Hatteras Financial Corp. Announces Fourth Quarter 2010 Financial Results

Hatteras Financial Corp. HTS today announced financial results for the quarter ended December 31, 2010. During the quarter ended December 31, 2010, the Company earned net income of $45.6 million or $0.99 per common share, compared to net income of $43.2 million or $1.12 per common share during the quarter ended September 30, 2010. The decline in per share net income was primarily due to lower relative average earning assets per share during the quarter as the Company methodically invested the proceeds from its September 21st, 2010 equity raise, but was also affected by a lower net interest margin. Net interest income for the quarter ended December 31, 2010 was $43.2 million, compared to $40.0 million for the quarter ended September 30, 2010. The Company's average earning assets increased to $8.0 billion for the fourth quarter of 2010 from $6.9 billion for the third quarter of 2010, and the yield for the fourth quarter of 2010 was 3.39%, falling from 3.70% in the third quarter of 2010. The decrease in the portfolio yield was primarily a result of mortgage prepayments combined with lower yields on recently purchased securities. Operating expenses were flat compared to the prior quarter and were $3.4 million in the fourth quarter of 2010 even though our average equity substantially increased. This equates to an annualized expense ratio of 1.13% of shareholders' equity based on average equity for the quarter ended December 31, 2010, down from 1.38% in the third quarter of 2010.