 production; 2.8% 2010 production; and 0.2% 2009 production. Additional information about our Agency RMBS portfolio at September 30, 2013 is summarized below:

  Face Value   Fair Value   Weighted Average
Asset Type (in thousands) Cost/Face   Fair Value/Face   Yield (1)   Coupon   CPR (2)
15 Year Fixed Rate $ 5,995,535 $ 6,240,505 $ 102.43 $ 104.09 2.57 % 3.14 % 15.1 %
20 Year Fixed Rate 89,615 96,644 103.08 107.84 3.48 % 4.50 % 31.3 %
30 Year Fixed Rate 5,813,529 5,985,741 102.33 102.96 3.25 % 3.70 % 4.1 %
Hybrid ARMs (3) 2,088,601   2,126,417   103.59   101.81   1.65 % 2.57 % 19.1 %
Total/Weighted Average $ 13,987,280   $ 14,449,307   $ 102.57   $ 103.30   2.72 % 3.30 % 12.4 %

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