NLY-PI — Annaly Capital Management, Inc.

Summary of Annaly Capital Management Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Economic Return: Achieved an economic return of 8.6% for Q4 and 20.2% for the full year 2025.
• Total Shareholder Return: Recorded a total shareholder return of 40% for 2025.
• Earnings Available for Distribution (EAD): Increased to $0.74 per share, exceeding the dividend payout.
• Book Value: Rose 5% from $19.25 to $20.21 per share.
• Economic Leverage: Decreased to 5.6x, reflecting a conservative leverage profile.
• Repo Rate: Reported a Q4 ending repo rate of 4.02%, down 34 basis points.

2. Strategic Updates and Business Highlights

• Portfolio Growth: Grew the portfolio by 30% in 2025, with all three investment strategies (Agency, Residential Credit, and MSR) showing double-digit growth.
• Agency Portfolio: Ended the year with a market value of $93 billion, benefiting from lower volatility and a supportive supply-demand environment.
• Residential Credit: Achieved record highs in lock volume, fundings, and securitization issuance through the Onslow Bay franchise.
• Mortgage Servicing Rights (MSR): Increased market value to $3.8 billion, with a focus on expanding the footprint across GSE platforms.

3. Forward Guidance and Outlook

• 2026 Outlook: Each investment strategy is well-positioned for continued strong results. Anticipated mid-teens returns in the Agency market with a focus on increasing allocations to non-Agency strategies.
• Market Conditions: Expect continued growth in the non-Agency market and a stable cash flow from the MSR portfolio, which remains significantly out of the money.

4. Bad News, Challenges, or Points of Concern

• Labor Market: Hiring slowed in Q4, indicating potential economic headwinds.
• Global Fiscal Risks: Concerns about high levels of global debt and potential complacency among investors.
• Policy Uncertainty: Potential changes in housing policy, such as G-fee cuts, could impact the MBS market and prepayment speeds.
• Market Volatility: Risks associated with tight valuations in the Agency MBS market and potential corrections in asset prices.

5. Notable Q&A Insights

• Mark-to-Market Book Values: Book value increased by 4% post-earnings release.
• Dividend Safety: Management expressed confidence in the sustainability of the dividend, expecting to outearn it in Q1 2026.
• Opportunistic MSR Purchases: Plans to be active in the coupon MSR market, particularly for lower note rates as origination volumes are expected to rise.
• GSE Involvement: Uncertainty regarding the GSEs' role in the market and potential impacts on swap and funding markets.
• Credit Market Outlook: Management indicated a preference for increasing allocations to residential credit and MSR, while maintaining a cautious approach to Agency investments.

This summary encapsulates the key financial metrics, strategic initiatives, outlook, and concerns discussed during the earnings call, providing a balanced view of Annaly Capital Management's performance and future direction.