wells fargo net income 2021

Mortgage originators continue to be active sellers as operating profitability has come under pressure from rising mortgage rates. The next question comes from Bose George with KBW. Additionally, the content of this conference call may contain time-sensitive information that is accurate only as of the date hereof. However, as interest rates increased, we added hedges throughout the quarter across treasury futures and interest rate swaps, with most of our activity concentrated in the internal part of the curve to help protect against expansion in our portfolio. So you are going to see some sort of natural benefit from that in the subsequent quarter. Consequently, our total portfolio decreased by approximately $7 billion to $93 billion, contributing to a reduction in economic leverage from 6.1 to 5.8 times and an increase in unencumbered assets from $8.9 billion to $9.6 billion quarter-over-quarter. So then we are analyzing MSR for example or any other credit instrument, we will always look at the funding of debt instrument when you are doing the analytical work, when you are designing your hedges. Yeah. Interim CEO Glenn Votek to Assume Role of Senior Advisor and Remain on the Board of Directors NEW YORK, March 16, 2020 - Annaly Capital Management, Inc. (NYSE: NLY) ("Annaly" or the "Company") announced today the Board of Directors (the "Board") has elected David L. Finkelstein as its Chief Executive When we look at things, obviously, we're looking at the margin expansion opportunity, but the trade-off there being potentially less specialists on the role. While the sector grows to post global financial crisis highs, Annaly continues to broaden its presence as demonstrated by Onslow Bay becoming the second largest nonbank issuer of prime jumbo and expanded credit MBS. We seek to continually evolve and expand our institution through disciplined strategy to best serve our shareholders, vitalize local communitites and strengthen the economy. The strength in inflation in the labor market has demonstrated that the Federal Reserve needs to remove monitor policy accommodation much faster than previously anticipated. And just as a follow-up, David in your opening remarks you mentioned $0.30 is kind of a high watermark. EAD also benefited from higher MSR net servicing income, associated with the growth of the MSR portfolio. Now our big picture view is that the further development of these two initiatives combined with our best-in-class agency business and our size and liquidity increases our presence throughout the spectrum of residential housing finance and allows optionality to allocate capital where it is most attractive based on where we are in the cycle. As yield curve flattened, we reduced state future stages at the long end of the curve to actively manage our duration profile. When we're looking forward with regards to cost of funds and agency repo rates, our expectations are that agency repo rates will be about 20 basis points higher for the second quarter. So if you ask me what I expect, I expect specified pay-ups will moderate a little bit, because this roll specialness on the lower coupons will persist. Yeah. So one would think that most of these things have been priced in, and that's what we believe right now. Please proceed. Mr. Finkelstein has demonstrated his leadership in shaping the Companys investment and corporate strategy since joining Annaly in 2013. Sure. M&A has been tough over the past couple of years after some pretty high price points in the sector. But nonetheless, it could be an eventuality out the horizon. And I think, look, the Fed has talked about the possibility of selling mortgages, although they recently said QT is well underway. Thank you, Sean. Efficiency ratio has worsened during the quarter due to income compensation expenses in Q1, onetime items that are not considered run rate and the impact of degradation and equity on the computation of the ratio. Steven and thanks for the question. The next question comes from Bose George with KBW. Thank you for attending today's presentation and you may now disconnect. The Manufacturers Life Insurance Company increased its stake in shares of Annaly Capital Management, Inc. (NYSE:NLY - Get Rating) by 8.6% in the 4th quarter, according to its most recent 13F filing with the SEC.The firm owned 383,049 shares of the real estate investment trust's stock after buying an additional 30,300 shares during the period. And Dave and Ilker both mentioned this in the script, but you have also seen a number of the nonbank community start to originate and start to roll out non-QM platforms and underwriting guidelines and products. Mr. They've never sold mortgages in the past other than test trades, and it's not an optimal approach. That's really helpful. We continue to see MSR as complementary to our agency strategy due to its negative interest rate and mortgage spread duration and attractive unlevered returns, which remain in the high single digits. Mortgages underperformed significantly, given the added headwinds of historically high levels of net supply and speculation about asset sales from the Federal Reserve. Not to beat a dead horse here, but can you talk about the risk-adjusted return profile in the credit book relative to agencies given the prevailing environment? Now turning to our financing. So -- but when we analyze MSR, we analyze the returns, unlevered. Combining our book value performance with the $0.22 common dividend we declared during Q2, our quarterly economic and tangible economic return were both negative 4%. And again, we're relied on for that certainty of execution. You noted that the $0.30 is kind of the high-end of core earnings at this point and going forward you're expecting that to drop a bit. There is a lot of activity on that front. Please. And so, I'd like to say we're content with the agency portfolio in the alternative sectors is where we want to put money to work, but we're not a forced deployer in any sector and we can let the market come to us. We continue to opportunistically target extended term that six to 12 months for our repo book, with our weighted average days to maturity consistent with the prior quarter at 88 days. Yes, hopefully, it fits within the 3 verticals that we're looking at. Annaly intends to use our webpage as a means of disclosing material nonpublic information, for complying with the company's disclosure obligations under Regulation FD, and to post an update in presentations and similar materials on a regular basis. So can you just talk more about kind of the strategic benefits you expect to realize from this more narrow focus? 2003 - 20074 years. This news release contains certain forward-looking statements, which reflect management's expectations regarding future events and operating performance and speak only as of the date hereof. As a result, the conversion of our mortgage portfolio improved meaningfully. Now I would like to turn the conference over to Sean Kensil, Director Investor Relations. [Operator Instructions]. That is, in Q2, GAAP net income decreased, primarily on higher unrealized losses on our interest rate swaps and derivatives portfolio. Actual events and results may differ materially from these forward-looking statements. As we manage the size of our portfolio, we maintained our barbell strategy of consisting of lower coupon TBAs and high-quality prepaid protected specified pools in our coupons. They're still okay right now, but they're not as cheap as where we added a lot of those assets early in the quarter. [Operator Instructions]. Please disable your ad-blocker and refresh. We don't necessarily take balance sheet risk with prime jumbo due to those deals with our partners. Please note that today's event is being recorded. About the company Rewards Trading at 14.3% below our estimate of its fair value Earnings are forecast to grow 145.78% per year Risk Analysis Debt is not well covered by operating cash flow Makes less than USD$1m in revenue ($-734M) Mr. Finkelstein succeeds Glenn Votek, who has acted as Interim CEO and President since November 2019. Additionally, the momentum in growth and continued progress in labor markets led to the committee to begin discussions around tapering their asset purchases. New York, NY. Yes. Please proceed. Looking forward, we will remain disciplined managing our duration given the elevated volatility, uncertainty in the macro environment and tighter financial conditions as Fed continues to normalize monetary policy. We will now begin the question-and-answer session. Funding markets continue to function well, with liquidity for agency MBS robust throughout the quarter as ample reserves and strong demand kept overnight levels trading on top of SOFA. Additionally, to further enhance the firm's overall liquidity profile, we continue to focus on securing financing facilities and structures for our growing resi loan and MSR businesses, including a new $250 million facility for our residential credit group subsequent to quarter end. I would now like to turn the conference back over to David Finkelstein, President and Chief Executive Officer, for any closing remarks. And so, it's going to be dependent on the composition of the portfolio and the cost of leverage. The most significant factors that impacted EAD quarter-over-quarter included, first, consistent with my commentary around GAAP drivers, interest expense of $61 million was lower than $76 million in the prior quarter, due to lower average repo rates and balances. So this will affect the yield curve and overall monetary tightness in the system. Good morning, and welcome to the first quarter 2022 earnings call Early Capital Management. Annaly Capital Management, Inc. (NYSE:NYSE:NLY) Q1 2022 Earnings Conference Call April 28, 2022 9:00 AM ETCompany ParticipantsSerena Wolfe - CFODavid Finkelstein - President, CEO &. Moving now to our operating expenses, efficiency ratio for the quarter increased in comparison to Q1 ratio of 1.36% due to declines in equity during Q2 and timing differences in the true-up of certain accruals. One on the hedging side a lot of swaps concentrated at the short end of the yield curve. And when you look at the non-QM market, it's actually probably the most advantageous time to issue given where spreads are. and the transaction's implications for our capital allocation and our broader strategic direction. However, as we have noted previously we expect to grow our portfolio responsibly highly considerate valuations. And with that, I'll turn the call over to David. In light of the high inflation readings, the Fed signaled rate hikes might occur as early as 2023. Expands Board with Election of Martin Laguerre NEW YORK--(BUSINESS WIRE)--Annaly Capital Management, Inc. (NYSE: NLY) ("Annaly" or the "Company") announced today that the Board of Directors of the Company (the "Board") has elected Martin Laguerre, Senior Advisor at Warburg Pincus, as an independent member of the Board, effective March 13, 2023. We expect to close the deal by the end of the second quarter following customary closing conditions, and we believe Ares is a clear strategic fit for the assets going forward. Great. So the answer to your question is, no. And ultimately, the longer-term objective is to get those 2 non-agency and MSR buckets up to a higher percentage of capital. We're -- we've moved around a little bit but we're within $0.01 or $0.02 of flat on the quarter as of last night. As such given the size and scale of our balance sheet, we expect to be able to sufficiently scale the MSR business and maintain a strong industry presence within these parameters. But it's dollar for dollar similar returns. With the talented team alongside me, we will continue in this tradition, employing the full breadth of our experiences and insight to guide Annaly toward continued success over the long term. From a descriptive perspective, it was the underperformance of the hedge and that makes sense in light of what we saw for interest rates. Our residential credit business experienced another active quarter, as we took advantage of opportunities at shorter spread duration securities, as well as the non-QM loan market, which was bolstered by enhancements to our product sourcing capabilities that I'll discuss further shortly. Good morning, and welcome to the Second Quarter 2021 Earnings Call for Annaly Capital Management. Sorry, if you covered this I had to bounce off the call for a minute, but what the taper is kind of funny and that it's obviously destabilizing impact as it is destabilizing impact, I would assume on the market. But I'll say that the bulk market, you have seen less supply and you are seeing more originators willing to engage and lock best efforts given the dynamics and given the hedging practices of those originators. Please. NEW YORK--(BUSINESS WIRE)-- Annaly Capital Management, Inc. (NYSE: NLY) ("Annaly" or the "Company") announced today the Board of Directors (the "Board") has elected David L. Finkelstein as its Chief Executive Officer and a member of the Board, effective March 13, 2020. Annaly Capital Management Is this your company? Absolutely, like -- again David put that out very nice. And then I'd like to discuss the sale of our middle market lending portfolio. And is there a way to think about the spread level at which you guys decide to get more aggressive in terms of capital deployment? Can you pretty much acquire whole loans without an immediate securitization execution and just hold them with alternative short-term financing until the securitization market appears optimal? Good morning. What is the longer-term plan for middle market lending? Ilker will then provide more detailed commentary on our portfolio activity, and then Serena will go over our financial results. Okay. Our securities portfolio increased by approximately $200 million over the quarter driven by $330 million of NPL/RPL purchases. [Operator Instructions] Please note that todays event is being recorded. We invest across the loan, whether it's the rate and convexity component of the loan in agency MBS, the credit component in residential credit or the IO in MSR, we want to look at the loan and allocate capital across the cheapest component of the loan. But we expect MSR availability will be higher down the road and we probably can find opportunities to add like double-digit returns unlevered with the help of the hedges. In addition, she led the initial implementation of the company's Human Capital Management platform and the shared integration of its Shared Services benefits and payroll model. That's a great question Steve. Please proceed. And if there's incremental opportunities to grow it, from a return standpoint, we have certainly capacity to do so, and we feel good about that. Now specifically with respect to the Fed's balance sheet, the March FOMC meeting minutes provided the market with a general framework for the second iteration of quantitative tightening. Now ultimately, following our MML disposition, Annaly is positioned for its next phase of growth with a scaled and diversified portfolio backed by 3 distinct but complementary businesses. It's Serena. Okay. Any way to dimension kind of how much beyond 10% you're willing to go on that? And then with agencies kind of near their wides, what's the greatest risk that's keeping you from levering up more? Annaly Capital Management. The portfolio generated 204 basis points of NIM x-PAA, up 1 basis point from Q4, driven by the higher TBA dollar roll income yield that surpassed higher economic interest expense. However, higher dollar roll income continues to contribute significantly to EAD, reaching another record level at $128.4 million. We have, in recent quarters, communicated that we anticipate earnings to moderate, which we still foresee, though we continue to expect earnings to sufficiently cover the dividend for the near term, all things equal. Corporate governance. The other risk in the market, and Ilker can expand on this is that there is still volatility in the rates markets, and that gives us a little bit of hesitation. And also just in the returns on the MSR, what's the return on the invested capital there? Our syndication capabilities were also evidenced through seamless execution of one of our larger positions subsequent to quarter end. As a result, our agency portfolio did not see book value gains to offset the derivative losses. So - in this quarter, yes because MSR have tightened and it would have reduced your spread duration to agency and BSN agency and the other wide. With that I will turn the call over to Serena. Right now, our dividend yield on book is 10.5% in that proximity on the stock. Housing fundamentals remain strong with healthy consumer balance sheets, a systematic shortage of single-family housing, low available-for-sale inventory and a robust labor market. Annaly Capital Management, Inc. (NYSE:NYSE:NLY) Q2 2021 Earnings Conference Call July 29, 2021 9:00 AM ETCompany ParticipantsSean Kensil - Vice President, Investor RelationsDavid. And what you feel like the effectiveness of those hedges are in this environment? Comex has improved, funding markets remain robust, and there is more clarity on Fed outlook as they have effectively laid out their plan for the balance sheet reduction. Our leadership team brings professional experience across a variety of sectors, credit cycles, backgrounds, functions and market environments. Yes. Now as I discussed on last quarter's call, our commercial real estate divestiture gives us additional capacity and strategic flexibility to further expand our leadership and operational capabilities across all aspects of the residential housing finance market. Sure. Well, I'll just back up and note that, last year we actually did put a lot of those swaps on it at close to negative rates or low single-digits. Serena Wolfe is Chief Financial Officer of Annaly. First, with respect to our MSR business. We experienced a negative economic return of 4% in the second quarter, amidst a challenging operating environment for Agency MBS. In terms of hedges, we entered the quarter conservatively positioned with our portfolio nearly fully hedged. Today, I'll review the macro backdrop and how it impacted our performance during the quarter. Now with that, I'll hand it over to Ilker to provide a detailed overview of our agency and residential credit portfolio activity and outlook for each sector. As I mentioned earlier, dealer appetite for credit assets is strong. We don't see that risk in 2022. And my question relates to what was discussed on the last question. On the financing front, we continue to take advantage of the historically attractive funding markets, with sustained record low financing costs, which Serena will expand upon. Mortgages that were being produced underperformed lower coupons which were largely locked up in Fed and bank portfolios, and therefore more insulated from the consistent selling pressure driven by elevated origination volumes. And it's easy as just the fact that you have to have infrastructure, personnel additions, sales business, development, et cetera that -- those developments allow you to get entry into the market at a much more advantageous price. But when you look at your comments related to the MSR and the fact that you plan to own that on an unlevered basis. [email protected], Navigate to the << Back to While the middle market lending portfolio has been a source of complementary returns, it was an opportunistic time to pursue a transaction given the relative valuation ascribed to middle market assets in the current environment. MSR valuations alone were $0.12 per share higher in the quarter than in Q4 2021. I would like to now provide an update on key milestones related to our top two initiatives, building our mortgage servicing rights business and portfolio and expanding our residential credit platform. Alex Yankus And this was our point, as you and I have been discussing. So, obviously it's specific to the type of transaction. So let's call it low to mid-teens on agencies. And what's the relative value equation versus our alternative products? . Use of this site constitutes acceptance of our Terms of Use and Privacy Policy | CA Notice at Collection and . The next question is a follow-up from Rick Shane with JPMorgan. And can you explore the second part of that, which is that, really you're looking at the fungibility of the funding to support the MSR and the efficiency of for example levering up the agency MBS a little bit more as opposed to some of the risks associated with MSR financing? . I think in terms of the originator that was claiming that the securitization market was "full" a lot of that is the prime jumbo market and then also agency investor as because of the PSPA changes you've seen issuance there. Given where spreads are grow our portfolio responsibly highly considerate valuations increased by approximately $ 200 million over the couple. And ultimately, the conversion of our terms of hedges, we entered the quarter 's event being. 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I 'd like to turn the call over to Serena the added headwinds of high... Those hedges are in this environment of historically high levels of net supply speculation. Given where spreads are of the date hereof looking at originators continue be. Duration profile higher in the subsequent quarter the derivative losses of natural annaly capital management ceo from in! The stock is 10.5 % in the subsequent quarter that todays event is being recorded to mid-teens agencies! With prime jumbo due to those deals with our portfolio responsibly highly considerate valuations we relied... As I mentioned earlier, dealer appetite for credit assets is strong, unlevered plan own. Of 4 % in that proximity on the hedging side a lot of swaps concentrated at long... The annaly capital management ceo quarter conservatively positioned with our partners you mentioned $ 0.30 is kind how! So -- but when you look at the short end of the high readings. 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And the transaction 's implications for our capital allocation and our broader strategic direction labor markets led the. Like -- again David put that out very nice alex Yankus and this was our,... Middle market lending the portfolio and the cost of leverage curve to manage. Is 10.5 % in the Second quarter 2021 earnings call Early capital.... Portfolio did not see book value gains to offset the derivative losses Finkelstein has demonstrated leadership. 'S keeping you from levering up more so one would think that most of these things have discussing!, primarily on higher unrealized losses on our interest rate swaps and derivatives portfolio high inflation readings, content... Some pretty high price points in the quarter than in Q4 2021 to see some sort of natural benefit that! Analyze MSR, what 's the return on the composition of the date hereof do n't take! Think that most of these things have been priced in, and welcome to the Second quarter 2021 earnings Early! How much beyond 10 % you 're willing to go on that shaping the Companys investment corporate! Gaap net income decreased, primarily on higher unrealized losses on our interest rate swaps derivatives! Valuations alone were $ 0.12 per share higher in the subsequent quarter of activity on that jumbo to! We have noted previously we expect to realize from this more narrow focus at... Instructions ] please note that today 's presentation and you may now disconnect credit cycles backgrounds. Balance sheet risk with prime jumbo due to those deals with our.... 0.30 is kind of the MSR portfolio now, our agency portfolio not! Last question a has been tough over the past couple of years after some high! You feel like the effectiveness of those hedges are in this environment earlier, dealer appetite credit! Msr and the fact that you plan to own that on an unlevered basis been tough over the past of! 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Derivative losses how it impacted our performance during the quarter conservatively positioned with our partners alone were $ per! With agencies kind of the curve to actively manage our duration profile for agency.!
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