Annaly Capital Management, Inc. and subsidiaries

Company overview

• Structure: Maryland corporation, internally managed, tax status as a Real Estate Investment Trust (REIT)
• Primary objective: generate net income for distribution to stockholders and optimize returns through prudent management of diversified investment strategies
• Core activities: ownership and management of a portfolio of real estate–related investments, including mortgage-backed securities (MBS), mortgage-related securities, residential mortgage loans, and mortgage servicing rights (MSR)

Investment groups (as described in Note 1)

• Annaly Agency Group: invests in Agency MBS collateralized by residential mortgages guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae, plus related Agency assets
• Annaly Residential Credit Group: invests primarily in non-Agency residential whole loans and securitized products in residential and commercial markets
• Annaly Mortgage Servicing Rights (MSR) Group: invests in MSR, i.e., the servicing rights to mortgage loans

Portfolio and asset mix (as of December 31, 2025)

• Total assets: $135.6 billion
• Portfolio composition (approximate):
  • Agency mortgage-backed securities (Agency MBS): 67.8%
  • Residential mortgage loans: 28.1%
  • Mortgage servicing rights (MSR): 2.8%
  • Credit Risk Transfer (CRT) securities: ~0.2%
  • Non-Agency mortgage-backed securities: ~1.1%
  • Commercial mortgage-backed securities (CMBS): minimal/0%
• Total investments carried at fair value: $91.3 billion in securities (Agency securities and CRT/Non-Agency securities)
• MSR-related assets: portfolio valued at $3.8 billion
• Onslow Bay (subsidiary) activity: priced 29 securitizations totaling $15.2 billion and settled $18 billion of whole loans in 2025

Capital structure and liquidity

• GAAP leverage: 7.2:1 (as of December 31, 2025)
• GAAP capital ratio: 11.9%
• Economic leverage ratio: 5.6:1
• Economic capital ratio: 14.9%
• Stockholders’ equity: $16.1 billion
• Total liabilities: approximately $119.5 billion
• Issued securities (indicative):
  • 6.95% Series F preferred: 696,910 thousand par value
  • 6.50% Series G preferred: 411,335 thousand par value
  • 6.75% Series I preferred: 428,324 thousand par value
  • 8.875% Series J preferred: 265,911 thousand (as of 2025)
  • Common stock: 706,972,452 shares issued and outstanding
• Liquidity and encumbrance:
  • Liquid assets: approximately $96.39 billion (as of 12/31/2025), comprising cash, unencumbered securities, and other liquid assets
  • About 96.29% of the carrying amount of encumbered and unencumbered financial assets qualified as liquid
  • Major funding sources: repurchase agreements (repo) and other secured financing; securitized debt; U.S. Treasuries sold, not yet purchased; equity offerings through at-the-market programs
• 2025 capital actions:
  • At-the-market common stock issuances: $2.6 billion raised through 127.9 million shares
  • Preferred stock: issued Series J preferred stock (11 million shares, including 1 million share over-allotment), gross proceeds $275 million
  • Common stock repurchases: no share repurchases in 2025 under current or prior programs

Revenue, income, and earnings (GAAP and non-GAAP)

• 2025 GAAP income statement highlights (in thousands)
  • Net interest income: 1,135,500
  • Net servicing income: 519,319
  • Other income (loss): 589,630
  • General and administrative expenses (G&A): 199,629
  • Income before income taxes: 2,044,820
  • Income taxes: -6,870
  • Net income: 2,051,690
  • Net income attributable to Annaly: 2,027,262
  • Dividends on preferred stock: 157,931
  • Net income available to common stockholders: 1,869,331
  • Net income per common share (basic/diluted): $2.92
  • Weighted average common shares outstanding: Basic 639,513,399; Diluted 641,042,741
• 2025 non-GAAP metrics (illustrative)
  • Earnings available for distribution (EAD): $2,024,863
  • EAD per average common share: $2.92
  • EAD return on average equity (excluding PAA): 14.47%
  • Net interest margin (excluding PAA): 1.70%
  • Average yield on interest earning assets (excluding PAA): 5.39%
  • Average economic cost of interest bearing liabilities: 3.99%

Drivers of earnings and expense

• Primary income drivers: net interest income, net servicing income, and other income
• Major expense: cost of interest bearing liabilities; expense levels are related to debt levels and hedging
• The company presents non-GAAP measures such as EAD, economic leverage, and economic capital to complement GAAP results

Segments and business model

• Segments correspond to the three investment groups:
  • Agency: Agency MBS and related assets guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae
  • Residential Credit: non-Agency residential whole loans and securitized products
  • MSR: Mortgage Servicing Rights investments and related MSR portfolio
• The company uses hedges and leverage to earn a net interest spread on its asset base, with an emphasis on liquidity management, risk governance, and capital optimization

Practices and controls

• Valuation policies for Residential Securities and MSR (fair value measurements)
• Use of the fair value option for certain securities (Agency, CRT, Non-Agency, etc.)
• Disclosure of non-GAAP metrics to illustrate operating performance and dividend capacity
• Risk management structures and governance, including an Enterprise Risk Committee, ALCO, FRDC, and programs for cybersecurity, vendor risk, and regulatory compliance

Notable quantitative items

• Total assets: $135.6 billion; total stockholders’ equity: $16.1 billion
• GAAP net income: $2.05 billion; earnings per share: $2.92 (basic and diluted)
• Common shares outstanding (average): ~639.5 million (basic)
• Economic metrics (non-GAAP): economic leverage ~5.6:1; economic capital ratio ~14.9%
• Agency MBS portfolio fair value: $89.6 billion
• Residential MSR portfolio value: about $3.8 billion; MSR acquisitions added roughly $60 billion in unpaid principal balance during 2025
• Onslow Bay activity: priced $15.2 billion in securitizations and settled $18 billion of whole loans in 2025
• Liquidity posture: substantial unencumbered assets and active use of repo facilities and warehouse lines to finance assets
• 2025 equity program activity: issued 127.9 million shares for proceeds of $2.6 billion

Additional context from notes and MD&A

• Disclosures cover liquidity and funding risk, investment and market risk, credit and counterparty risk, operational risk, and regulatory risk
• Critical accounting estimates focus on fair value measurements for MSR and Residential Securities, MSR valuation methodologies, and the use of the fair value option for various securities
• Management emphasizes capital preservation and conservative leverage within stated targets and policies

If you would like a condensed one-page executive summary or a table comparing GAAP and non-GAAP metrics, I can prepare that.