Annaly (NLY) Tops Q4 Earnings Estimates, Logs Negative NII

Annaly Capital Management, Inc. NLY reported fourth-quarter earnings available for distribution (EAD) per average share of 68 cents, which surpassed the Zacks Consensus Estimate of 64 cents. However, the figure declined from 89 cents reported in the year-ago quarter.

NLY registered year-over-year decline in book value per share (BVPS) and margin, while the average yield on interest-earning assets improved.

In 2023, EAD per average share was $2.86, down from $4.23 reported in the prior-year quarter.

Inside the Headlines

Net interest income (NII) was negative $53.6 million in the reported quarter. The Zacks Consensus Estimate was pegged at $296 million. In the prior-year quarter, the company reported $135.09 million in NII.

In 2023, NII was negative $111.38 million. It reported NII of $1.47 billion in 2022. Further, the figure missed the Zacks Consensus Estimate of $239 million.

At fourth-quarter end, Annaly had $93.23 billion of total assets, up 4% from the prior quarter. At the end of the quarter, unencumbered assets were $5.2 billion.

In the reported quarter, the average yield on interest-earning assets (excluding premium amortization adjustment or PAA) was 4.55%, up from the prior-year quarter’s 3.86%. The average economic costs of interest-bearing liabilities were 3.42%, increasing from 2.11% in the prior-year quarter.

Net interest spread (excluding PAA) of 1.22% in the fourth quarter fell from 1.71% in the prior-year quarter. Also, the net interest margin (excluding PAA) was 1.58% compared with 1.90% in fourth-quarter 2022.

Annaly’s BVPS was $19.44 as of Dec 31, 2023, down 6.5% from $20.79 in the prior-year quarter. At the end of the reported quarter, the company’s economic capital ratio was 14%, up from 13.4% in the prior-year quarter.

In the fourth quarter, the weighted average actual constant prepayment rate was 6.3%, down from 7.5% in the year-ago quarter.

Economic leverage was 5.7X as of Dec 31, 2023, down from 6.4X sequentially and 6.3X in the prior-year quarter. Annaly generated an annualized EAD return on average equity of 13.76% in the fourth quarter, down from the prior-year quarter’s 16.19%.

NLY currently carries a Zacks Rank #4 (Sell).

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

Annaly Capital Management Inc Price, Consensus and EPS Surprise

Annaly Capital Management Inc Price, Consensus and EPS Surprise

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

Earnings Dates of Other Companies

We now look forward to the earnings of other companies in the REIT space, like Starwood Property Trust, Inc. STWD and AFC Gamma, Inc. AFCG.

Starwood Property will report quarterly results on Feb 22, whereas AFC Gamma is set to report fourth-quarter numbers on Mar 7.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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