Annaly Capital Management (NLY) Q3 2024 earnings summary

Executive summary

• Economic return for Q3 2024 was 4.9%, with year-to-date return at 10.5%, driven by strong performance across Agency MBS, Residential Credit, and MSR segments.

• Book value per common share increased to $19.54 from $19.25 in the prior quarter and $18.25 a year ago.

• Earnings available for distribution (EAD) exceeded the dividend, supporting a stable payout, with EAD per share at $0.66.

• Raised $1.2 billion in accretive common equity since the start of Q3, enhancing scale and liquidity.

• Declared a quarterly common stock dividend of $0.65 per share, maintaining a double-digit annualized yield.

Financial highlights

• GAAP net income per share was $0.05, up from a loss of $0.09 in Q2 2024 and $(1.21) in Q3 2023.

• Net interest margin (excluding PAA) was 1.52%, with net interest spread (excluding PAA) at 1.32%.

• Average yield on interest earning assets (excluding PAA) was 5.25%, while average economic cost of interest bearing liabilities was 3.93%.

• Dividend yield stood at 13.0%–12.95% annualized as of quarter end.

• Total investment portfolio reached $97.7 billion, with $72.5 billion in Agency MBS.

Outlook and guidance

• Management is optimistic about the business model, citing the Fed’s rate cutting cycle, constructive macro environment, and strong risk-adjusted return potential.

• Expect modest NIM increase and to modestly earn more in Q4 than Q3.

• Agency, Residential Credit, and MSR strategies are expected to benefit from improved market dynamics and robust demand.

• Disciplined management of leverage, liquidity, and duration exposure amid election and policy uncertainty.

• MSR portfolio expected to benefit from new sub-servicing partnerships and remains resilient to rate changes.