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Annaly Q1 Earnings Beat Estimates, Net Interest Margin Improves Y/Y
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Key Takeaways
Annaly Q1 EAD of 76 cents beat estimates and grew y/y from 72 cents, with net income rising sharply.
NLY saw net interest margin and spread improve, while BVPS increased to $19.82 from $19.02 a year ago.
Annaly expanded residential credit and MSR portfolios, though its economic capital ratio edged down.
Annaly Capital Management, Inc. (NLY - Free Report) reported first-quarter 2026 earnings available for distribution (EAD) per average share of 76 cents, which beat the Zacks Consensus Estimate of 74 cents. The figure increased from 72 cents in the year-ago quarter.
NLY’s net interest income (NII) and net interest margin improved year over year in the reported quarter. Notably, the year-over-year increase in book value per common share (BVPS) was also encouraging. However, a lower economic capital ratio was concerning.
Net income available to common stockholders was $242 million compared with $87.1 million in the year-ago period.
Inside Annaly’s Headlines
NII was $452.7 million in the reported quarter, which lagged the Zacks Consensus Estimate by 8.4%. In the prior-year quarter, the company reported NII of $220 million.
Net interest spread (excluding PAA) of 1.42% in the first quarter increased from 1.35% in the prior-year quarter.
Annaly’s BVPS was $19.82 as of March 31, 2026, up from $19.02 in the prior-year quarter. At the end of the reported quarter, the company’s economic capital ratio was 14.7%, down from 14.8% in the prior-year quarter.
In the first quarter, the weighted average actual constant prepayment rate was 10.2%, up from 7.1% in the year-ago quarter.
Annaly generated an annualized EAD return on average equity of 14.58% in the first quarter, which increased from the prior-year quarter’s 14.43%.
Annaly’s total portfolio was $106.7 billion in the quarter, including a $92.2-billion Agency portfolio. The Residential Credit portfolio increased 30% to $10.3 billion, while the MSR portfolio increased 9% to $4.2 billion.
NLY Keeps Leverage Conservative With Ample Liquidity
Annaly maintained a disciplined leverage profile in the quarter, with GAAP leverage at 7.3X and economic leverage at 5.7X, both modestly higher than the prior quarter’s levels. The company also reported total stockholders’ equity of $16.3 billion as of the quarter-end.
Liquidity remained a focal point, given ongoing macro and rate volatility. Annaly ended the quarter with $9 billion in total assets available for financing, including $5 billion in cash and unencumbered Agency MBS. This flexibility matters for a mortgage REIT because it helps sustain funding access and supports portfolio repositioning as market conditions shift.
Annaly Hedging Stays Steady Amid Volatility
Against a volatile rate environment, NLY kept its hedge posture relatively steady. The company ended the quarter with a hedge ratio of 87%, while maintaining an $81-billion hedge portfolio that was broadly in line with the prior quarter.
Funding costs improved modestly, supporting underlying spread dynamics. Average economic costs of interest-bearing liabilities were 3.93% in the quarter, while the net interest margin (excluding PAA) was 1.71% compared with 1.69% in the first quarter of 2025. Average yield on interest-earning assets, excluding the premium amortization adjustment, was 5.35%, highlighting how asset yields continued to run ahead of funding costs as the company balanced carry opportunities with risk management.
NLY Leans on Dividend Coverage & Capital Raising
A key highlight for income-focused investors was that earnings again exceeded the common dividend. Annaly declared a quarterly common stock cash dividend of 70 cents per share for the first quarter, supported by its earnings available for distribution.
The company also leaned on equity issuance to support growth. Annaly raised $509 million through its at-the-market sales program during the quarter, which management characterized as accretive, and framed the move as part of its broader approach to disciplined portfolio management.
Our Take on NLY
Annaly’s first-quarter results benefited from a higher net interest margin, stronger net income and growth in its residential credit and MSR businesses. While book value per share rose year over year, a lower economic capital ratio and elevated market volatility are likely to keep returns sensitive in the near term.
Annaly Capital Management Inc Price, Consensus and EPS Surprise
AGNC Investment Corp. (AGNC - Free Report) reported first-quarter of 2026 net spread and dollar roll income per common share of 42 cents, topping the Zacks Consensus Estimate by 16.7%. However, the metric declined 4.5% from the year-ago quarter’s 44 cents.
AGNC’s results benefited from rallies in average asset yield and NII. Also, a rise in tangible net BVPS on the portfolio was positive. However, a reduced net interest spread and a higher weighted average cost of funds were concerning.
Starwood Property Trust, Inc. (STWD - Free Report) is expected to post first-quarter 2026 results on May 8.
Over the past seven days, the Zacks Consensus Estimate for STWD’s quarterly earnings has been unchanged at 43 cents per share.
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Annaly Q1 Earnings Beat Estimates, Net Interest Margin Improves Y/Y
Key Takeaways
Annaly Capital Management, Inc. (NLY - Free Report) reported first-quarter 2026 earnings available for distribution (EAD) per average share of 76 cents, which beat the Zacks Consensus Estimate of 74 cents. The figure increased from 72 cents in the year-ago quarter.
NLY’s net interest income (NII) and net interest margin improved year over year in the reported quarter. Notably, the year-over-year increase in book value per common share (BVPS) was also encouraging. However, a lower economic capital ratio was concerning.
Net income available to common stockholders was $242 million compared with $87.1 million in the year-ago period.
Inside Annaly’s Headlines
NII was $452.7 million in the reported quarter, which lagged the Zacks Consensus Estimate by 8.4%. In the prior-year quarter, the company reported NII of $220 million.
Net interest spread (excluding PAA) of 1.42% in the first quarter increased from 1.35% in the prior-year quarter.
Annaly’s BVPS was $19.82 as of March 31, 2026, up from $19.02 in the prior-year quarter. At the end of the reported quarter, the company’s economic capital ratio was 14.7%, down from 14.8% in the prior-year quarter.
In the first quarter, the weighted average actual constant prepayment rate was 10.2%, up from 7.1% in the year-ago quarter.
Annaly generated an annualized EAD return on average equity of 14.58% in the first quarter, which increased from the prior-year quarter’s 14.43%.
Annaly’s total portfolio was $106.7 billion in the quarter, including a $92.2-billion Agency portfolio. The Residential Credit portfolio increased 30% to $10.3 billion, while the MSR portfolio increased 9% to $4.2 billion.
NLY Keeps Leverage Conservative With Ample Liquidity
Annaly maintained a disciplined leverage profile in the quarter, with GAAP leverage at 7.3X and economic leverage at 5.7X, both modestly higher than the prior quarter’s levels. The company also reported total stockholders’ equity of $16.3 billion as of the quarter-end.
Liquidity remained a focal point, given ongoing macro and rate volatility. Annaly ended the quarter with $9 billion in total assets available for financing, including $5 billion in cash and unencumbered Agency MBS. This flexibility matters for a mortgage REIT because it helps sustain funding access and supports portfolio repositioning as market conditions shift.
Annaly Hedging Stays Steady Amid Volatility
Against a volatile rate environment, NLY kept its hedge posture relatively steady. The company ended the quarter with a hedge ratio of 87%, while maintaining an $81-billion hedge portfolio that was broadly in line with the prior quarter.
Funding costs improved modestly, supporting underlying spread dynamics. Average economic costs of interest-bearing liabilities were 3.93% in the quarter, while the net interest margin (excluding PAA) was 1.71% compared with 1.69% in the first quarter of 2025. Average yield on interest-earning assets, excluding the premium amortization adjustment, was 5.35%, highlighting how asset yields continued to run ahead of funding costs as the company balanced carry opportunities with risk management.
NLY Leans on Dividend Coverage & Capital Raising
A key highlight for income-focused investors was that earnings again exceeded the common dividend. Annaly declared a quarterly common stock cash dividend of 70 cents per share for the first quarter, supported by its earnings available for distribution.
The company also leaned on equity issuance to support growth. Annaly raised $509 million through its at-the-market sales program during the quarter, which management characterized as accretive, and framed the move as part of its broader approach to disciplined portfolio management.
Our Take on NLY
Annaly’s first-quarter results benefited from a higher net interest margin, stronger net income and growth in its residential credit and MSR businesses. While book value per share rose year over year, a lower economic capital ratio and elevated market volatility are likely to keep returns sensitive in the near term.
Annaly Capital Management Inc Price, Consensus and EPS Surprise
Annaly Capital Management Inc price-consensus-eps-surprise-chart | Annaly Capital Management Inc Quote
NLY currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance & Earnings Dates of Annaly’s Peers
AGNC Investment Corp. (AGNC - Free Report) reported first-quarter of 2026 net spread and dollar roll income per common share of 42 cents, topping the Zacks Consensus Estimate by 16.7%. However, the metric declined 4.5% from the year-ago quarter’s 44 cents.
AGNC’s results benefited from rallies in average asset yield and NII. Also, a rise in tangible net BVPS on the portfolio was positive. However, a reduced net interest spread and a higher weighted average cost of funds were concerning.
Starwood Property Trust, Inc. (STWD - Free Report) is expected to post first-quarter 2026 results on May 8.
Over the past seven days, the Zacks Consensus Estimate for STWD’s quarterly earnings has been unchanged at 43 cents per share.