Annaly's Prepayment Pressure Continues And A Dividend Cut Is Likely, But Its Plan Is Compelling

Last week, Annaly Capital Management (NLY)

reported GAAP net income for the fourth quarter of 2012 of $700.5 million or $0.70 per share, compared to $445.6 million or $0.46 per share for the same quarter the prior year, and $224.8 million or $0.22 per average common share for Q3 of 2012. The Company also reported that it had a book value of $15.85 per share at the end of 2012.

Without the effect of the unrealized gains and losses on agency backed interest-only residential mortgage-backed securities ("RMBSs"), interest rate swaps and the extinguishing of some convertible senior notes, net income was $465.1 million or $0.46 per share, compared to $525.3 million or $0.54 per share for Q4 of 2011, and $449.8 million or $0.45 for Q3 of 2012.

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