8-K: Annaly Capital Management Reports Q1 2026 Results

Annaly Capital Management announced its first quarter 2026 financial results, reporting GAAP net income of $0.33 per share and Earnings Available for Distribution (EAD) of $0.76 per share.

Summary

• Annaly Capital Management reported its financial results for the quarter ended March 31, 2026.
• GAAP net income was $0.33 per average common share.
• Earnings Available for Distribution (EAD) were $0.76 per average common share.
• The economic return for the first quarter was 1.5%.
• Book value per common share stood at $19.82.
• GAAP leverage increased slightly to 7.3x from 7.2x, while economic leverage rose to 5.7x from 5.6x.
• A common stock cash dividend of $0.70 per share was declared for the first quarter.
• The total portfolio value was $106.7 billion, with $92.2 billion in the Agency portfolio.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a moderately positive report, with strong operational execution in non-Agency segments and consistent economic returns, though GAAP net income and equity declined.

Positives

• Earnings available for distribution ($0.76 per share) exceeded the common stock cash dividend ($0.70 per share).
• The company achieved its tenth consecutive quarter of positive economic returns.
• The Residential Credit portfolio increased by 30% to $10.3 billion.
• The MSR portfolio grew by 9% to $4.2 billion.
• Annaly Residential Credit Group closed a record $4.7 billion in securitizations during the quarter.
• Average GAAP cost of interest-bearing liabilities decreased by 20 basis points to 4.29%.
• Average economic cost of interest-bearing liabilities decreased by 2 basis points to 3.93%.
• Raised $509 million of accretive capital through the at-the-market sales program.

Negatives

• GAAP net income per share of $0.33 was significantly lower than the prior quarter's $1.40.
• Annualized GAAP return on average equity decreased to 7.15% from 26.14% in the prior quarter.
• Book value per common share decreased to $19.82 from $20.21 in the prior quarter.
• GAAP leverage increased to 7.3x from 7.2x.
• Net gains (losses) on investments and other were a significant loss of $672.1 million.

Risks

• Changes in interest rates, yield curve, and prepayment rates.
• Availability and terms of financing.
• Market value changes of the Company's assets.
• General business and economic conditions.
• Risks related to investments in credit risk transfer securities and mortgage servicing rights.
• Potential for operational risks or risk management failures.
• Cybersecurity incidents.

Future Outlook

Annaly sees attractive investment opportunities across its three strategies and believes it is well-positioned to deliver sustainable value for its shareholders, citing supportive technical factors in the Agency MBS market and disciplined portfolio management.

Management Comments

• "The first quarter of 2026 marked Annaly's tenth consecutive quarter of positive economic returns as our diversified housing finance platform further demonstrated its ability to deliver superior risk-adjusted returns across a range of market environments."
• "Earnings again exceeded our dividend, and we grew the portfolio through accretive capital raising and disciplined portfolio management."
• "During the first quarter, we increased our capital allocation to our non-Agency businesses considerate of compelling relative value."
• "Our Residential Credit portfolio expanded 30% driven by another quarter of record whole loan production, while continuing our programmatic pace of securitization."
• "Our MSR portfolio also grew nearly 10% as we capitalized on opportunities in the bulk and flow markets, leveraging our strong industry relationships."
• "At the same time, our flagship Agency MBS business performed well with technical factors among the most supportive we have seen in years, bolstered by a disciplined leverage and liquidity profile."
• "Looking ahead, we see attractive investment opportunities across our three strategies and believe Annaly remains well-positioned to deliver sustainable value for our shareholders."

Industry Context

StockSavvy.ai notes that Annaly's diversified strategy across Agency MBS, Residential Credit, and MSRs is a key differentiator in the current market, allowing it to capitalize on varied opportunities while managing risk. The growth in non-Agency businesses reflects a broader industry trend of seeking higher yields in a potentially volatile rate environment.

Comparison to Industry Standards

• Annaly's EAD per share of $0.76 for Q1 2026 compares favorably to its common stock dividend of $0.70 per share, indicating a strong dividend coverage ratio.
• The company's economic leverage of 5.7x is within a typical range for mortgage REITs, though it has slightly increased from the prior quarter.
• The 30% growth in the Residential Credit portfolio and 9% growth in the MSR portfolio outpace many peers who may be more focused on traditional Agency MBS.
• Annaly's stated goal of delivering positive economic returns for ten consecutive quarters suggests a consistent performance strategy compared to industry cyclicality.

Stakeholder Impact

• Shareholders benefit from a declared dividend of $0.70 per share, covered by EAD.
• The company's growth in Residential Credit and MSR businesses may create opportunities for employees in those sectors.
• Suppliers and business partners in the mortgage finance ecosystem may see continued engagement through securitization and servicing activities.

Next Steps

• Hold first quarter 2026 earnings conference call on April 22, 2026.
• Continue to invest paydowns into intermediate coupons, primarily 4.5% securities, and Agency CMBS.
• Capitalize on attractive investment opportunities across its three strategies.

Key Dates

Recommendation

The report shows consistent operational performance and dividend coverage, but the decline in GAAP net income and book value, coupled with increased leverage, warrants a cautious 'hold' stance until market conditions stabilize and the impact of strategic shifts becomes clearer.

Keywords

Annaly Capital Management, NLY, Q1 2026 Earnings, Mortgage REIT, Agency MBS, Residential Credit, MSR, Financial Results