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Mar 31, 2022
Annaly Q1 2022 Earnings Report
Announced financial results for the quarter ended March 31, 2022.
Key Takeaways
Annaly Capital Management reported a GAAP net income of $1.37 per average common share and earnings available for distribution of $0.28 per average common share for the quarter, with an economic return of (12.3%). The company's book value per common share was $6.77, with GAAP leverage at 5.3x and economic leverage at 6.4x. They declared a quarterly common stock cash dividend of $0.22 per share.
GAAP net income of $1.37 per average common share for the quarter
Earnings available for distribution (“EAD”) of $0.28 per average common share for the quarter; unchanged from the prior quarter with dividend coverage of over 125%
Economic return of (12.3%) for the first quarter
Annualized GAAP return on average equity of 65.6% and annualized EAD return on average equity of 14.0%
Annaly
Annaly
Forward Guidance
The market environment during the first quarter of 2022 was one of the most challenging for fixed-income in decades, characterized by exceptional volatility with substantial spread widening and a notable increase in benchmark rates. The announced sale of our Middle Market Lending portfolio subsequent to quarter end marks a significant strategic achievement that is accretive to Annaly's stockholders.
Positive Outlook
- Improvement in new investment returns provided by wider spreads
- Greater certainty of mortgage cash flows in a lower prepayment environment
- Additional clarity with respect to quantitative tightening
- Sale of Middle Market Lending portfolio is accretive to Annaly's stockholders
- Transaction enables Annaly to deploy additional capital into our core housing finance strategy
Challenges Ahead
- Challenging market environment for fixed-income
- Exceptional volatility with substantial spread widening
- Notable increase in benchmark rates
- Agency MBS underperformance resulting from market turbulence impacted book value
- Expectation for continued volatility