Hatteras Financial Corp. Announces Fourth Quarter 2012 Financial Results

Hatteras Financial Corp. (NYSE: HTS) (“Hatteras” or the “Company”) today announced financial results for the quarter ended December 31, 2012.

Fourth Quarter 2012 Highlights
  • Net income of $1.02 per weighted average share
  • Declared a $0.70 per share common dividend
  • Book value $28.19 per share at year end
  • Net return on average common equity of 14.07%
  • Average net interest spread of 1.08%
  • Annualized total expense ratio of 0.89% of average shareholders’ equity

Full Year 2012 Highlights
  • Net income of $3.67 per weighted average share
  • Declared $3.30 per share common dividends
  • Book value increased $1.11 per share
  • Net return on average common equity of 12.96%
  • Undistributed taxable income of $0.45 per share at year end

Fourth Quarter 2012 Results

During the quarter ended December 31, 2012, the Company earned net income available to common shareholders of $101.3 million, or $1.02 per diluted common share, compared to net income of $82.0 million, or $0.83 per diluted common share during the quarter ended September 30, 2012. Net interest income for the quarter ended December 31, 2012 was $74.7 million, compared to $79.6 million for the quarter ended September 30, 2012. The Company’s net interest margin decreased to 1.08% for the fourth quarter of 2012 from 1.22% in the third quarter of 2012 due to a portfolio yield drop that was not offset by a corresponding decrease in the Company’s cost of funds. The Company’s cost funds (including hedges) increased 0.02% to 0.96% for the quarter ended December 31, 2012. The Company’s average repurchase agreement (repo) rate increased to 0.44% in the fourth quarter of 2012, from 0.41% in the third quarter of 2012, on all outstanding short-term repo positions. The Company realized gain on sale of mortgage-backed securities (MBS) of $39.1 million during the quarter compared to $10.5 million for the previous quarter. The annualized expense ratio for the quarter was 0.89% of average shareholders’ equity for the quarter ended December 31, 2012 as compared to 0.84% for the prior quarter.

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