Annaly Capital Management, Inc. Reports 2nd Quarter 2018 Results

August 1, 2018

NEW YORK--(BUSINESS WIRE)--Aug 1, 2018--Annaly Capital Management, Inc. (NYSE:NLY) (the “Company” or “Annaly”) today announced its financial results for the quarter ended June 30, 2018.

Quarterly Financial Highlights

GAAP net income of $595.9 million, $0.49 per average common share Core earnings (excluding PAA) were $382.8 million, $0.30 per average common share GAAP return on average equity was 17.20% and core return on average equity (excluding PAA) was 11.05% Book value per common share of $10.35 Economic leverage of 6.4x as compared to 6.5x at March 31, 2018 Net interest margin (excluding PAA) of 1.56%, up from 1.52% in the prior quarter Increased hedge ratio to 95% as compared to 94% at March 31, 2018

Business Highlights

Increased credit capital allocation to 28%, up from 24% at the beginning of 2018, with $1.1 billion of new credit investments Credit strategy further enhanced by previously announced MTGE acquisition; the $900 million transaction is accretive to earnings, continues consolidation strategy and is currently expected to close during the third quarter of 2018 Solidifying position as programmatic issuer with third quarter 2018 residential whole loan securitization following successful first quarter 2018 debut offering Continued to add efficient funding sources for Commercial Real Estate and Middle Market Lending, increasing capacity, improving terms and reducing cost of financing Enhanced corporate governance disclosure in the 2018 proxy statement, resulting in a 95% favorable say-on-pay endorsement from shareholders Declared 19th consecutive dividend of $0.30 per common share

“Amidst a challenging market environment, Annaly delivered another strong quarter demonstrating the durability of our business model,” commented Kevin Keyes, Chairman, Chief Executive Officer and President. “We continued to further expand our investments into lower levered, floating rate credit cash flows while producing core earnings of $0.30 per share and core ROE at its highest return since our diversification strategy began in 2014. The ongoing expansion of our proprietary partnerships in Residential Credit, Commercial Real Estate and Middle Market Lending enable us to source unique and complementary investment opportunities at attractive risk adjusted returns.

“During the quarter we also successfully continued our acquisition strategy with the announcement of the $900 million purchase of MTGE Investment Corp. The transaction further enhances the scale and diversification of our investment platform, is accretive to earnings, provides immediate cost savings, increases our equity base for continued growth and reinforces Annaly’s stature as a market leading industry consolidator.”

Financial Performance

The following table summarizes certain key performance indicators as of and for the quarters ended June 30, 2018, March 31, 2018 and June 30, 2017:

Other Information

This news release and our public documents to which we refer contain or incorporate by reference certain forward-looking statements which are based on various assumptions (some of which are beyond our control) and may be identified by reference to a future period or periods or by the use of forward-looking terminology, such as “may,” “will,” “believe,” “expect,” “anticipate,” “continue,” or similar terms or variations on those terms or the negative of those terms. Actual results could differ materially from those set forth in forward-looking statements due to a variety of factors, including, but not limited to, changes in interest rates; changes in the yield curve; changes in prepayment rates; the availability of mortgage-backed securities and other securities for purchase; the availability of financing and, if available, the terms of any financing; changes in the market value of our assets; changes in business conditions and the general economy; our ability to grow our commercial real estate business; our ability to grow our residential mortgage credit business; our ability to grow our middle market lending business; credit risks related to our investments in credit risk transfer securities, residential mortgage-backed securities and related residential mortgage credit assets, commercial real estate assets and corporate debt; risks related to investments in mortgage servicing rights; our ability to consummate any contemplated investment opportunities; changes in government regulations and policy affecting our business; our ability to maintain our qualification as a REIT for U.S. federal income tax purposes; our ability to maintain our exemption from registration under the Investment Company Act of 1940, as amended; and our ability to consummate the proposed MTGE Acquisition on a timely basis or at all, and potential business disruption following the MTGE Acquisition. For a discussion of the risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in our most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q. We do not undertake, and specifically disclaim any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements, except as required by law.

Annaly is a leading diversified capital manager that invests in and finances residential and commercial assets. Annaly’s principal business objective is to generate net income for distribution to its stockholders and to preserve capital through prudent selection of investments and continuous management of its portfolio. Annaly has elected to be taxed as a real estate investment trust, or REIT, for federal income tax purposes. Annaly is externally managed by Annaly Management Company LLC. Additional information on the Company can be found at www.annaly.com.

Annaly routinely posts important information for investors on the Company’s website, www.annaly.com, in the Investors section. Annaly intends to use this webpage as a means of disclosing material, non-public information, for complying with the Company’s disclosure obligations under Regulation FD and to post and update investor presentations and similar materials on a regular basis. Annaly encourages investors, the media and others interested in Annaly to monitor the Investors section of the Company’s website, in addition to following Annaly’s press releases, SEC filings, public conference calls, presentations, webcasts and other information it posts from time to time on its website. The information contained on, or that may be accessed through, the Company’s webpage is not incorporated by reference into, and is not a part of, this document.

The Company prepares a supplemental investor presentation and a financial summary for the benefit of its shareholders. Both the Second Quarter 2018 Investor Presentation and the Second Quarter 2018 Financial Summary can be found at the Company’s website ( www.annaly.com ) in the Investors section under Investor Presentations.

Conference Call

The Company will hold the second quarter 2018 earnings conference call on August 2, 2018 at 9:00 a.m. Eastern Time. The number to call is 888-317-6003 for domestic calls and 412-317-6061 for international calls. The conference passcode is 1905089. There will also be an audio webcast of the call on www.annaly.com. The replay of the call will be available for one week following the conference call. The replay number is 877-344-7529 for domestic calls and 412-317-0088 for international calls and the conference passcode is 10121993. If you would like to be added to the e-mail distribution list, please visit www.annaly.com, click on Investors, then select Email Alerts and complete the email notification form.

Financial Statements

This article has been truncated. You can see the rest of this article by visiting http://www.businesswire.com/news/home/20180801005967/en.

Update hourly