As the Q3 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the thrifts & mortgage finance industry, including Annaly Capital Management (NYSE: NLY) and its peers.

Thrifts & Mortgage Finance institutions operate by accepting deposits and extending loans primarily for residential mortgages, earning revenue through interest rate spreads (difference between lending rates and borrowing costs) and origination fees. The industry benefits from demographic tailwinds as millennials enter prime homebuying age, technological advancements streamlining the loan approval process, and potential interest rate stabilization improving affordability. However, significant headwinds include net interest margin compression during rate volatility, increased competition from fintech disruptors offering digital-first experiences, mounting regulatory compliance costs, and potential housing market corrections that could impact loan portfolios and default rates.

The 14 thrifts & mortgage finance stocks we track reported a satisfactory Q3. As a group, revenues beat analysts’ consensus estimates by 5.6% while next quarter’s revenue guidance was 0.5% below.

In light of this news, share prices of the companies have held steady as they are up 3% on average since the latest earnings results.

Annaly Capital Management (NYSE: NLY)

Operating as a real estate investment trust since 1996 with a focus on generating income from interest rate spreads, Annaly Capital Management (NYSE: NLY) is a diversified capital manager that invests in agency mortgage-backed securities, residential mortgage loans, and mortgage servicing rights.

Annaly Capital Management reported revenues of $885.6 million, up 637% year on year. This print exceeded analysts’ expectations by 7.2%. Despite the top-line beat, it was still a mixed quarter for the company with an impressive beat of analysts’ revenue estimates but a significant miss of analysts’ net interest income estimates.

“We were pleased to generate an 8.1% economic return during the third quarter and 11.5% economic return for the first nine months of the year as each of our investment strategies drove strong performance and contributed to earnings that again exceeded our dividend,” said Chief Executive Officer & Co-Chief Investment Officer David Finkelstein.

Annaly Capital Management pulled off the fastest revenue growth of the whole group. Unsurprisingly, the stock is up 7.5% since reporting and currently trades at $22.91.

Read our full report on Annaly Capital Management here, it’s free for active Edge members.

Best Q3: Ellington Financial (NYSE: EFC)

Operating under the guidance of Ellington Management Group, a respected name in structured credit markets, Ellington Financial (NYSE: EFC) acquires and manages a diverse portfolio of mortgage-related, consumer-related, and other financial assets to generate returns for investors.

Ellington Financial reported revenues of $82.76 million, up 23.6% year on year, outperforming analysts’ expectations by 4.9%. The business had an exceptional quarter with a beat of analysts’ EPS estimates and a solid beat of analysts’ revenue estimates.

However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $13.61.

Is now the time to buy Ellington Financial? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: WaFd Bank (NASDAQ: WAFD)

Founded in 1917 and rebranded from Washington Federal in 2023, WaFd (NASDAQ: WAFD) is a bank holding company that provides lending, deposit services, and insurance through its Washington Federal Bank subsidiary across eight western states.

WaFd Bank reported revenues of $187.2 million, flat year on year, falling short of analysts’ expectations by 2%. It was a disappointing quarter as it posted a significant miss of analysts’ net interest income estimates and a significant miss of analysts’ EPS estimates.

Interestingly, the stock is up 14.2% since the results and currently trades at $31.79.

Read our full analysis of WaFd Bank’s results here.

AGNC Investment (NASDAQ: AGNC)

Born during the 2008 financial crisis when mortgage markets were in turmoil, AGNC Investment (NASDAQ: AGNC) is a real estate investment trust that primarily invests in mortgage-backed securities guaranteed by U.S. government agencies or enterprises.

AGNC Investment reported revenues of $836 million, up 122% year on year. This print topped analysts’ expectations by 42.3%. Zooming out, it was a slower quarter as it produced a significant miss of analysts’ net interest income estimates and a significant miss of analysts’ EPS estimates.

AGNC Investment scored the biggest analyst estimates beat among its peers. The stock is up 3.6% since reporting and currently trades at $10.47.

Read our full, actionable report on AGNC Investment here, it’s free for active Edge members.

Columbia Financial (NASDAQ: CLBK)

Founded during the Roaring Twenties in 1926 and headquartered in Fair Lawn, New Jersey, Columbia Financial (NASDAQ: CLBK) operates federally chartered savings banks in New Jersey that offer traditional banking services including loans, deposits, and insurance products.

Columbia Financial reported revenues of $64.91 million, up 29.4% year on year. This number beat analysts’ expectations by 15.5%. Overall, it was a very strong quarter as it also logged an impressive beat of analysts’ revenue estimates and a beat of analysts’ EPS estimates.

The stock is up 14.7% since reporting and currently trades at $16.27.

Read our full, actionable report on Columbia Financial here, it’s free for active Edge members.

Market Update

The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.

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