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Annaly (NLY) Q3 Earnings Top Estimate, Book Value & NII Fall

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Annaly Capital Management, Inc. (NLY - Free Report) reported third-quarter 2021 earnings available for distribution (EAD) per share of 28 cents that surpassed the Zacks Consensus Estimate of 26 cents. The figure, however, compared unfavorably with the year-ago quarter’s 32 cents.

The net interest income (NII) was $362.5 million, lagging the Zacks Consensus Estimate of $410.2 million. The figure declined 19% year over year.

With continued low financing costs, Annaly witnessed a rise in net interest spread. However, the company registered a year-over-year decline in book value per share (BVPS) and the average yield on interest-earning assets.

In the third quarter of 2021, the company closed the previously announced sale of substantially all of the assets that comprise the commercial real estate business for $2.33 billion. The remaining assets are expected to be legally transferred by the end of fourth-quarter 2021.

Inside the Headlines

At the third-quarter end, the company had $94.2 billion of total assets, with 92% of assets invested in the Agency portfolio. At the end of the quarter, unencumbered assets stood at $9.8 billion.

In the reported quarter, the average yield on interest-earning assets (excluding premium amortization adjustment or PAA) was 2.63%, down from the prior-year quarter’s 2.86%.Average GAAP costs of interest-bearing liabilities were 0.32%, declining from 0.60%.

Net interest spread (excluding PAA) of 1.97% for the third quarter rose from 1.93% in the prior-year quarter. The net interest margin (excluding PAA) in the reported quarter was 2.04% compared with 2.05% witnessed in third-quarter 2020.

Annaly’s BVPS was $8.39 as of Sep 30, 2021, sequentially up from $8.37. However, BVPS compared unfavorably with $8.70 as of Sep 30, 2020. At the end of the reported quarter, the company’s economic capital ratio was 14.2%, rising from 13.6% in the prior-year quarter.

For the September-end quarter, the weighted average actual constant prepayment rate was 23.1%, sequentially down from 26.4%.

Economic leverage was 5.8X as of Sep 30, 2021, flat sequentially and down from 6.2X in the prior-year quarter. The company generated an annualized EAD return on average equity (excluding PAA) of 12.81% in the third quarter, down from the prior quarter’s 13.05%.

Annaly currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Annaly Capital Management Inc Price, Consensus and EPS Surprise

 

Annaly Capital Management Inc Price, Consensus and EPS Surprise

Annaly Capital Management Inc price-consensus-eps-surprise-chart | Annaly Capital Management Inc Quote

Performance and Earnings Dates of Other mREITs

AGNC Investment Corp. (AGNC - Free Report) reported a third-quarter 2021 net spread and dollar roll income per common share (excluding estimated "catch-up" premium amortization costs) of 75 cents per share, beating the Zacks Consensus Estimate of 63 cents. However, the reported figure declined from the third-quarter 2020 number of 81 cents.

We now look forward to the earnings releases of other mortgage REITs like Arbor Realty Trust, Inc. (ABR - Free Report) and Chimera Investment Corporation (CIM - Free Report) , which are scheduled to release their results on Oct 29 and Nov 3, respectively.

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