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For the operating results for the fourth quarter, net income totaled $42 million, or 43 cents per diluted common share, and we paid a common dividend of 43 cents on January 20, 2012. Net interest margins for the quarter increased slightly to $46 million, while our total financing spread declined one basis point to 1.46%. Yields on the company's interest-earning assets averaged 2.07%, representing a five basis point decline over the previous quarter. If you look at that decline relative to what this decline was from the second quarter to the third quarter; in the third quarter this yield declined 22 basis points, so it's a 22 in the third quarter versus a five basis point decline in the fourth. So, this smaller decline in yields reflects the smaller declines in the coupon interest rates in the mortgage loans that reset during the quarter, and this is primarily the result of higher prevailing indexes on the six-month and twelve-month LIBOR, which is the basis for coupon resets on much of our portfolio.Yields also benefited from lower levels of mortgage prepayments during the quarter, which declined to an annualized CPR of 15.6% in the fourth quarter, from 16.9% in the previous quarter. In our previous earnings releases, we discussed how prepayment on our more seasoned securities continued to be suppressed by low housing prices and credit problems being experienced by many of these borrowers, while prepayment on newer originations remained somewhat elevated. Both of these factors continue to be correct, proved to be correct in the fourth quarter and are continuing. Interest rates on the company's interest-bearing liabilities averaged 51 basis points for the fourth quarter, representing a four basis point decline from the previous quarter. This reflects the expiration of that $1.3 billion in the last six months of some higher rate swap agreements. Those were replaced primarily with much lower levels than what we previously had. The benefits to that, however, were a bit muted by higher borrowing rates on our repos in the fourth quarter, largely due to the European sovereign debt issues.
Regarding the portfolio, I would like to discuss what we believe is a fundamental difference between our investment portfolio and those of our peers, which is our focus on investing entirely in ARM [adjustable-rate mortgage] securities. At year end, 72% of our portfolio was invested in ARM securities backed by loans that will reset in less than 18 months, typically to a lower level in today's environment.Looking at the portfolio as a whole, the average borrower underlying our securities has an average mortgage coupon rate of a relatively low 3.53%. Basically, you can arrive at this number if you take the weighted average coupon we disclosed on page 11 in our press release and add about 60-70 basis points for servicing fees and guarantee fees so that you get to what the homeowner rate is. As a result, most of the borrowers in our portfolio lack the ability to meaningfully lower their monthly mortgage payments even if they can overcome the other impediments that we mentioned earlier. For these reasons we expect prepays to remain largely in check in 2012. Portfolio acquisitions during the quarter were $612 million, which offset portfolio runoff of $580 million, increasing our investment portfolio to $12.26 billion at year end. Also at year end the duration of our investment portfolio stood at 9 ¾ months, while the duration of our liabilities was six months, resulting in a duration gap of 3 ¾ months, and during the period our leverage at year end declined slightly to 8.1 times our long term investment capital. During the fourth quarter we were able to raise $42 million through our previous capital raises and we ended the quarter with total long term investment capital of $1.39 billion, and book value ticked up slightly from $12.50 to $12.52. Read the rest of this transcript for free on seekingalpha.com