Annaly (NLY) Q1 Earnings Upper Estimates, NII Slide & Book Value

Annaly Capital Management, Inc. NLY reported earnings available for distribution (EAD) per share of 28 cents in the first quarter of 2022, which beat Zacks’ consensus estimate of 23 cents. The figure, however, compares unfavorably to 29 cents in the prior year quarter.

NLY saw a year-over-year decline in book value per share (BVPS) and average return on interest-earning assets.

Net interest income (NII) was $580.9 million, beating Zacks consensus estimate of $341 million. This figure decreased by 15.5% year-on-year.

In the headlines

At the end of the first quarter, Annaly had $84.4 billion in total assets, including $76.1 billion invested in the Agency’s portfolio. At the end of the quarter, unencumbered assets stood at $7.2 billion.

In the quarter under review, the average return on interest earning assets (excluding premium amortization adjustment or PAA) was 2.62%, down from 2.71% in the prior year quarter . The average economic cost of interest-bearing liabilities was 0.89%, down from 0.87% previously.

The net interest spread (excluding PAA) of 1.73% for the first quarter fell from 1.84% in the prior year quarter. Nevertheless, the net interest margin (excluding PAA) in the current quarter was 2.04%, compared to 1.91% in the first quarter of 2021.

Annaly’s BVPS was $6.77 as of March 31, 2022, down sequentially from $7.97. Additionally, BVPS compares unfavorably at $8.95 as of March 31, 2021. At the end of the current quarter, Annaly’s economic capital ratio was 13.1%, down from 13.7% in the quarter. of the previous year.

For the quarter to the end of March, the actual weighted average constant prepayment rate was 16.7%, down sequentially from 21.4%.

Economic leverage was 6.4X as of March 31, 2022, compared to 5.7X (sequentially) and 6.1X in the prior year quarter. Annaly generated an annualized EAD return on average equity (excluding PAA) of 14.01% in the first quarter, up from 12.53% in the prior year quarter.

Annaly Capital Management Inc Price, Consensus and EPS Surprise

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

Annaly currently wears a Zacks rank #4 (sale).

You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Competitive landscape

We now look forward to the release of results from other mortgage REITs, such as Starwood Realty Trust STWD and AGNC Investment Corp. AGNC.

STWD and AGNC are due to report results on May 5 and May 2, respectively.

Starwood Property and AGNC Investment currently have a Zacks rank #3 (Hold).

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