Annaly Capital Management (NYSE: NLY) reported Q2 EPS of $0.30, $0.01 better than the analyst estimate of $0.29. Revenue for the quarter came in at $776.81 million versus the consensus estimate of $791.5 million.

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.”

For earnings history and earnings-related data on Annaly Capital Management (NLY) click here.