Anworth Mortgage Asset Corp. (ANH) filed Quarterly Report for the period ended 2009-09-30.
Anworth Mortgage Asset Corp. was formed to invest in mortgage assetsincluding mortgage pass-through certificates collateralized mortgageobligations mortgage loans and other securities representing interests in or obligations backed by pools of mortgage loans which can be readily financed and short-term investments. The Company intends to acquire mortgage assets primarily in the secondary mortgage market through its manager Anworth Mortgage Advisory Corporation. Anworth Mortgage Asset Corp. has a market cap of $746.7 million; its shares were traded at around $6.94 with a P/E ratio of 6.1 and P/S ratio of 2.6. The dividend yield of Anworth Mortgage Asset Corp. stocks is 16.1%. Anworth Mortgage Asset Corp. had an annual average earning growth of 21.9% over the past 5 years.
Highlight of Business Operations:
At September 30, 2009, we had total assets of $5.98 billion. Our Agency MBS portfolio, consisting of $5.94 billion, was distributed as follows: 22% adjustable-rate Agency MBS, 63% hybrid adjustable-rate Agency MBS, 15% fixed-rate Agency MBS and less than 1% agency floating-rate collateralized mortgage obligations, or CMOs. Our Non-Agency MBS portfolio consisted of approximately $5.1 million of floating-rate CMOs. Stockholders’ equity available to common stockholders at September 30, 2009 was approximately $853 million, or $7.58 per share. The $853 million equals total stockholders’ equity of $902 million less the Series A Cumulative Preferred Stock, or Series A Preferred Stock, liquidating value of $46.9 million and less the difference between the Series B Cumulative Convertible Preferred Stock, or Series B Preferred Stock, liquidating value of $31.2 million and the proceeds from its sale of $29.1 million. For the three months ended September 30, 2009, we reported net income to common stockholders of $30.2 million. Net income to common stockholders consists of net income of $31.7 million minus payment of preferred dividends of approximately $1.5 million.
Net interest income for the three months ended September 30, 2009 was $35.3 million, or 51% of gross income, compared to $29.2 million, or 38% of gross income, for the three months ended September 30, 2008. Net interest income is comprised of the interest income earned on mortgage investments less interest expense from borrowings. Interest income net of premium amortization expense for the three months ended September 30, 2009 was $63.2 million, compared to $73.6 million for the three months ended September 30, 2008, a decrease of 14%, due primarily to a decrease in the weighted average coupon of our Agency MBS from 5.58% at September 30, 2008 to 5.33% at September 30, 2009, and a decline in the average balance outstanding of our portfolio, from approximately from $5.55 billion at September 30, 2008 to approximately $5.24 billion at September 30, 2009. Interest expense for the three months ended September 30, 2009 was $27.9 million, compared to $44.4 million for the three months ended September 30, 2008, a decrease of 37%. This decrease was due primarily to the decrease in short-term interest rates.
Total expenses were $3.6 million for the three months ended September 30, 2009, compared to $3.2 million for the three months ended September 30, 2008. The increase of $0.4 million in total expenses was due to an increase in compensation and benefits of $0.6 million (due primarily to an increase of $0.4 million in the accrual for year-end 2009 additional compensation over the additional compensation accrued in the third quarter of 2008), partially offset by a decrease in other expenses of $126 thousand and a write-off in 2008 of $108 thousand in offering costs.
Net interest income for the nine months ended September 30, 2009 was $107.9 million, or 51% of gross income, compared to $77.3 million, or 34% of gross income, for the nine months ended September 30, 2008. Interest income net of premium amortization expense for the nine months ended September 30, 2009 was $197.5 million, compared to $216.4 million for the nine months ended September 30, 2008, a decrease of 9%, due primarily to a decrease in the weighted average coupon of our Agency MBS from 5.58% at September 30, 2008 to 5.33% at September 30, 2009 and an increase in premium amortization expense. Interest expense for the nine months ended September 30, 2009 was $89.6 million, compared to $139.1 million for the nine months ended September 30, 2008, a decrease of 36%. This decrease was due primarily to the decrease in short-term interest rates.
Total expenses were $11.5 million for the nine months ended September 30, 2009, compared to $9.0 million for the nine months ended September 30, 2008. The increase of $2.5 million in total expenses was due to an increase in compensation and benefits of $2.8 million (due primarily to an increase in the accrual for year-end 2009 additional compensation over the additional compensation accrued through September 2008), partially offset by a decrease in other expenses of $104 thousand and a write-off in 2008 of $108 thousand in offering costs.
At September 30, 2009, we held Agency MBS, whose amortized cost was approximately $5.76 billion, consisting primarily of $4.91 billion of adjustable-rate MBS, $845 million of fixed-rate MBS and $6 million of floating-rate CMOs. This amount represents an approximate 10% increase from the $5.26 billion held at December 31, 2008. Of the adjustable-rate Agency MBS owned by us, 27% were adjustable-rate pass-through certificates whose coupons reset within one year. The remaining 73% consisted of hybrid adjustable-rate MBS whose coupons will reset between one year and five years. Hybrid adjustable-rate MBS have an initial interest rate that is fixed for a certain period, usually three to five years, and thereafter adjust annually for the remainder of the term of the loan.
ANH is in the portfolios of Arnold Schneider of Schneider Capital Management, David Dreman of Dreman Value Management.
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