Annaly Capital Management reported a challenging third quarter marked by significant portfolio valuation pressure despite strong operational earnings. While Earnings Available for Distribution (EAD) of $0.80 per share comfortably covered the $0.75 dividend, the company recorded an economic loss of 7.6% as book value per share declined 11.4% sequentially.
Key Highlights
- Earnings available for distribution of $0.80 per share beat the analyst estimate of $0.78, supported by higher average yields on interest-earning assets.
- Book Value Per Share (BVPS) ended the quarter at $17.86, a sharp decline from $20.15 in the prior quarter and below the $19.15 estimate.
- The Agency portfolio decreased modestly to $91.8 billion, representing 55% of dedicated capital as the company rotated into higher coupon specified pools.
- Economic leverage increased to 5.9x from 5.6x in the prior quarter, while the company ended the period with a 100% hedge ratio to manage interest rate extension risk.
- Residential Credit loan fundings reached a record $5.8 billion through the whole loan correspondent channel, maintaining a $10.4 billion portfolio.