2023-07-26 16:35:56 ET
As expected, Annaly Capital Management ( NYSE: NLY ) Q2 earnings fell for a fourth straight quarter but reduced its leverage and kept its book value steady.
Q2 EPS for distribution of $0.72, trailing the $0.74 consensus, fell from $0.81 in the prior quarter and from $1.22 in Q2 2022.
"As we have noted for some time, Annaly ( NLY ) is well-prepared for volatility and strategically managed our leverage position during the quarter given uncertainties emanating from the regional banking turbulence and debt ceiling negotiations," said CEO and Chief Investment Officer David Finkelstein. "These efforts enabled book value to end the quarter effectively unchanged while our portfolio out-earned our dividend."
Economic return of 2.9% narrowed from 3.0% in Q1. Economic leverage of 5.8x narrowed from 6.4x in the previous quarter.
Book value per common share of $20.73 at June 30, 2023 ticked down from $20.77 at March 31.
Total assets of $89.3B increased from $86.8B at March 31, 2023. Securities rose to $71.2B at June 30 from $69.2B at March 31, while net loans fell to $1.15B from $1.64B. Mortgage servicing rights stood at $2.02B compared with $1.79B at the end of Q1.
Total portfolio of $78.9B includes $71.4B in highly liquid agency portfolio. The agency portfolio fell 8%, predominantly through reductions to its TBA position early in the quarter, to manage leverage ahead of expected volatility events; portfolio additions focused on increasing exposure to higher coupon specified pools, the company said.
Q2 net interest income of -$32.0M vs. $19.5M in Q1 2023 and from $475.1M in Q2 2022; net interest margin, excluding PAA, of 1.66% vs. 1.76% in Q1 and 2.20% in Q2 2022.
Q2 net interest spread, excluding PAA, was 1.45% vs. 1.62% in the previous quarter and 1.76% in the year-ago quarter.
Net servicing income of $74.8M dropped from $76.4M in Q1 and $49.8M in Q2 2022.
Average economic cost of interest-bearing liabilities was 2.77% at June 30 compared with 2.34% at March 31 and 1.11% at June 30, 2022.
Total general and administrative expenses of $42.9M rose from $40.8M in the prior quarter and from $36.0M in the year-ago period.
Conference call on July 27 at 9:00 AM ET.
Earlier, Annaly Capital Management ( NLY ) non-GAAP EPS of $0.72 misses by $0.02
More on Annaly Capital:
- A look at Annaly's previous income statements
- Earn 13% From a Recession, With Enormous Upside: Annaly Capital
- Annaly Capital: Broken Model, Downside Is as Low as 70% of Tangible Book
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Annaly Capital Q2 earnings fall as it prepared for volatility from bank stress