Annaly (NLY) Higher estimate of third quarter profit, book value and lower NII


Annaly Capital Management, Inc. NLY said third quarter 2021 earnings available for distribution (EAD) per share of 28 cents which exceeded Zacks’ consensus estimate of 26 cents. The figure, however, compares unfavorably with the 32 cents in the previous year’s quarter.

Net Interest Income (NII) was $ 362.5 million, behind the Zacks consensus estimate of $ 410.2 million. The figure is down 19% year over year.

With funding costs still low, Annaly has witnessed an increase in net interest spreads. However, the company saw a year-over-year decline in book value per share (BVPS) and average return on interest-bearing assets.

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

In the headlines

At the end of the third quarter, the company had $ 94.2 billion in total assets, of which 92% of the assets were invested in the agency’s portfolio. At the end of the quarter, unencumbered assets stood at $ 9.8 billion.

In the current quarter, the average return on interest-bearing assets (excluding premium amortization adjustment or PAA) was 2.63%, down from 2.86% in the previous year’s quarter. The average GAAP costs of interest-bearing liabilities were 0.32%, down from 0.60%.

The net interest spread (excluding PAA) of 1.97% for the third quarter fell from 1.93% in the quarter of the previous year. The net interest margin (excluding PAA) during the reported quarter was 2.04% compared to 2.05% in the third quarter of 2020.

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

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

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

Annaly currently wears a Zacks Rank # 3 (Hold). You can see The full list of Zacks # 1 Rank (Strong Buy) stocks today here.

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 benefit dates of other mREITs

AGNC Investment Corp. AGNC reported a net spread and dollar income per common share in the third quarter of 2021 (excluding estimated “catch-up” premium amortization costs) of 75 cents per share, beating Zacks’ consensus estimate of 63 cents. However, the reported figure has declined from the 81-cent count in the third 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 October 29 and November 3, respectively.

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