Annaly Capital Management Inc.'s Core Earnings Rise 4.5%

Mortgage REIT Annaly Capital Management saw its core earnings top $350 million in the fourth quarter as its interest margin rose and the company reduced its total leverage.

Feb 25, 2014 at 6:46PM

In its after-hours earnings report, Annaly Capital Management (NYSE:NLY) announced core earnings of $350 million in the fourth quarter of 2013, representing increases over the $282 million of net income seen in the third quarter and $335 million in the fourth quarter of 2012.

The company had even more impressive growth in its net income, which was more than $1 billion in the fourth quarter of 2013, versus $700 million in the fourth quarter of 2012. However, this jump was largely attributable to gains realized in derivative positions at Annaly known as interest-rate swaps. These positions are used across mortgage real estate investment trusts as a means to hedge against risk.

Annaly's annualized core return on average equity expanded to more than 11% at the end of the fourth quarter of 2013, versus 9.1% in the fourth quarter of 2012. In addition, its interest rate spread expanded from 0.94% at the end of 2012 to stand at 1.43% in the fourth quarter of 2013. For the full year of 2013, core earnings per share stood at $1.21, down from $1.54 in 2012.

Chairman and CEO Wellington Denahan noted of the company's results: "We are encouraged by the reduced uncertainty in the fixed income markets with the introduction of monetary policy tapering. Our commercial assets continue to build momentum, with commercial investments now representing 14% of our stockholders' equity."

In addition, Annaly dramatically decreased its leverage and size, going from $133 billion in assets with a 6.5-to-1 leverage ratio at the end of 2012 to $82 billion with a 5-to-1 leverage ratio at the end of 2013.

Denahan added that "the lower leverage stance permits us to be opportunistic with capital deployment, allowing us to strengthen earnings in future periods." 

Patrick Morris and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information