Annaly Capital Management Inc.
) - the mortgage real estate investment trust (mREIT) - reported
second-quarter 2014 core earnings of 30 cents per share, beating
the Zacks Consensus Estimate by 4 cents. The results also came in
above the prior-quarter core earnings of 23 cents per share and the
year-ago figure of 29 cents per share.
Results reflect interest spread expansion in the quarter. Net
interest income (NII) came in at $557.9 million, up 5.1%
sequentially and 1.7% year over year.
Annaly Capital Management, Inc - Earnings
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Quarter in Detail
For the reported quarter, annualized yield on average
interest-earning assets was 3.20% while annualized cost of funds on
average interest-bearing liabilities (including the net interest
payments on interest rate swaps) was 1.94%.
This led to an average interest rate spread of 1.26% for the
quarter, reflecting a 36 basis point (bps) increase from the prior
quarter and a 25 bps uptick from the year-ago quarter. Net interest
margin (NIM) for the quarter came in at 1.57% compared with 1.32%
in the prior quarter and 1.20% in the year-ago period.
The company's investment securities (including Agency
mortgage-backed securities, Agency debentures) were $82.4 billion
as of Jun 30, 2014, up from $77.8 billion as of Mar 31, 2014 but
down from $95.8 billion as of Jun 30, 2013. The commercial
investment portfolio, net of financing, denoted 11% of
stockholders' equity as of Jun 30, 2014, compared with 12% as of
Mar 31, 2014.
Annaly's book value per share came in at $13.23 as of Jun 30, 2014,
up from $12.30 as of Mar 31, 2014 and $13.03 as of Jun 30, 2013. As
of Jun 30, 2014, the company's capital ratio (representing the
ratio of stockholders' equity to total assets) was 15.4%, compared
with 15.2% at the end of the prior quarter and 12.9% at year-ago
Leverage was 5.3:1 as of Jun 30, 2014, compared with 5.2:1 as of
Mar 31, 2014 and 6.2:1 as of Jun 30, 2014. The company offered an
annualized core return on average equity of 9.24% in the quarter
under review, compared with 7.68% in the prior quarter and 8.24% in
the year-ago period.
Amid the continued Fed tapering of bond purchases and anticipation
of rising interest rates in the long term, Annaly is making
concerted efforts to enhance its book value and manage its leverage
level. Moreover, we believe that the diversification of Annaly into
commercial assets would help enhance the company's top-line growth,
Annaly currently has a Zacks Rank #3 (Hold). Investors interested
in the mREIT industry may also consider stocks like American
Capital Mortgage Investment Corp. (
Altisource Portfolio Solutions S.A. (
) and ZAIS Financial Corp. (
). All these stocks carry a Zacks Rank #2 (Buy).
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