Annaly Capital Management (NLY) Q2 2024 earnings summary

Executive summary

• Delivered a 0.9% economic return for Q2 2024 and 5.7% for the first half, with earnings available for distribution (EAD) of $0.68 per share, covering the $0.65 dividend and supporting a 13.6% yield.

• Book value per share declined to $19.25 from $19.73 in Q1 2024, but quarter-to-date book value is up roughly 2% with dividend accrual.

• Maintained prudent economic leverage at 5.8x and strong liquidity, with $6.3B in assets available for financing.

• Reported GAAP net loss of ($0.09) per share for Q2 2024.

• Agency and MSR portfolios grew, while residential credit saw record loan growth in the Onslow Bay channel.

Financial highlights

• Q2 economic return was 0.9%, including a $0.65 dividend; year-to-date economic return reached 5.7%.

• EAD increased to $0.68 per share, up from $0.64 in Q1, driven by higher coupon income and strong loan settlements.

• Net interest margin (excluding PAA) rose to 1.58% from 1.43% sequentially.

• Book value per share declined to $19.25 from $19.73 in Q1 2024.

• Annualized EAD return on average equity was 13.36% in Q2 2024.

Outlook and guidance

• Management expects less restrictive monetary policy and gradual interest rate cuts in the second half of 2024, with Agency MBS, residential credit, and MSR strategies expected to benefit.

• Anticipates yield curve steepening, reduced volatility, and Agency MBS outperformance if the Fed cuts rates.

• Plan to grow residential credit and MSR businesses opportunistically while maintaining current capital allocation.

• Company believes it is well-positioned for further growth due to substantial liquidity and prudent leverage.