NLY — Annaly Capital Management, Inc.

Summary of Annaly Capital Management Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Economic Return: 8.6% for Q4 2025; 20.2% for the full year.
• Total Shareholder Return: 40% for 2025.
• Earnings Available for Distribution (EAD): Increased to $0.74 per share, exceeding the dividend.
• Book Value per Share: Rose 5% to $20.21.
• Economic Leverage: Decreased to 5.6x.
• Repo Rate: Improved to 4.02%, down 34 basis points.
• Portfolio Growth: Total equity raised in 2025 was $2.9 billion, leading to a 30% growth in the portfolio.

2. Strategic Updates and Business Highlights

• Agency Portfolio: Increased to $93 billion, driven by favorable market conditions and strong demand.
• Residential Credit: Portfolio grew to $8 billion, with record activity in the Onslow Bay franchise, achieving significant securitization issuance.
• Mortgage Servicing Rights (MSR): Portfolio valued at $3.8 billion, with a focus on expanding through bulk purchases and flow channels.
• Diversification Strategy: Continued emphasis on a balanced approach across Agency, Residential Credit, and MSR, with potential shifts towards increasing allocations in non-Agency strategies.

3. Forward Guidance and Outlook

• 2026 Outlook: Each investment strategy is positioned to deliver strong results. Anticipation of continued growth in the non-Agency market and a stable environment for Agency MBS.
• Dividend Safety: Management expressed confidence in maintaining the dividend, supported by strong earnings power and liquidity.
• Market Conditions: Expectation of lower hedging costs and stable returns due to improved market technicals and GSE involvement.

4. Bad News, Challenges, or Points of Concern

• Labor Market Risks: Continued softness in hiring and potential impacts on the economy.
• Global Fiscal Risks: Concerns regarding high levels of debt and potential market corrections.
• Policy Uncertainty: Potential G-fee cuts could impact the MBS market negatively if applied broadly, creating uncertainty in valuations.
• Market Volatility: Risks associated with asset pricing and the potential for increased volatility in the future.

5. Notable Q&A Insights

• Mark-to-Market Book Values: Book value increased by 4% recently, indicating positive market conditions.
• Dividend Comfort: Management expressed confidence in the sustainability of the dividend based on current earnings and portfolio performance.
• MSR Market Activity: The company is well-positioned to capitalize on opportunities in the MSR market, particularly with lower coupon MSRs.
• GSE Involvement: Uncertainty regarding GSE portfolio caps and their impact on the market, with management advocating for targeted G-fee cuts to support new buyers without harming existing loans.
• Liquidity and Funding: The GSEs' MBS purchases are expected to maintain stability in funding markets despite their reduced participation.

This summary encapsulates the key points from the earnings call, highlighting Annaly Capital Management's strong performance in Q4 2025 while also addressing potential risks and strategic directions for the future.