Annaly Capital Management Inc is an American mortgage real estate investment trust. The Company owns a portfolio of real estate-related investments, including mortgage pass-through certificates, collateralized mortgage obligations, credit risk transfer securities, other securities representing interests in or obligations backed by pools of mortgage loans, residential mortgage loans, and mortgage servicing rights. Its business objective is to generate net income for distribution to its stockholders and optimize its returns through prudent management of its diversified investment strategies. The Company's three investment groups are comprised of the following: Annaly Agency Group, Annaly Residential Credit Group, and Annaly Mortgage Servicing Rights Group.
Financial Performance
Annaly Capital Management Inc (NLY, Financial) reported a GAAP net loss of ($0.09) per average common share for Q2 2024. However, the company achieved earnings available for distribution (EAD) of $0.68 per average common share, aligning with analyst estimates. The company's revenue for the quarter was $1,075.16 million, slightly below the estimated $1,080.00 million.
Key Metrics and Financial Highlights
| Metric | Q2 2024 | Q1 2024 | Q2 2023 |
|---|---|---|---|
| Book value per common share | $19.25 | $19.73 | $20.73 |
| GAAP net income (loss) per average common share | ($0.09) | $0.85 | $0.27 |
| GAAP leverage | 7.1x | 6.7x | 6.1x |
| Earnings available for distribution per average common share | $0.68 | $0.64 | $0.72 |
Investment and Strategy
Annaly's total portfolio stood at $74.8 billion, with $66.0 billion in highly liquid Agency portfolio assets. The Agency portfolio increased by 2% quarter-over-quarter due to opportunistic portfolio additions. The Residential Credit portfolio decreased modestly to $5.9 billion, while the Mortgage Servicing Rights (MSR) portfolio ended the quarter with a market value of $2.8 billion, up 5% quarter-over-quarter.
Financing and Capital
The company reported $6.3 billion of total assets available for financing, including $3.5 billion in cash and unencumbered Agency MBS. The average GAAP cost of interest-bearing liabilities increased slightly to 5.43%, while the average economic cost of interest-bearing liabilities rose to 3.90% quarter-over-quarter.
Corporate Responsibility & Governance
Annaly published its fifth Corporate Responsibility Report, titled "Powering American Homeownership," underscoring its commitment to sustainable business practices, sound corporate governance, and a best-in-class corporate culture.
Despite modest widening in Agency MBS spreads, Annaly produced a positive economic return in the second quarter, supported by our diversified capital allocation, balanced hedge portfolio, and responsible leverage position. Notably, Annaly generated a 5.7% economic return year-to-date, demonstrating the strength of our housing finance model," remarked David Finkelstein, Annaly's Chief Executive Officer and Chief Investment Officer.
Analysis
Annaly Capital Management Inc (NLY, Financial) demonstrated resilience in a challenging market environment, achieving its earnings per share estimate despite a slight revenue miss. The company's diversified investment strategy and prudent leverage management have enabled it to maintain a stable book value per share and generate positive economic returns. However, the increase in GAAP leverage and the modest widening in Agency MBS spreads could pose challenges moving forward.
For more detailed insights and to access the full earnings report, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from Annaly Capital Management Inc for further details.
