Annaly Capital Management (NLY) posted a net income of nearly $355 million in the third quarter, reversing a trend that saw the company posts losses of $539 million in the first and second quarters combined.
The company reported a net income of $354.86 million in the third quarter, compared to losses of $335.5 million in the second quarter and $203.35 million in the first quarter.
The company reported a net income of more than $1 billion in 2013.
Annaly’s GAAP net income for the quarter ended September 30, 2014 was $354.9 million, or $0.36 per average common share, compared to a GAAP net loss of $335.5 million, or $0.37 per average common share, for the quarter ended June 30, 2014, and GAAP net income of $192.5 million, or $0.18 per average common share, for the quarter ended September 30, 2013.
The increase in net income from the quarter ended June 30, 2014 to the quarter ended September 30, 2014 was primarily attributable to net losses on terminations of interest rate swaps incurred in the prior quarter, partially offset by lower unrealized gains on swaps for the current quarter, the company said.
Core earnings for the quarter ended September 30, 2014 was $308.6 million, or $0.31 per average common share, compared to $300.4 million, or $0.30 per average common share, for the quarter ended June 30, 2014, and $282.3 million, or $0.28 per average common share, for the quarter ended September 30, 2013.
“We welcome the end of Quantitative Easing and look forward to the opportunities it presents as the mortgage market begins to adjust to fewer direct policy impacts on fundamentals,” Wellington Denahan, Annaly’s chairman and chief executive officer, said.
“We expect the market to endure higher levels of volatility but remain comfortable in our continued ability to deliver attractive relative returns.”
Other highlights of the company’s earnings statement are:
- Strong capital position with capital ratio of 15.0% and leverage of 5.4:1
- Net interest margin of 1.61%, up from 1.57% in prior quarter
- Common stock book value of $12.87
The company also reported that its Investment Securities, which are comprised of Agency mortgage-backed securities and Agency debentures, were $82.8 billion at September 30, 2014, compared to $82.4 billion at June 30, 2014 and $83.0 billion at September 30, 2013.
As of September 30, 2014, substantially all of the Company’s Investment Securities were Fannie Mae, Freddie Mac and Ginnie Mae mortgage-backed securities and debentures.
Fixed-rate agency mortgage-backed securities and debentures comprised 95% of the company’s Investment Securities portfolio at September 30, 2014. Adjustable-rate agency mortgage-backed securities and debentures comprised 5% of the company’s Investment Securities portfolio.
During the quarter ended September 30, 2014, the company disposed of $4.2 billion of Investment Securities, resulting in a realized gain of $4.7 million. During the quarter ended June 30, 2014, the company disposed of $6.1 billion of Investment Securities, resulting in a realized gain of $5.9 million. During the quarter ended September 30, 2013, the company disposed of $13.0 billion of Investment Securities, resulting in a realized gain of $43.6 million.
