Hatteras Financial Corp. (NYSE: HTS) (“Hatteras” or the “Company”) today announced financial results for the quarter ended September 30, 2013.
Third Quarter 2013 Highlights
- Net income of $0.44 per weighted average share excluding gains and losses
- GAAP net loss of $2.72 per weighted average share
- Quarter end book value of $21.31 per share with leverage at 7.9 to 1
- Declared a $0.55 per common share dividend
- Weighted average constant prepayment rate (“CPR”) of 19.7% for the quarter
- Weighted average CPR of 14.1% for October
- Repurchased 1.1 million shares
- Realized average net interest spread of 0.86%
- Weighted average repurchase agreement rate of 0.38%
Third Quarter 2013 Results
The results of the quarter ended September 30, 2013 were largely influenced by management actions to adjust the balance sheet and reduce its interest rate exposure through sales and purchases of agency securities (as defined below) and Eurodollar futures contracts to better reflect the current interest rate market. The sales of securities also helped reduce leverage to be within historical ranges. Overall, a substantial majority of the portfolio was unchanged from June 30 with a continued concentration of seasoned adjustable rate mortgages (“ARMs”) that are expected to perform well in the current interest rate environment. During the quarter ended September 30, 2013, the Company earned net income available to common shareholders (excluding net losses on securities sales and futures transactions) of $43.6 million, or $0.44 per weighted average share. The Company had a GAAP net loss available to common shareholders of $267.6 million, or $2.72 per weighted average share, compared to GAAP net income of $65.3 million, or $0.66 per weighted average share, during the quarter ended June 30, 2013. The Company realized net losses of $225.6 million on sales of its agency securities during the quarter, and recognized $8.1 million of losses on agency securities it sold after quarter end. Eurodollar futures contracts hedges produced an unrealized negative mark-to-market of $50.1 million and realized losses of $27.3 million during the quarter.