CYS Investments, Inc. (NYSE: CYS) (“CYS”, "we", "our", or the
“Company”) today announced financial results for the quarter ended
June 30, 2015 (the "Second Quarter").
Second Quarter 2015 Summary Results
- June 30, 2015 book value per
common share of $9.62, after declaring a $0.28 dividend per common
share on June 8, 2015.
- GAAP net loss available to common
stockholders of $(102.2) million, or $(0.66) per diluted common
share.
- Core earnings plus drop income of $42.8
million ($34.2 million core earnings and $8.6 million drop income),
or $0.27 per diluted common share ($0.22 core earnings and $0.05
drop income).
- Interest rate spread, net of hedge,
including drop income, of 1.34%.
- Operating expenses of 1.27% of average
stockholders' equity.
- Weighted-average amortized cost of
Agency RMBS and U.S. Treasuries (collectively, "Debt Securities")
of $103.98.
- Leverage ratio of 7.06 to 1 at
June 30, 2015.
- Constant Prepayment Rate ("CPR") of
13.0%.
- Repurchased 1,286,586 shares of the
Company's common stock at a weighted-average purchase price of
$8.87 for an aggregate of approximately $11.4 million.
Market Commentary
Agency RMBS prices ended the Second Quarter meaningfully cheaper
than where they began. Longer-term interest rates generally ended
the Second Quarter higher than where they began. The Second Quarter
proved to be relatively volatile for the bond market. The yield on
10-year U.S. Treasuries rose 43 basis points ("bps") to end the
Second Quarter at 2.35%. The cheapening of the bond market was
driven by growing sentiment that the U.S. economy was recovering
from a harsh winter, as evidenced particularly by sustained, albeit
modest, U.S. payroll growth. Prices of Agency RMBS followed the
general trend of the bond market as Fannie Mae 30-year 3.5% Agency
RMBS fell to $102.89 at the end of the Second Quarter from $105.11
at the end of the first quarter of 2015 (the "First Quarter"), and
the Fannie Mae 15-year 3.0% Agency RMBS fell to $103.48 at the end
of the Second Quarter from $104.83 at the end of the First Quarter.
While the heightened bond market volatility in the Second Quarter
pushed down our book value per share, the net interest spread on
our reinvesting activities has improved. We have been preparing for
volatility in the Agency RMBS market, and as of June 30, 2015 we
have substantial excess liquidity of $1.2 billion, or 67.4% of our
equity.
The U.S. Federal Reserve (the “Fed”) continues to guide the
capital markets to anticipate an interest rate hike in 2015. In the
Fed’s June Economic Forecast, the Fed Open Market Committee
("FOMC") expressed a wide consensus that two 25 bps hikes in the
target Federal Funds Rate are likely before year end. This suggests
an initial hike in September. In the FOMC’s June press conference,
Chair Janet Yellen suggested that the FOMC expects a long period of
accommodative monetary policy after an initial hike in the Fed
Funds Rate. It is unclear whether the term “initial” should be
interpreted to mean one or two hikes, or more. With 10-year U.S.
Treasuries yielding 2.33% at July 21, 2015, the bond market appears
to be anticipating little risk of either inflation or a more
aggressive Fed rates approach. At such time that the Fed raises the
Fed Funds Rate, we would expect our borrowing costs to increase,
and therefore our net interest spread to decrease.
Second Quarter 2015 Results
The Company’s book value per common share on June 30, 2015
was $9.62, compared to $10.53 at March 31, 2015, after
declaring a $0.28 dividend per common share on June 8, 2015. The
decrease in book value was due principally to a decrease in the
prices of Agency RMBS during the Second Quarter, partially offset
by an increase in the value of the Company's interest rate
hedges.
The Company had net loss available to common stockholders of
$(102.2) million in the Second Quarter, or $(0.66) per diluted
common share, compared to net income of $49.4 million, or $0.31 per
diluted common share, in the First Quarter, as explained below.
In the Second Quarter, total interest income decreased slightly
to $80.5 million from $80.9 million in the First Quarter. While the
yield on our Debt Securities declined to 2.44% in the Second
Quarter from 2.56% in the First Quarter, we had higher average
settled Debt Securities of $13,219.7 million in the Second Quarter
compared to $12,653.3 million in the First Quarter, and therefore
were able to maintain steady interest income despite the lower
yield. The decline in our average yield on Debt Securities in the
Second Quarter was due to higher prepayments in our investment
portfolio, as our quarterly CPR increased to 13.0% from 10.3% in
the First Quarter. The higher CPR was driven by lower residential
mortgage interest rates in February and March 2015 and resulting
increased residential mortgage refinancings in the Second Quarter,
which caused paydown losses and amortization expense to increase.
The Company's net interest income was $45.3 million in the Second
Quarter, up approximately $1.6 million from $43.7 million in the
First Quarter, as we experienced lower interest expense on our
interest rate swaps and caps.
The Company's investments in securities and hedges moved as
expected in the Second Quarter with the rising interest rate
environment. The Company had a net realized and unrealized loss
from investments of $(167.5) million in the Second Quarter, a
decrease of $261.4 million compared to a net realized and
unrealized gain from investments of $93.9 million in the First
Quarter. Included in these Second Quarter and First Quarter results
were ($1.6) million in realized dollar roll losses and $10.3
million in realized dollar roll gains, respectively. The net loss
on investments in the Second Quarter was driven by a decrease in
prices for all of our Agency RMBS. For example, the prices of the
Company's 30-year 4.0% Agency RMBS and 15-year 3.0% Agency RMBS
decreased at the end of the Second Quarter by $1.00 and $1.21 to
$106.17 and $103.74, respectively. The net realized and unrealized
gain on interest rate swap and cap contracts was $31.0 million for
the Second Quarter, compared to a loss of $(77.4) million for the
First Quarter, as the increase in interest rates in the Second
Quarter moved hedge values higher.
The Company’s operating expense ratio rose slightly to 1.27% of
average stockholders' equity in the Second Quarter, compared to
1.16% in the First Quarter, mostly due to lower average
stockholders' equity during the Second Quarter. Stockholders'
equity declined in the Second Quarter largely due to the net loss
and share repurchases of $11.4 million.
In the Second Quarter, the Company had core earnings plus drop
income (defined below) of $42.8 million, or $0.27 per diluted
common share, comprised of core earnings of $34.2 million, or $0.22
per diluted common share, and drop income of $8.6 million, or $0.05
per diluted common share. This compares to First Quarter core
earnings plus drop income of $46.9 million, or $0.30 per diluted
common share, consisting of core earnings of $32.8 million, or
$0.21 per diluted common share, and drop income of $14.1 million,
or $0.09 per diluted common share. Core earnings increased
primarily due to lower swap and cap interest rate expense,
resulting in lower total interest expense, however, as we had
higher average settled Debt Securities in the Second Quarter,
interest income remained stable despite lower total yield on the
investment portfolio. The decrease in drop income to $8.6 million
in the Second Quarter from $14.1 million in the First Quarter
reflects a lower average to-be-announced (“TBA”) securities
portfolio in the Second Quarter of $1.5 billion, a decrease of $0.5
billion compared to the First Quarter average balance of $2.0
billion. TBAs were 4.3% and 14.0% of the total investment portfolio
at the end of the Second Quarter and First Quarter, respectively,
as we reduced our TBA positions because financing in the forward
market made it more advantageous to settle than to roll our TBA
positions in the Second Quarter.
Set forth below are summary financial data for the Second
Quarter and the First Quarter:
Summary Financial Data
(in thousands)
Three Months Ended
Key Balance Sheet Metrics June 30, 2015
March 31, 2015 Average settled Debt
Securities (1) $ 13,219,744 $ 12,653,266 Average total Debt
Securities (2) $ 14,711,932 $ 14,810,062 Average repurchase
agreements and FHLBC Advances (3) $ 11,610,144 $ 10,954,377 Average
Debt Securities liabilities (4) $ 13,102,332 $ 13,111,173 Average
stockholders' equity (5) $ 1,893,445 $ 1,981,424 Average common
shares outstanding (6) 157,334 160,523 Leverage ratio (at period
end) (7) 7.06:1 6.77:1 Book Value per common share $ 9.62 $ 10.53
Key Performance Metrics* Average yield on settled
Debt Securities (8) 2.44 % 2.56 % Average yield on total Debt
Securities including drop income (9) 2.42 % 2.57 % Average cost of
funds(10) 0.35 % 0.35 % Average cost of funds and hedge (11) 1.21 %
1.36 % Adjusted average cost of funds and hedge (12) 1.08 % 1.13 %
Interest rate spread net of hedge (13) 1.23 % 1.20 % Interest rate
spread net of hedge including drop income (14) 1.34 % 1.44 %
Operating expense ratio (15) 1.27 % 1.16 % Total stockholder return
on common equity (16) (5.98 )% 3.14 %
__________
(1) The average settled Debt Securities is calculated by
averaging the month end cost basis of
settled Debt Securities during the period.
(2) The average total Debt Securities is calculated by
averaging the month end cost basis of
total Debt Securities during the period.
(3) The average repurchase agreements and short- and long-term
Federal Home Loan Bank of Cincinnati ("FHLBC") advances (together,
"FHLBC Advances") are calculated by averaging the month end repurchase agreements and
FHLBC Advances balances during the period.
(4) The average Debt Securities liabilities are calculated by
adding the average month end
repurchase agreements and FHLBC Advances balances plus average
unsettled Debt Securities during the period.
(5) The average stockholders' equity is calculated by
averaging the month end stockholders'
equity during the period.
(6) The average common shares outstanding are calculated by
averaging the daily common shares
outstanding during the period.
(7) The leverage ratio is calculated by dividing (i) the Company's repurchase agreements
and FHLBC Advances balances plus
payable for securities purchased minus receivable for securities
sold by (ii) stockholders' equity.
(8) The average yield on Debt Securities for the period is
calculated by dividing total interest
income by average settled Debt Securities.
(9) The average yield on total Debt Securities including drop
income for the period is calculated by dividing total interest income plus drop income by
average total Debt Securities
(10) The average cost of funds for the period is calculated by
dividing repurchase agreement and
FHLBC Advances interest expense by average repurchase agreements
and FHLBC Advances for the period.
(11) The average cost of funds and hedge for the period is
calculated by dividing interest
expense by average repurchase agreements and FHLB Advances.
(12) The adjusted average cost of funds and hedge for the period
is calculated by dividing total
interest expense by average total Debt Securities liabilities.
(13) The interest rate spread net of hedge for the period is
calculated by subtracting average cost
of funds and hedge from average yield on settled Debt
Securities.
(14) The interest rate spread net of hedge including drop income
for the period is calculated by subtracting adjusted average cost of funds and
hedge from average yield on total Debt Securities including drop
income.
(15) The operating expense ratio for the period is calculated by
dividing operating expenses by average
stockholders' equity.
(16) Calculated by change in book value plus dividend distributions on common stock.
* All percentages are annualized except total stockholder return
on common equity.
Portfolio
The Company's Debt Securities portfolio, at fair value,
decreased to $14.2 billion at June 30, 2015, from $15.1
billion at March 31, 2015. During the Second Quarter, we sold
approximately $370 million of Agency Hybrid Adjustable Rate
Mortgages ("ARM"s) and $324 million of 15-Year Fixed Rate Agency
RMBS to reduce our exposure to prepayments. We took advantage of
low interest rates early in the Second Quarter and sold some of our
five-year U.S. Treasuries. Later in the Second Quarter, we took
advantage of the steepening yield curve by adding to our holdings
of 30-year Agency RMBS. Overall, throughout the Second Quarter we
reduced our holdings of Agency RMBS by approximately $600
Million.
The following tables detail the Company's Debt Securities
portfolio at June 30, 2015 and March 31, 2015:
June 30,
2015 March 31, 2015 Fair Value (in billions)
% of Total Fair Value (in billions)
% of Total 15-Year Fixed Rate $ 7.2 51 % $ 7.6
51 % 20-Year Fixed Rate 0.1 1 % 0.1 1 % 30-Year Fixed Rate 6.3 44 %
6.1 40 % Hybrid ARMs 0.4 3 % 0.8 5 % U.S. Treasuries 0.2 1 %
0.5 3 % Total $ 14.2 100 % $ 15.1 100 %
The Company’s June 30, 2015 Debt Securities are summarized
below:
Face Value Fair Value
Weighted Average Asset Type (in
thousands) Cost/Face
FairValue/Face
Yield(1) Coupon
CPR(2) 15-Year Fixed Rate $ 6,982,657 $
7,271,583 $ 103.32 $ 104.14 2.06 % 3.11 % 10.9 % 20-Year Fixed Rate
58,336 63,308 102.89 108.52 2.18 % 4.50 % 26.0 % 30-Year Fixed Rate
5,966,144 6,268,165 105.04 105.06 2.80 % 3.82 % 13.5 % Hybrid ARMs
(3) 398,189 413,324 102.82 103.80 1.86 % 3.08 % 21.7 % U.S.
Treasury Securities 225,000 223,910 99.04
99.52 1.60 % 1.50 % n/a Total $ 13,630,326 $
14,240,290 $ 103.98 $ 104.48 2.37 % 3.40 %
12.4 %
__________
(1) This is a forward yield and is calculated based on the cost
basis of the security at June 30, 2015.
(2) CPR is a method of expressing the prepayment rate for a
mortgage pool that assumes that a constant fraction of the
remaining principal is prepaid each month or year. Specifically,
the constant prepayment rate is an annualized version of the prior
three-month prepayment rate for those bonds held at June 30,
2015. Securities with no prepayment history are excluded from this
calculation.
(3) The weighted-average months to reset of our Hybrid ARM
portfolio was 75.5 at June 30, 2015. Months to reset is the
number of months remaining before the fixed rate on a Hybrid ARM
becomes a variable rate. At the end of the fixed period, the
variable rate will be determined by the margin and the
pre-specified caps of the Hybrid ARM and will reset annually.
In July 2015, the aggregate CPR of the Company's Debt Securities
was 11.1%.
Leverage & Liquidity
Our leverage was 7.06 to 1 at the end of the Second Quarter
compared to 6.77 to 1 at the end of the First Quarter. At the end
of the Second Quarter, while our investment portfolio value was
slightly lower and our borrowings were slightly higher, overall,
the higher leverage ratio was primarily due to the decline in
stockholders' equity.
At June 30, 2015, the Company’s liquidity position,
consisting of unpledged Agency RMBS, U.S. Treasuries and cash, was
approximately $1.2 billion, or 67.4% of stockholders' equity,
compared to $1.4 billion, or 70.9% of stockholders' equity, at
March 31, 2015.
Financing
During the Second Quarter, the Company financed its investment
portfolio with average repo borrowings and FHLBC Advances of $11.6
billion, with an average cost of funds of 0.35%, compared to $11.0
billion and 0.35% during the First Quarter.
Total interest expense fell $1.8 million to $35.3 million in the
Second Quarter compared to $37.1 million for the First Quarter.
While interest expense from repo borrowings and FHLBC Advances
increased approximately $0.6 million, primarily due to higher
average repo borrowings and FHLBC Advances, swap and cap interest
expense decreased by $2.5 million to $25.0 million from $27.5
million in the First Quarter.
During the Second Quarter, the Company did not experience any
reductions in the availability of repo borrowings or FHLB Advances.
The Company manages its counterparty risk by diversifying its repo
borrowings across its global counterparties, and by increasing the
number of counterparties from whom we may seek borrowings. At
June 30, 2015, the Company did not have any repo borrowing
(other than FHLBC Advances) with a counterparty that amounted to
greater than 7% of our total outstanding borrowings. Since
December 31, 2014, we have increased the number of
counterparties to 48 at June 30, 2015. Below is a summary, by
region, of our outstanding borrowings at June 30, 2015
(dollars in thousands):
Counterparty Region Number of
Counterparties Total Outstanding
Borrowings % of Total North America 21 $
7,142,620 60.7 % Europe 8 2,996,437 25.5 % Asia 5 1,626,278
13.8 % Total 34 $ 11,765,335 100.0 %
In addition, the Company had payables for securities purchased
net of receivable for securities sold of $0.8 billion at
June 30, 2015, compared to $2.4 billion at March 31,
2015.
Hedging
The Company utilizes interest rate swap and cap contracts (a
"swap" or "cap", respectively) to manage interest rate risk
associated with the financing of its Debt Securities portfolio. As
of June 30, 2015, the Company held swaps with an aggregate
notional amount of approximately $7.4 billion, a weighted-average
fixed rate of 1.39%, and a weighted-average expiration of 3.6
years. The receive rate on the Company's swaps is the three-month
London Interbank Offered Rate ("LIBOR"). At June 30, 2015, the
Company had entered into caps with a notional amount of $2.5
billion, a weighted-average cap rate of 1.28%, and a
weighted-average expiration of 4.6 years.
In the Second Quarter, we terminated a cancelable swap with a
notional of $400 million and a pay rate of 2.438%. The Company
seeks to reduce its exposure to interest rate risk by expanding
and/or lengthening its hedges, and reducing its pay rate, if
possible, when doing so. At June 30, 2015, $1.5 billion of our
$7.4 billion in interest rate swaps are cancelable between October
2015 and January 2016. The cancelable feature in our newer swaps,
while adding flexibility, may result in higher swap interest
expense than with a conventional swap with no cancelable
feature.
The Company's outstanding swaps and caps at June 30, 2015
are described below (dollars in thousands):
Interest Rate
Swaps Weighted Average Notional Fair
Expiration Year Fixed Pay Rate Amount
Value 2017 0.87 % $ 2,750,000 $ 5,815 2018 1.16 % 2,000,000
280 2019 1.75 % 800,000 (7,631 ) 2021 2.30 % 1,300,000 (4,595 )
2022 2.15 % 500,000 3,327 Total 1.39 % $ 7,350,000
$ (2,804 )
Interest Rate Caps Weighted
Average Notional Fair Expiration Year
Cap Rate Amount Value 2019 1.34 % $ 800,000 $
19,791 2020 1.25 % 1,700,000 65,087 Total 1.28 % $
2,500,000 $ 84,878
Our duration gap increased to 1.23 at June 30, 2015,
compared to 0.60 at March 31, 2015, as the rise in rates
during the Second Quarter caused Agency RMBS to extend.
Drop Income
"Drop income" is a component of our net realized and unrealized
gain (loss) on investments in our unaudited consolidated statements
of operations, and is therefore excluded from core earnings. Drop
income is the difference between the spot price and the forward
settlement price for the same Agency RMBS on trade date. This
difference is also the economic equivalent of the assumed net
interest spread (yield less financing costs) of the Agency RMBS
from trade date to settlement date. The Company derives drop income
through utilization of forward settling transactions of Agency
RMBS. The Company's drop income and average TBA market values
outstanding during the Second Quarter and First Quarter are shown
in the chart below (dollars in thousands):
June 30, 2015 March 31,
2015 Change Drop income $ 8,561 $ 14,125 $
(5,564 ) TBAs average market value 1,468,467 2,022,951 (554,484 )
Prepayments
The portfolio recorded $572.3 million in principal repayments
and prepayments, a CPR of approximately 13.0% and net amortization
expense of $27.6 million in the Second Quarter, compared to $462.4
million in principal repayments and prepayments, a CPR of
approximately 10.3% and net amortization expense of $21.5 million
in the First Quarter. The increase in CPR in the Second Quarter was
principally due to elevated mortgage refinancings and bond
seasoning factors.
Dividend
The Company declared a common dividend of $0.28 per share for
the Second Quarter, compared to a $0.30 common dividend in the
First Quarter. Using the closing share price of $7.73 on
June 30, 2015, the Second Quarter dividend equates to an
annualized dividend yield of 14.5%.
Share Repurchase Program
In the Second Quarter, we repurchased 1,286,586 shares of the
Company's common stock at a weighted-average purchase price of
$8.87, for an aggregate of approximately $11.4 million. In the
First Quarter, we repurchased 4,149,571 shares of the
Company's common stock at a weighted-average purchase price
of $8.95, for an aggregate of approximately $37.2
million. As of June 30, 2015, the Company had approximately
$199.8 million available under the share repurchase program to
repurchase shares of its common stock.
Conference Call
The Company will host a conference call at 9:00 AM Eastern Time
on Thursday, July 23, 2015, to discuss its financial results
for the Second Quarter. To participate in the call by telephone,
please dial (866) 299-3305 at least 10 minutes prior to the start
time and reference the conference passcode 83187835#. International
callers should dial (412) 455-6213 and reference the same passcode.
The conference call will be webcast live over the Internet and can
be accessed at the Company’s web site at http://www.cysinv.com. To listen to the live
webcast, please visit http://www.cysinv.com at least 15 minutes prior to
the start of the call to register, download, and install necessary
audio software.
A dial-in replay of the call will be available on Thursday, July
23, 2015, at approximately 12:00 PM Eastern Time through Thursday,
August 6, 2015 at approximately 11:00 AM Eastern Time. To access
this replay, please dial (855) 859-2056 and enter the conference ID
number 83187835#. International callers should dial (404) 537-3406
and enter the same conference ID number. A replay of the conference
call will also be archived on the Company’s website at http://www.cysinv.com.
Additional Information
The Company will make available additional quarterly information
for the benefit of its stockholders through a supplemental
presentation that will be available at the Company's website,
www.cysinv.com, contemporaneously with the filing of the Company's
quarterly report on Form 10-Q. The presentation will be available
on the Webcasts/Presentations tab of the Investor Relations section
of the Company's website.
About CYS Investments, Inc.
CYS Investments, Inc. is a specialty finance company that
primarily invests on a leveraged basis in residential mortgage
pass-through certificates for which the principal and interest
payments are guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae.
The Company refers to these securities as Agency RMBS. CYS
Investments, Inc. has elected to be treated as a real estate
investment trust for federal income tax purposes.
Forward-Looking Statements Disclaimer
This release contains “forward-looking statements” made pursuant
to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995, including those relating to interest rate
volatility, the prices and volatility of Agency RMBS, earnings,
yields, investment environment, interest rates, hedges, forward
settling transactions, liquidity, prepayments, and the effect of
actions of the U.S. government, including the Fed, the FOMC, and
the Federal Housing Finance Agency on our results. Forward-looking
statements typically are identified by use of the terms such as
“believe,” “expect,” “anticipate,” “estimate,” “plan,” “continue,”
“intend,” “should,” “may” or similar expressions. Forward-looking
statements are based on the Company's beliefs, assumptions and
expectations of the Company's future performance, taking into
account all information currently available to the Company. The
Company cannot assure you that actual results will not vary from
the expectations contained in the forward-looking statements. All
of the forward-looking statements are subject to numerous possible
events, factors and conditions, many of which are beyond the
control of the Company and not all of which are known to the
Company, including, without limitation, market conditions and those
described in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2014, and in the Company's Quarterly
Report on Form 10-Q for the three months ended March 30, 2015,
which have been filed with the Securities and Exchange Commission.
All forward-looking statements speak only as of the date on which
they are made. New risks and uncertainties arise over time, and it
is not possible to predict those events or how they may affect us.
Except as required by law, the Company is not obligated to, and
does not intend to, update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise.
CYS INVESTMENTS, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except per share numbers)
June 30,
2015 March 31, 2015
December 31,2014*
Assets: Investments in securities, at fair value (including
pledged assets of $12,385,443, $11,309,980 and $11,908,922,
respectively)
$ 14,240,290 $ 15,047,074 $ 14,601,507 Other investments 41,028
18,229 8,025 Derivative assets, at fair value 101,852 91,604
148,284 Cash 49,919 7,170 4,323 Receivable for securities sold and
principal repayments 907,661 345,006 83,643 Interest receivable
37,551 37,314 37,894 Receivable for cash pledged as collateral
25,509 37,216 11,104 Other assets 1,304 11,408 1,083
Total assets 15,405,114 15,595,021 14,895,863
Liabilities and stockholders' equity: Liabilities:
Repurchase agreements 10,115,335 10,204,901 11,289,559 Short-term
FHLBC advances 1,575,000 510,000 — Long-term FHLBC advances, at
fair value 75,011 — — Derivative liabilities, at fair value 19,778
38,502 16,007 Payable for securities purchased 1,732,668 2,767,042
1,505,481 Payable for cash received as collateral 25,104 48,229
72,771 Distribution payable 48,328 51,844 4,410 Accrued interest
payable 26,311 31,422 27,208 Accrued expenses and other liabilities
3,473 2,445 5,259 Total liabilities 13,621,008
13,654,385 12,920,695
Stockholders'
equity: Preferred Stock, $25.00 par value, 50,000 shares
authorized: 7.75% Series A Cumulative Redeemable Preferred Stock,
(3,000 shares issued and outstanding, respectively, $75,000 in
aggregate liquidation preference) $ 72,369 $ 72,369 $ 72,369 7.50%
Series B Cumulative Redeemable Preferred Stock, (8,000 shares
issued and outstanding, respectively, $200,000 in aggregate
liquidation preference) 193,531 193,531 193,531 Common Stock, $0.01
par value, 500,000 shares authorized (156,849, 158,114 and 161,850
shares issued and outstanding, respectively) 1,568 1,581 1,618
Additional paid in capital 2,002,339 2,012,697 2,049,152
Accumulated deficit (485,701 ) (339,542 ) (341,502 ) Total
stockholders' equity $ 1,784,106 $ 1,940,636 $
1,975,168
Total liabilities and stockholders' equity
$ 15,405,114 $ 15,595,021 $ 14,895,863
Book
value per common share $ 9.62 $ 10.53 $ 10.50
__________________
* Derived from audited financial statements.
CYS INVESTMENTS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended (In thousands, except per share numbers)
June 30, 2015 March 31, 2015 Interest
income: Interest income from Agency RMBS $ 79,579 $ 80,060 Other
interest income 953 790 Total interest income 80,532
80,850 Interest expense: Repurchase agreement and
short-term FHLBC advances
interest expense
10,157 9,642 Long-term FHLBC advances interest expense 105 — Swap
and cap interest expense 24,992 27,468
Total interest expense
35,254 37,110 Net interest income 45,278
43,740 Other income (loss): Net realized gain (loss) on
investments 9,435 18,253 Net unrealized gain (loss) on investments
(176,899 ) 75,689 Net realized gain (loss) on termination of swap
and cap contracts (2,300 ) (2,568 ) Net unrealized gain (loss) on
swap and cap contracts 33,347 (74,800 ) Net unrealized gain (loss)
on long-term FHLBC advances (11 ) — Other income 118 40
Total other income (loss) (136,310 ) 16,614 Expenses:
Compensation and benefits 3,712 3,554 General, administrative and
other 2,293 2,203 Total expenses 6,005 5,757
Net income (loss) $ (97,037 ) $ 54,597 Dividends on
preferred stock (5,203 ) (5,203 ) Net income (loss) available to
common stockholders $ (102,240 ) $ 49,394 Net income (loss)
per common share basic & diluted $ (0.66 ) $ 0.31
Core Earnings
"Core earnings" represents a non-GAAP financial measure and is
defined as net income (loss) available to common shares excluding
net realized gain (loss) on investments, net unrealized gain (loss)
on investments, net realized gain (loss) on termination of swap and
cap contracts, net unrealized gain (loss) on swap and cap
contracts, and net unrealized gain (loss) on long-term FHLBC
advances. Management uses core earnings to evaluate the effective
yield of the portfolio after operating expenses. In addition,
management utilizes core earnings as a key metric in conjunction
with other portfolio and market factors to determine the
appropriate leverage and hedging ratios, as well as the overall
structure of the portfolio. The Company believes that providing
users of the Company's financial information with such measures, in
addition to the related GAAP measures, gives investors greater
transparency and insight into the information used by the Company's
management in its financial and operational decision-making.
The primary limitation associated with core earnings as a
measure of the Company's financial performance over any period is
that it excludes the effects of net realized and unrealized gain
(loss) on investments, swap and cap contracts, and long-term
indebtedness. In addition, the Company's presentation of core
earnings may not be comparable to similarly-titled measures of
other companies, which may use different calculations. As a result,
core earnings should not be considered as a substitute for the
Company's GAAP net income (loss) as a measure of our financial
performance or any measure of our liquidity under GAAP.
Three Months Ended (In thousands)
June 30,
2015 March 31, 2015 NET INCOME (LOSS)
AVAILABLE TO COMMON SHARES $ (102,240 ) $ 49,394 Net realized
(gain) loss on investments (9,435 ) (18,253 ) Net unrealized (gain)
loss on investments 176,899 (75,689 ) Net realized (gain) loss on
termination of swap and cap contracts 2,300 2,568 Net unrealized
(gain) loss on swap and cap contracts (33,347 ) 74,800 Net
unrealized (gain) loss on long-term FHLBC advances 11 —
Core earnings $ 34,188 $ 32,820
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150722006330/en/
CYS Investments, Inc.Richard E. Cleary, 617-639-0440Chief
Operating Officer
Cys Investments, Inc. (NYSE:CYS)
Historical Stock Chart
From Mar 2024 to Apr 2024
Cys Investments, Inc. (NYSE:CYS)
Historical Stock Chart
From Apr 2023 to Apr 2024
