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Annaly (NLY) Stock Rises 3.5% on Q1 Earnings Beat, NII Falls
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Annaly Capital Management, Inc. (NLY - Free Report) reported first-quarter earnings available for distribution (EAD) per average share of 81 cents, which surpassed the Zacks Consensus Estimate of 72 cents. The figure declined from $1.11 in the year-ago quarter.
The company gained 3.5% following the release of its first-quarter 2023 results. A challenging operating backdrop amid significant volatility in interest rates and mortgage spreads are major near-term headwinds for NLY.
NLY registered a year-over-year decline in book value per share (BVPS) and margin, while the average yield on interest-earning assets improved.
Inside the Headlines
Net interest income (NII) was $19.47 million in the reported quarter, missing the Zacks Consensus Estimate of $183 million. The figure plunged year over year from $580.9 million.
At the first-quarter end, Annaly had $85.5 billion of total assets, with $77.6 billion invested in the Agency portfolio. At the end of the quarter, unencumbered assets were $5.7 billion.
In the reported quarter, the average yield on interest-earning assets (excluding premium amortization adjustment or PAA) was 3.96%, up from the prior-year quarter’s 2.62%. The average economic costs of interest-bearing liabilities were 2.34%, increasing from 0.89%.
Net interest spread (excluding PAA) of 1.62% in the first quarter fell from 1.73% in the prior-year quarter. Also, the net interest margin (excluding PAA) was 1.76% compared with 2.04% in first-quarter 2022.
Annaly’s BVPS was $20.77 as of Mar 31, 2023, down from $27.08 in the prior-year quarter. At the end of the reported quarter, Annaly’s economic capital ratio was 13.2%, up from 13.1% in the prior-year quarter.
In the first quarter, the weighted average actual constant prepayment rate was 5.5%, sequentially down from 7.5%.
Economic leverage was 6.4X as of Mar 31, 2023, up from 6.3X (sequentially) but flat from the prior-year quarter. Annaly generated an annualized EAD return on average equity (excluding PAA) of 14.82% in the first quarter, up from the prior-year quarter’s 14.01%.
AGNC Investment Corp.’s (AGNC - Free Report) first-quarter 2023 net spread and dollar roll income per common share (excluding estimated "catch-up" premium amortization costs) of 70 cents per share beat the Zacks Consensus Estimate of 61 cents. The bottom line declined from 72 cents in the prior-year quarter.
AGNC Investment’s adjusted net interest and dollar roll income (excluding catch-up premium amortization) was $493 million, rising from the quarter-ago number of $423 million.
Starwood Property Trust (STWD - Free Report) is scheduled to report quarterly figures on May 4. Over the past month, the Zacks Consensus Estimate for STWD’s quarterly earnings has been unchanged, implying a 35.5% fall from the prior-year reported number.
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Annaly (NLY) Stock Rises 3.5% on Q1 Earnings Beat, NII Falls
Annaly Capital Management, Inc. (NLY - Free Report) reported first-quarter earnings available for distribution (EAD) per average share of 81 cents, which surpassed the Zacks Consensus Estimate of 72 cents. The figure declined from $1.11 in the year-ago quarter.
The company gained 3.5% following the release of its first-quarter 2023 results. A challenging operating backdrop amid significant volatility in interest rates and mortgage spreads are major near-term headwinds for NLY.
NLY registered a year-over-year decline in book value per share (BVPS) and margin, while the average yield on interest-earning assets improved.
Inside the Headlines
Net interest income (NII) was $19.47 million in the reported quarter, missing the Zacks Consensus Estimate of $183 million. The figure plunged year over year from $580.9 million.
At the first-quarter end, Annaly had $85.5 billion of total assets, with $77.6 billion invested in the Agency portfolio. At the end of the quarter, unencumbered assets were $5.7 billion.
In the reported quarter, the average yield on interest-earning assets (excluding premium amortization adjustment or PAA) was 3.96%, up from the prior-year quarter’s 2.62%. The average economic costs of interest-bearing liabilities were 2.34%, increasing from 0.89%.
Net interest spread (excluding PAA) of 1.62% in the first quarter fell from 1.73% in the prior-year quarter. Also, the net interest margin (excluding PAA) was 1.76% compared with 2.04% in first-quarter 2022.
Annaly’s BVPS was $20.77 as of Mar 31, 2023, down from $27.08 in the prior-year quarter. At the end of the reported quarter, Annaly’s economic capital ratio was 13.2%, up from 13.1% in the prior-year quarter.
In the first quarter, the weighted average actual constant prepayment rate was 5.5%, sequentially down from 7.5%.
Economic leverage was 6.4X as of Mar 31, 2023, up from 6.3X (sequentially) but flat from the prior-year quarter. Annaly generated an annualized EAD return on average equity (excluding PAA) of 14.82% in the first quarter, up from the prior-year quarter’s 14.01%.
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-eps-surprise-chart | Annaly Capital Management Inc Quote
Competitive Landscape
AGNC Investment Corp.’s (AGNC - Free Report) first-quarter 2023 net spread and dollar roll income per common share (excluding estimated "catch-up" premium amortization costs) of 70 cents per share beat the Zacks Consensus Estimate of 61 cents. The bottom line declined from 72 cents in the prior-year quarter.
AGNC Investment’s adjusted net interest and dollar roll income (excluding catch-up premium amortization) was $493 million, rising from the quarter-ago number of $423 million.
Starwood Property Trust (STWD - Free Report) is scheduled to report quarterly figures on May 4. Over the past month, the Zacks Consensus Estimate for STWD’s quarterly earnings has been unchanged, implying a 35.5% fall from the prior-year reported number.