Annaly (NLY) Earnings above estimate for second quarter, NII and decrease in book value

Annaly Capital Management, Inc. NLY announced second quarter 2021 earnings available for distribution (EAD), formerly known as basic earnings per share excluding premium amortization adjustment (“PAA”), of 30 cents, exceeding estimate of the Zacks consensus of 27 cents. The figure compares favorably with the 27 cents in the previous year’s quarter.

Net Interest Income (NII) was $ 322.9 million, behind the Zacks consensus estimate of $ 412.3 million. The figure is down 19% year over year.

While record financing costs and a higher average return on interest-earning assets supported Annaly, the company saw a sequential decline in book value per share (BVPS).

Annaly is in the process of selling her commercial real estate business to Slate Asset Management for $ 2.33 billion. This will reduce exposure to the commercial real estate sector and provide the ability to increase investment in the residential mortgage finance market. After the end of the second quarter, the company has transferred the platform and the majority of the assets, while the rest are expected to be transferred by the end of the third quarter of 2021.

In the headlines

At the end of the second quarter, the company had $ 92.9 billion in total assets. At the end of the second quarter of 2021, unencumbered assets stood at $ 9.6 billion.

Annaly sequentially increased her capital allocation to the residential lending business from 13% to 19% in the second quarter, supported by $ 1 billion in full loan purchases.

During the quarter under review, the average return on interest-bearing assets (excluding PAA) was 2.76%, up from 2.71% in the previous quarter.

The net interest spread (excluding PAA) of 1.93% for the second quarter increased from 1.84% in the previous quarter. The net interest margin (excluding PAA) in the reported quarter was 2.09% compared to 1.91% in the first quarter of 2021.

Annaly’s BVPS was $ 8.37 as of June 30, 2021, down sequentially from $ 8.95. In addition, BVPS compares unfavorably with $ 8.39 as of June 30, 2020. At the end of the current quarter, the company’s economic capital ratio was 14.3%, compared to 13.7% in the previous quarter.

For the end of June quarter, the weighted average real constant prepayment rate was 26.4%, up sequentially from 23.9%.

The economic leverage was 5.8X as of June 30, 2021, compared to 6.1X in the previous quarter. The company generated an annualized EAD return on average equity (excluding PAA) of 13.05% in the second quarter, up from 12.53% in the previous quarter.

Annaly currently wears a Zacks Rank # 4 (Sell).

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Annaly Capital Management Inc Price, Consensus and BPA Surprise

Annaly Capital Management Inc Price, Consensus and BPA Surprise

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

Performance and profit dates of other REITs

AGNC Investment Corp. AGNC reported a net spread and second-quarter 2021 dollar income (excluding estimated catch-up premium amortization costs) of 76 cents per share, beating Zacks’ consensus estimate of 64 cents. The published figure improved from the 58-cent figure in the second quarter of 2020.

We now look forward to the results of other mortgage REITs like Arbor Realty Trust, Inc. A brand Chimera investment company CIM, which are expected to release their results on July 30 and August 4, respectively.

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