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Annaly Q3 Earnings Beat Estimates, Net Interest Income Improves Y/Y
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Key Takeaways
NLY reported EAD of 80 cents per share, beating estimates of 77 cents and rising from 73 cents a year ago.
Net interest income climbed to $543.6 million, while the annualized EAD return on equity rose to 15.86%.
EAD covered the 75-cent dividend 1.07X, but book value fell to $17.86 and GAAP leverage rose to 8.0X.
Annaly Capital Management, Inc.’s (NLY - Free Report) third-quarter 2026 earnings available for distribution (EAD) per average common share of 80 cents beat the Zacks Consensus Estimate of 77 cents. The figure increased from 73 cents in the year-ago quarter.
NLY’s net interest income (NII) and net interest margin improved year over year in the reported quarter. The increase in EAD and stronger net interest income were encouraging. However, a decline in book value per common share (BVPS), higher funding costs and a GAAP net loss were concerning.
Net loss available to common stockholders was $1.04 billion compared with net income of $791.3 million in the year-ago period.
Inside Annaly’s Q3 Headlines
NII was $543.6 million in the reported quarter, which missed the Zacks Consensus Estimate of $596 million. The figure increased significantly from the year-ago quarter.
Net interest spread (excluding the premium amortization adjustment, or PAA) was 1.42% in the third quarter, down from 1.50% in both the prior-year and prior quarters.
Annaly’s BVPS was $17.86 as of Sept. 30, 2026, down from $19.25 in the prior-year quarter. At the end of the reported quarter, the company’s economic capital ratio was 14.2%, down from 14.8% in the year-ago quarter.
The weighted average experienced constant prepayment rate was 9.6%, compared with 8.6% in the year-ago quarter.
Annaly generated an annualized EAD return on average equity of 15.86% in the third quarter, up from 14.70% in the prior-year quarter.
The company’s total portfolio was $106.5 billion in the quarter, including a $91.8 billion Agency portfolio. The Residential Credit portfolio was $10.4 billion, while the mortgage servicing rights (MSR) portfolio increased to $4.3 billion in market value.
Annaly’s leverage increased in the quarter, with GAAP leverage at 8.0X, up from 7.1X in the year-ago quarter. Economic leverage rose to 5.9X from 5.7X in the prior-year period. The company reported total stockholders’ equity of $15.8 billion as of quarter-end, down from $16.9 billion in the previous quarter.
Liquidity remained important amid volatility in fixed-income markets. Annaly ended the quarter with $8.5 billion in total assets available for financing, including $4.2 billion in cash and unencumbered Agency mortgage-backed securities (MBS). The company maintained $8.3 billion in warehouse capacity across its Residential Credit and MSR businesses, including $2.8 billion of committed capacity.
Annaly also issued 12 securitizations totaling a record $7.4 billion through its Residential Credit Group during the quarter.
Annaly Maintains a Defensive Hedging Strategy
Against a challenging fixed-income market backdrop, NLY continued actively managing its hedge portfolio, primarily adding Treasury futures to offset market-driven extension and maintain a disciplined risk posture. The company ended the quarter with a hedge ratio of 100%, up from 92% in the year-ago quarter and 97% in the previous quarter.
Funding costs increased during the quarter. Average GAAP costs of interest-bearing liabilities rose six basis points sequentially to 4.34%, while average economic costs increased seven basis points to 4.03%. Net interest margin, excluding PAA, was 1.69%, compared with 1.70% in the third quarter of 2025 and 1.76% in the previous quarter.
The average yield on interest-earning assets, excluding PAA, was 5.45%, compared with 5.46% in both the year-ago and prior quarters. GAAP net interest margin improved to 1.54%, up marginally from the prior-year quarter.
NLY Supports Dividend Coverage Through Earnings and 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 75 cents per share, unchanged from the previous quarter and up from 70 cents in the year-ago period. EAD of 80 cents per share provided 1.07X coverage of the declared dividend.
The company also continued raising equity capital to support its investment strategy. Annaly raised $757 million through its at-the-market sales program during the quarter, which it characterized as accretive. The capital-raising activity supports the company’s ability to pursue investment opportunities across its Agency, Residential Credit and MSR strategies.
Our Take on NLY
Annaly’s third-quarter results benefited from higher net interest income, improved GAAP net interest margin and stronger EAD per share. Earnings continued to cover the common dividend, while active hedging, liquidity management and equity issuance supported the company’s investment strategy. However, the decline in book value per share, higher funding costs and increased leverage remain key concerns. The substantial GAAP net loss also highlights the impact of market-driven investment valuation changes on reported results.G
Going forward, Annaly’s performance will likely remain sensitive to interest-rate movements, mortgage prepayment trends and financing costs. Its ability to maintain dividend coverage while preserving book value and managing leverage will be important for sustaining shareholder returns.
Annaly Capital Management Inc Price, Consensus and EPS Surprise
ARMOUR Residential REIT’s (ARR - Free Report) third-quarter 2026 results reflected distributable earnings available to common stockholders of 71 cents per share, which missed the Zacks Consensus Estimate of 73 cents.
ARR’s net interest income increased to $83.7 million from $38.5 million in the prior-year quarter. However, the company reported a GAAP net loss of $2.26 per common share against net income of $1.49 per share in the year-ago quarter. Book value per common share declined to $14.55 from $17.49 in the year-ago period.
AGNC Investment Corp.’s (AGNC - Free Report) third-quarter 2026 results reflected net spread and dollar roll income of 37 cents per common share, which missed the Zacks Consensus Estimates of 39 cents.
The company reported a net loss of $1.17 per common share and a 16.9% sequential decline in tangible net book value per comon share to $7.13. Higher interest rates and weakness in the Agency mortgage-backed securities market pressured performance. However, AGNC maintained liquidity of $6.3 billion in unencumbered cash and Agency MBS and raised $992 million through its at-the-market common stock offering program.
View the Zacks #1 Rank List
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Annaly Q3 Earnings Beat Estimates, Net Interest Income Improves Y/Y
Key Takeaways
Annaly Capital Management, Inc.’s (NLY - Free Report) third-quarter 2026 earnings available for distribution (EAD) per average common share of 80 cents beat the Zacks Consensus Estimate of 77 cents. The figure increased from 73 cents in the year-ago quarter.
NLY’s net interest income (NII) and net interest margin improved year over year in the reported quarter. The increase in EAD and stronger net interest income were encouraging. However, a decline in book value per common share (BVPS), higher funding costs and a GAAP net loss were concerning.
Net loss available to common stockholders was $1.04 billion compared with net income of $791.3 million in the year-ago period.
Inside Annaly’s Q3 Headlines
NII was $543.6 million in the reported quarter, which missed the Zacks Consensus Estimate of $596 million. The figure increased significantly from the year-ago quarter.
Net interest spread (excluding the premium amortization adjustment, or PAA) was 1.42% in the third quarter, down from 1.50% in both the prior-year and prior quarters.
Annaly’s BVPS was $17.86 as of Sept. 30, 2026, down from $19.25 in the prior-year quarter. At the end of the reported quarter, the company’s economic capital ratio was 14.2%, down from 14.8% in the year-ago quarter.
The weighted average experienced constant prepayment rate was 9.6%, compared with 8.6% in the year-ago quarter.
Annaly generated an annualized EAD return on average equity of 15.86% in the third quarter, up from 14.70% in the prior-year quarter.
The company’s total portfolio was $106.5 billion in the quarter, including a $91.8 billion Agency portfolio. The Residential Credit portfolio was $10.4 billion, while the mortgage servicing rights (MSR) portfolio increased to $4.3 billion in market value.
NLY Reports Higher Leverage Amid Market Volatility
Annaly’s leverage increased in the quarter, with GAAP leverage at 8.0X, up from 7.1X in the year-ago quarter. Economic leverage rose to 5.9X from 5.7X in the prior-year period. The company reported total stockholders’ equity of $15.8 billion as of quarter-end, down from $16.9 billion in the previous quarter.
Liquidity remained important amid volatility in fixed-income markets. Annaly ended the quarter with $8.5 billion in total assets available for financing, including $4.2 billion in cash and unencumbered Agency mortgage-backed securities (MBS). The company maintained $8.3 billion in warehouse capacity across its Residential Credit and MSR businesses, including $2.8 billion of committed capacity.
Annaly also issued 12 securitizations totaling a record $7.4 billion through its Residential Credit Group during the quarter.
Annaly Maintains a Defensive Hedging Strategy
Against a challenging fixed-income market backdrop, NLY continued actively managing its hedge portfolio, primarily adding Treasury futures to offset market-driven extension and maintain a disciplined risk posture. The company ended the quarter with a hedge ratio of 100%, up from 92% in the year-ago quarter and 97% in the previous quarter.
Funding costs increased during the quarter. Average GAAP costs of interest-bearing liabilities rose six basis points sequentially to 4.34%, while average economic costs increased seven basis points to 4.03%. Net interest margin, excluding PAA, was 1.69%, compared with 1.70% in the third quarter of 2025 and 1.76% in the previous quarter.
The average yield on interest-earning assets, excluding PAA, was 5.45%, compared with 5.46% in both the year-ago and prior quarters. GAAP net interest margin improved to 1.54%, up marginally from the prior-year quarter.
NLY Supports Dividend Coverage Through Earnings and 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 75 cents per share, unchanged from the previous quarter and up from 70 cents in the year-ago period. EAD of 80 cents per share provided 1.07X coverage of the declared dividend.
The company also continued raising equity capital to support its investment strategy. Annaly raised $757 million through its at-the-market sales program during the quarter, which it characterized as accretive. The capital-raising activity supports the company’s ability to pursue investment opportunities across its Agency, Residential Credit and MSR strategies.
Our Take on NLY
Annaly’s third-quarter results benefited from higher net interest income, improved GAAP net interest margin and stronger EAD per share. Earnings continued to cover the common dividend, while active hedging, liquidity management and equity issuance supported the company’s investment strategy. However, the decline in book value per share, higher funding costs and increased leverage remain key concerns. The substantial GAAP net loss also highlights the impact of market-driven investment valuation changes on reported results.G
Going forward, Annaly’s performance will likely remain sensitive to interest-rate movements, mortgage prepayment trends and financing costs. Its ability to maintain dividend coverage while preserving book value and managing leverage will be important for sustaining shareholder returns.
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 #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of NLY’s Peers
ARMOUR Residential REIT’s (ARR - Free Report) third-quarter 2026 results reflected distributable earnings available to common stockholders of 71 cents per share, which missed the Zacks Consensus Estimate of 73 cents.
ARR’s net interest income increased to $83.7 million from $38.5 million in the prior-year quarter. However, the company reported a GAAP net loss of $2.26 per common share against net income of $1.49 per share in the year-ago quarter. Book value per common share declined to $14.55 from $17.49 in the year-ago period.
AGNC Investment Corp.’s (AGNC - Free Report) third-quarter 2026 results reflected net spread and dollar roll income of 37 cents per common share, which missed the Zacks Consensus Estimates of 39 cents.
The company reported a net loss of $1.17 per common share and a 16.9% sequential decline in tangible net book value per comon share to $7.13. Higher interest rates and weakness in the Agency mortgage-backed securities market pressured performance. However, AGNC maintained liquidity of $6.3 billion in unencumbered cash and Agency MBS and raised $992 million through its at-the-market common stock offering program.