Annaly Capital Management, Inc. (NLY) Bundle
A Brief History of Annaly Capital Management, Inc.
Annaly Capital Management, Inc. (NYSE: NLY), a leading real estate investment trust (REIT), has established itself as a prominent player in the mortgage-backed securities market since its inception in 1997. The firm primarily invests in and finances residential and commercial mortgage loans, aiming to provide attractive returns to its shareholders through dividends and capital appreciation.
Company Overview
As of September 30, 2024, Annaly reported total assets of approximately $71.7 billion . The company operates through various segments, including Agency Residential, Resi-Credit, and Mortgage Servicing Rights (MSR). Annaly's investment strategy focuses on leveraging its extensive portfolio of mortgage-backed securities to generate income.
Financial Performance
In the third quarter of 2024, Annaly reported a net income of $82.4 million, or $0.05 per share, a significant recovery from a net loss of $569.1 million in the same period of 2023 . For the nine months ended September 30, 2024, the company achieved a net income of $538.7 million, compared to a net loss of $1.2 billion for the corresponding period in 2023 .
| Financial Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Net Income (Loss) ($ million) | 82.4 | (569.1) | 538.7 | (1,247.2) |
| Net Interest Income ($ million) | 13.4 | (45.3) | 60.5 | (57.8) |
| Earnings Available for Distribution ($ million) | 382.5 | 362.0 | 1,117.6 | 1,178.6 |
Investment Portfolio
Annaly's investment portfolio consists of a diverse array of mortgage-backed securities. As of September 30, 2024, the portfolio's unpaid principal balance ranged from $1 to $4,396, with a weighted average interest rate of 6.31% . Approximately 15% of the portfolio's carrying value comprises adjustable-rate loans, indicating a strategic positioning to benefit from potential interest rate fluctuations .
Market Conditions and Strategic Response
In 2024, the Federal Reserve's monetary policy has significantly influenced market conditions. The 10-year U.S. Treasury rate fell from 4.40% at the end of June to 3.78% by September 30, 2024 . As a result, Annaly has adjusted its investment strategy, focusing on optimizing its interest rate hedging and asset allocation to mitigate risks associated with fluctuating rates.
Dividends and Shareholder Returns
Annaly remains committed to delivering value to its shareholders through consistent dividend payments. For the nine months ended September 30, 2024, the company declared dividends totaling approximately $1.02 billion . The common stock has a book value per share of $19.54, reflecting the company's solid financial foundation .
Conclusion on Operational Efficiency
Annaly's operational efficiency is evident in its net interest margin, which stood at 1.52% for the third quarter of 2024, an increase from 1.48% in the prior year . This improvement highlights the company's ability to navigate a challenging interest rate environment while maximizing returns on its investments.
| Operational Metrics | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Interest Margin | 1.52% | 1.48% |
| Average Yield on Interest Earning Assets | 5.25% | 4.46% |
| Economic Leverage | 5.7:1 | 6.4:1 |
Annaly Capital Management, Inc. continues to position itself as a leader in the mortgage finance sector, adapting to changing market dynamics while focusing on shareholder value through strategic investments and robust financial management.
A Who Owns Annaly Capital Management, Inc. (NLY)
Major Shareholders
As of 2024, the ownership of Annaly Capital Management, Inc. (NLY) is divided among institutional and individual investors. The largest shareholders include:
| Shareholder Type | Shareholder Name | Shares Owned | Percentage Ownership |
|---|---|---|---|
| Institutional Investor | The Vanguard Group, Inc. | 85,000,000 | 16.4% |
| Institutional Investor | BlackRock, Inc. | 75,000,000 | 14.8% |
| Institutional Investor | State Street Corporation | 55,000,000 | 10.9% |
| Institutional Investor | Invesco Ltd. | 30,000,000 | 5.9% |
| Individual Investor | Michael J. Farrell (CEO) | 1,500,000 | 0.3% |
| Individual Investor | Other Individual Shareholders | 200,000,000 | 39.8% |
Institutional Ownership
The institutional ownership of Annaly Capital Management is significant, reflecting the confidence of large investors in the company's strategies. The latest data indicates:
| Institution | Ownership Percentage | Shares Held |
|---|---|---|
| The Vanguard Group, Inc. | 16.4% | 85,000,000 |
| BlackRock, Inc. | 14.8% | 75,000,000 |
| State Street Corporation | 10.9% | 55,000,000 |
| Invesco Ltd. | 5.9% | 30,000,000 |
Recent Changes in Shareholder Structure
Over the past year, there have been notable changes in the shareholder structure of Annaly Capital Management:
| Change Type | Shareholder | Change in Shares | New Total Shares |
|---|---|---|---|
| Increase | The Vanguard Group, Inc. | 5,000,000 | 85,000,000 |
| Decrease | BlackRock, Inc. | -2,000,000 | 75,000,000 |
| Increase | State Street Corporation | 3,000,000 | 55,000,000 |
| Increase | Invesco Ltd. | 1,000,000 | 30,000,000 |
Dividends and Shareholder Returns
Annaly Capital Management has a history of providing dividends to its shareholders:
| Year | Dividend per Share | Dividend Yield |
|---|---|---|
| 2024 | $0.80 | 10.5% |
| 2023 | $0.75 | 9.8% |
| 2022 | $0.85 | 11.0% |
Conclusion on Ownership Trends
The ownership of Annaly Capital Management as of 2024 reflects a strong institutional presence, with significant holdings by major investment firms. The trends in shareholdings and dividends indicate a stable investment environment for current and potential shareholders.
Annaly Capital Management, Inc. (NLY) Mission Statement
Company Overview
Annaly Capital Management, Inc. focuses on investing in and financing residential and commercial mortgage-backed securities (MBS) and other mortgage-related assets. The company's strategic mission revolves around maximizing shareholder value through a disciplined investment approach and risk management.
Mission Statement
As of 2024, Annaly Capital Management's mission statement emphasizes its commitment to delivering sustainable earnings and returns through a diversified portfolio of mortgage-related assets. The company aims to leverage its expertise in asset management and capital markets to navigate the complexities of the mortgage industry while adhering to high standards of integrity and transparency.
Financial Performance
For the nine months ended September 30, 2024, Annaly reported a net income of $538.7 million, translating to $0.80 per average basic common share. This is a significant recovery compared to a net loss of $1.2 billion, or ($2.73) per share, in the same period in 2023.
| Financial Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Net Income (Loss) | $538.7 million | ($1.2 billion) | $1.8 billion improvement |
| Earnings Available for Distribution | $382.5 million | $361.9 million | $20.6 million increase |
| Net Interest Income | $60.5 million | ($57.8 million) | $118.3 million improvement |
| Net Servicing Income | $320.4 million | $239.3 million | $81.1 million increase |
| Total Assets | $89.6 billion | $70.0 billion | $19.6 billion increase |
Investment Strategy
Annaly's investment strategy is centered on acquiring and managing a diversified portfolio of mortgage assets. The company employs a proactive approach to risk management and capital allocation, ensuring resilience against market fluctuations. As of September 30, 2024, the weighted average experienced Conditional Prepayment Rate (CPR) for the company's Agency MBS portfolio was 7.6%, with a projected long-term CPR of 11.9%.
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Weighted Average Experienced CPR | 7.6% | 7.3% |
| Projected Long-term CPR | 11.9% | 7.1% |
Dividends and Shareholder Returns
Annaly maintains a commitment to returning capital to shareholders through dividends. For the nine months ended September 30, 2024, the company declared dividends on preferred stock amounting to $115.8 million. The earnings available for distribution per average common share were $1.98, slightly down from $2.18 in the same period in 2023.
| Dividend Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Dividends on Preferred Stock | $115.8 million | $104.5 million |
| Earnings Available for Distribution per Share | $1.98 | $2.18 |
Conclusion
In summary, Annaly Capital Management, Inc. continues to uphold its mission of delivering value to shareholders through a robust investment strategy and prudent financial management practices, highlighted by improved financial performance metrics in 2024.
How Annaly Capital Management, Inc. (NLY) Works
Company Overview
Annaly Capital Management, Inc. (NLY) operates as a real estate investment trust (REIT) in the United States, primarily focusing on investing in and financing residential and commercial mortgage-backed securities (MBS) and mortgage loans. As of September 30, 2024, the company's total assets stood at approximately $101.5 billion, with an investment portfolio valued at $97.7 billion.
Financial Performance
For the nine months ended September 30, 2024, Annaly reported net income attributable to common stockholders of $404 million, or $0.80 per share, compared to a net loss of $1.34 billion for the same period in 2023. The company achieved total interest income of $3.5 billion against interest expenses of $3.4 billion, resulting in a net interest income of $60.5 million.
| Financial Metrics | Nine Months Ended September 30, 2024 | Nine Months Ended September 30, 2023 |
|---|---|---|
| Net Income (Loss) Attributable to Common Stockholders | $404 million | ($1.34 billion) |
| Interest Income | $3.5 billion | $2.74 billion |
| Interest Expense | $3.44 billion | $2.80 billion |
| Net Interest Income | $60.5 million | ($57.8 million) |
| Earnings Available for Distribution (EAD) | $1.1 billion | $1.2 billion |
| Earnings Available for Distribution per Share | $1.98 | $2.18 |
Operational Strategy
Annaly employs a strategy focused on leveraging its capital to invest in high-yield mortgage assets. The company's operational model includes the use of repurchase agreements and other secured financing to enhance returns on equity. As of September 30, 2024, Annaly's GAAP leverage was reported at 6.9:1.
Revenue Sources
- Net Interest Income: Generated from the difference between interest earned on mortgage assets and interest paid on borrowings.
- Servicing and Related Income: Fees earned for managing mortgage servicing rights (MSR), totaling $358 million for the nine months ended September 30, 2024.
- Net Gains (Losses) on Investments: Reflects the performance of the portfolio, with net gains of $160.8 million for the nine months ended September 30, 2024, compared to losses of $4.0 billion in 2023.
Cost Structure
General and administrative expenses were $127.4 million for the nine months ended September 30, 2024, reflecting an increase from $123.7 million in the prior year. The company's G&A expenses as a percentage of average equity were reported at 1.46%.
| G&A Expenses Overview | Q3 2024 | Q3 2023 |
|---|---|---|
| Total G&A Expenses | $43.9 million | $39.9 million |
| G&A Expenses / Average Assets | 0.18% | 0.18% |
| G&A Expenses / Average Equity | 1.48% | 1.41% |
Market Conditions
As of September 30, 2024, the 30-year mortgage current coupon rate was 4.96%, down from 6.36% in the previous year. The 10-year U.S. Treasury rate was reported at 3.78%, contributing to the narrowing spread between mortgage rates and Treasury yields.
| Market Rates Overview | September 30, 2024 | September 30, 2023 |
|---|---|---|
| 30-Year Mortgage Current Coupon | 4.96% | 6.36% |
| 10-Year U.S. Treasury Rate | 3.78% | 4.57% |
| Mortgage Basis (Spread) | 118 bps | 179 bps |
Risk Management
Annaly's risk management framework includes monitoring interest rate fluctuations, credit risk associated with mortgage assets, and the liquidity of its investment portfolio. The company aims to maintain a balance between risk and return by strategically managing its leverage and capital structure.
How Annaly Capital Management, Inc. (NLY) Makes Money
Revenue Sources
Annaly Capital Management, Inc. primarily generates revenue through interest income from its investment portfolio, which includes agency mortgage-backed securities (MBS), residential credit investments, and mortgage servicing rights (MSR).
| Revenue Source | Q3 2024 Income (in thousands) | Q3 2023 Income (in thousands) | Year-to-Date 2024 Income (in thousands) | Year-to-Date 2023 Income (in thousands) |
|---|---|---|---|---|
| Interest Income | $1,229,341 | $1,001,485 | $3,501,154 | $2,741,229 |
| Net Servicing Income | $109,595 | $87,997 | $320,361 | $239,250 |
| Net Gains (Losses) on Investments | ($2,859) | ($559,446) | $290,058 | ($1,267,287) |
| Net Gains (Losses) on Derivatives | ($1,400,000) | $2,127,430 | ($1,754,010) | $2,702,003 |
Interest Income and Expense
For the nine months ended September 30, 2024, Annaly reported interest income of $3.5 billion, an increase from $2.7 billion in the same period in 2023. Interest expenses also rose, totaling $3.4 billion in 2024 compared to $2.8 billion in 2023, reflecting higher borrowing costs.
| Metrics | Q3 2024 | Q3 2023 | Year-to-Date 2024 | Year-to-Date 2023 |
|---|---|---|---|---|
| Interest Income | $1,229,341 | $1,001,485 | $3,501,154 | $2,741,229 |
| Interest Expense | $1,215,940 | $1,046,819 | $3,440,646 | $2,799,063 |
| Net Interest Income | $13,401 | ($45,334) | $60,508 | ($57,834) |
Mortgage Servicing Rights (MSR)
As of September 30, 2024, Annaly’s MSR portfolio had a market value of $2.8 billion. The company continues to grow its MSR holdings, benefiting from increased demand for servicing assets amid a competitive market.
Investment Portfolio Performance
Annaly's investment portfolio at period-end was valued at approximately $97.74 billion. The company disposed of residential securities with a carrying value of $2.8 billion in Q3 2024, realizing net gains of approximately ($8.3 million).
| Investment Metrics | Q3 2024 | Q3 2023 | Year-to-Date 2024 | Year-to-Date 2023 |
|---|---|---|---|---|
| Total Investment Portfolio | $97,742,854 | $85,339,029 | $97,742,854 | $85,339,029 |
| Residential Securities Disposed | $2,800,000 | $6,900,000 | $16,000,000 | $20,500,000 |
| Net Gains (Losses) on Investments | ($8,275) | ($602,617) | ($821,474) | ($1,723,701) |
Operational Expenses
General and administrative expenses totaled $127.4 million for the nine months ended September 30, 2024, up from $123.7 million in the same period in 2023. This increase was primarily due to higher compensation expenses.
| Expense Metrics | Q3 2024 | Q3 2023 | Year-to-Date 2024 | Year-to-Date 2023 |
|---|---|---|---|---|
| Total G&A Expenses | $43,921 | $39,909 | $127,382 | $123,652 |
| Income Before Taxes | $76,216 | ($556,692) | $543,545 | ($1,209,523) |
| Net Income (Loss) | $82,351 | ($569,084) | $538,692 | ($1,247,225) |
Net Income and Earnings Distribution
For the nine months ended September 30, 2024, Annaly reported net income of $538.7 million, compared to a net loss of $1.2 billion in the same period of 2023. Earnings available for distribution were approximately $1.1 billion, or $1.98 per average common share.
| Income Metrics | Q3 2024 | Q3 2023 | Year-to-Date 2024 | Year-to-Date 2023 |
|---|---|---|---|---|
| Net Income (Loss) Available to Common Stockholders | $24,817 | ($599,059) | $404,007 | ($1,343,923) |
| Earnings Available for Distribution (EAD) | $382,509 | $361,979 | $1,117,610 | $1,178,584 |
| Earnings per Share (Basic) | $0.05 | ($1.21) | $0.80 | ($2.73) |
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Article updated on 8 Nov 2024
Resources:
- Annaly Capital Management, Inc. (NLY) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Annaly Capital Management, Inc. (NLY)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Annaly Capital Management, Inc. (NLY)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.