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What changed in ANNALY CAPITAL MANAGEMENT INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of ANNALY CAPITAL MANAGEMENT INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+644 added−646 removedSource: 10-K (2026-02-12) vs 10-K (2025-02-13)

Top changes in ANNALY CAPITAL MANAGEMENT INC's 2025 10-K

644 paragraphs added · 646 removed · 302 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

59 edited+260 added−32 removed199 unchanged
Biggest changeBUSINESS accounting, internal controls or auditing matters with the Chair of the Board, the independent directors, or the Chair of the Audit Committee or through our whistleblower phone hotline or e-mail inbox. • We have adopted an Insider Trading Policy that prohibits our directors, officers and employees, as well as those of our subsidiaries from buying or selling our securities on the basis of material nonpublic information and prohibits communicating material nonpublic information about our company to others.
Biggest changeThis code is applicable to our directors, officers and employees. • We have adopted Corporate Governance Guidelines which, in conjunction with the charters of our Board committees, provide the framework for the governance of our company. • We have procedures by which any of our employees, officers or directors may raise concerns confidentially about our company’s conduct, accounting, internal controls or auditing matters with the Chair of the Board, the independent directors, or the Chair of the Audit Committee or through our whistleblower phone hotline or e-mail inbox. • We have adopted an Insider Trading Policy that prohibits our directors, officers and employees, as well as those of our subsidiaries from buying or selling our securities on the basis of material nonpublic information and prohibits communicating material nonpublic information about our company to others.
Distributions In accordance with the requirements for maintaining REIT status, we intend to distribute to stockholders aggregate dividends equaling at least 90% of our REIT taxable income (determined without regard to the deduction of dividends paid and by excluding any net capital gain) for each taxable year and will endeavor to distribute at least 100% of our REIT taxable income so as not to be subject to tax.
BUSINESS Distributions In accordance with the requirements for maintaining REIT status, we intend to distribute to stockholders aggregate dividends equaling at least 90% of our REIT taxable income (determined without regard to the deduction of dividends paid and by excluding any net capital gain) for each taxable year and will endeavor to distribute at least 100% of our REIT taxable income so as not to be subject to tax.
We finance our Agency mortgage-backed securities and residential credit investments primarily with repurchase agreements. We seek to diversify our exposure and limit concentrations by entering into repurchase agreements with multiple counterparties. We enter into repurchase agreements with broker-dealers, commercial banks and other lenders that typically offer this type of financing.
We finance our Agency mortgage-backed securities and residential credit securities primarily with repurchase agreements. We seek to diversify our exposure and limit concentrations by entering into repurchase agreements with multiple counterparties. We enter into repurchase agreements with broker-dealers, commercial banks and other lenders that typically offer this type of financing.
For purposes of calculating this ratio, our economic leverage ratio is equal to the sum of Recourse Debt, cost basis of TBA and CMBX derivatives outstanding, and net forward purchases (sales) of investments divided by total equity. Our target economic leverage ratio is determined under our capital management policy.
For purposes of calculating this ratio, our economic leverage ratio is equal to the sum of Recourse Debt, cost basis of TBA derivatives outstanding, and net forward purchases (sales) of investments divided by total equity. Our target economic leverage ratio is determined under our capital management policy.
A reduction in the ability of mortgage loan originators to access Fannie Mae and Freddie Mac to sell their mortgage loans may adversely affect the mortgage markets generally and adversely affect the ability of mortgagors to refinance their mortgage loans.
A potential reduction in the ability of mortgage loan originators to access Fannie Mae and Freddie Mac to sell their mortgage loans may adversely affect the mortgage markets generally and adversely affect the ability of mortgagors to refinance their mortgage loans.
Should our actual economic leverage ratio increase above the target level, we will consider appropriate measures. Our actions may include asset sales, changes in asset mix, reductions in asset purchases or originations, issuance of capital or other capital enhancing or risk reduction strategies. The following table presents our leverage and capital ratios as of the periods presented.
Should our actual economic leverage ratio increase above the target level, we will consider appropriate measures which may include asset sales, changes in asset mix, reductions in asset purchases or originations, issuance of capital or other capital enhancing or risk reduction strategies. The following table presents our leverage and capital ratios as of the periods presented.
To manage this risk, we have a robust process that monitors the activities of the third party servicers. This oversight process is also subject t o regulatory requirements and expectations that we are expected to meet. Changes in laws or regulations governing our operations or our failure to comply with those laws or regulations affects our business.
To manage this risk, we have a robust process that monitors the activities of the third party servicers. This oversight process is also subject to regulatory requirements and expectations that we are expected to meet. Changes in laws or regulations governing our operations or our failure to comply with those laws or regulations affects our business.
Zwirn & Co., L.P. with a focus on credit and debt restructuring. Mr. Campbell currently serves on the Advisory Board for the Fitzgerald Institute of Real Estate at the University of Notre Dame. Mr. Campbell received a B.B.A. from the University of Notre Dame and a M.B.A. from the University of Chicago, Booth School of Business. Anthony C.
Zwirn & Co., L.P. with a focus on credit and debt restructuring. Mr. Campbell currently serves on the Advisory Board for the Fitzgerald Institute of Real Estate at the University of Notre Dame. Mr. Campbell received a B.B.A. from the University of Notre Dame and a M.B.A. from the University of Chicago, Booth School of Business.
Hosting over 50 community building events in 2024, our seven employee network groups, which include the Women’s Interactive Network (“WIN”), the Asian American and Pacific Islander Employee Network, the Black Employee Network, the Latin American Employee Network, the disAbility Network, the Veteran’s Employee Network, and the Annaly Pride Network, continue to evolve and advance.
Hosting over 50 community building events in 2025, our seven employee network groups, which include the Women’s Interactive Network (“WIN”), the Asian American and Pacific Islander Employee Network, the Black Employee Network, the Latin American Employee Network, the disAbility Network, the Veteran’s Employee Network, and the Annaly Pride Network, continue to evolve and advance.
Risk Factors • Liquidation of assets may jeopardize our REIT qualification or create additional tax liability for us. • The failure of assets subject to repurchase agreements to qualify as real estate assets could adversely affect our ability to remain qualified as a REIT. • Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities. • Qualifying as a REIT involves highly technical and complex provisions of the Code. • The tax on prohibited transactions limits our ability to engage in certain transactions. • Certain financing activities may subject us to U.S. federal income tax and could have negative tax consequences for our stockholders. • Uncertainty exists with respect to the treatment of our TBAs for purposes of the REIT asset and income tests. • Dividends payable by REITs generally receive different tax treatment than dividend income from regular corporations. • New legislation or administrative or judicial action, in each instance potentially with retroactive effect, could make it more difficult or impossible for us to remain qualified as a REIT.
Risk Factors • The failure of assets subject to repurchase agreements to qualify as real estate assets could adversely affect our ability to remain qualified as a REIT. • Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities. • Qualifying as a REIT involves highly technical and complex provisions of the Code. • The tax on prohibited transactions limits our ability to engage in certain transactions. • Certain financing activities may subject us to U.S. federal income tax and could have negative tax consequences for our stockholders. • Uncertainty exists with respect to the treatment of our TBAs for purposes of the REIT asset and income tests. • Dividends payable by REITs generally receive different tax treatment than dividend income from regular corporations. • New legislation or administrative or judicial action, in each instance potentially with retroactive effect, could make it more difficult or impossible for us to remain qualified as a REIT.
(2) Assets exclude assets transferred or pledged to securitization vehicles, include TBA purchase contracts (market value), unsettled MSR commitments, CMBX derivatives (market value), and retained securities that are eliminated in consolidation and are shown net of participations issued.
(2) Assets exclude assets transferred or pledged to securitization vehicles, include TBA purchase contracts (market value), unsettled MSR commitments, and retained securities that are eliminated in consolidation and are shown net of participations issued.
To promote a sense of purpose, accountability and broader exposure, we offer networking opportunities across our company, which include senior leader-led small group sessions as well as one-on-one employee knowledge share sessions. More broadly, we continue to offer firmwide learning sessions that focus on core business strategies and initiatives to foster holistic and inclusive learning.
BUSINESS To promote a sense of purpose, accountability and broader exposure, we offer networking opportunities across our company, which include senior leader-led small group sessions as well as one-on-one employee knowledge share sessions. More broadly, we continue to offer firmwide learning sessions that focus on core business strategies and initiatives.
Any new laws modifying the relationship between Fannie Mae, Freddie Mac and the federal government could affect our business model or business operations. The interest and principal payments we expect to receive on the Agency mortgage-backed securities in which we invest are guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae.
Any new laws, regulations or administrative actions modifying the relationship between Fannie Mae, Freddie Mac and the federal government could affect our business model or business operations. The interest and principal payments we expect to receive on the Agency mortgage-backed securities in which we invest are guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae.
Prior to joining Annaly in 2013, Mr. Finkelstein served for four years as an Officer in the Markets Group of the Federal Reserve Bank of New York where he was the primary strategist and policy advisor for the MBS purchase program. Mr. Finkelstein has over 25 years of experience in fixed income investments.
Finkelstein served for four years as an Officer in the Markets Group of the Federal Reserve Bank of New York where he was the primary strategist and policy advisor for the MBS purchase program. Mr. Finkelstein has over 25 years of experience in fixed income investments. Prior to the Federal Reserve Bank of New York, Mr.
Our Insider Trading Policy prohibits our directors, officers and employees, from (1) holding our stock in a margin account as eligible collateral, or otherwise pledging our stock as collateral for a loan, or (2) engaging in any hedging transactions with respect to our equity securities held by them. • Our executive officers are subject to two clawback policies, one that covers financial restatements and another that covers misconduct. • Our executive officers and directors are subject to stock ownership guidelines and holding restrictions. • Stockholders holding 25% of our common stock have the right to call a special meeting.
Our Insider Trading Policy prohibits our directors, officers and employees, from (1) holding our stock in a margin account as eligible collateral, or otherwise pledging our stock as collateral for a loan, or (2) engaging in any hedging transactions with respect to our equity securities held by them. • Our executive officers are subject to two clawback policies, one that covers financial restatements and another that covers misconduct. • Our executive officers and directors are subject to stock ownership guidelines and holding restrictions. • Stockholders holding 25% of our common stock have the right to call a special meeting. 9 ANNALY CAPITAL MANAGEMENT, INC.
Risks Related to Our Taxation as a REIT • Our failure to maintain our qualification as a REIT would have adverse tax consequences. • Our distribution requirements could adversely affect our ability to execute our business plan. • Distributions to tax-exempt investors may be classified as unrelated business taxable income. • We have flexibility to pay dividends in our own stock. • Our TRSs cannot constitute more than 20% of our total assets. • TRSs are subject to tax at the regular corporate rates, are not required to distribute dividends, and the amount of dividends a TRS can pay to its parent REIT may be limited by REIT gross income tests. • If transactions between a REIT and a TRS are entered into on other than arm’s-length terms, the REIT may be subject to a penalty tax. • Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flow. • Complying with REIT requirements may cause us to forgo otherwise attractive opportunities and may force us to liquidate otherwise attractive investments. 12 ANNALY CAPITAL MANAGEMENT, INC.
Risks Related to Our Taxation as a REIT • Our failure to maintain our qualification as a REIT would have adverse tax consequences. • Our distribution requirements could adversely affect our ability to execute our business plan. • Distributions to tax-exempt investors may be classified as unrelated business taxable income. • We have flexibility to pay dividends in our own stock. • Our TRSs cannot constitute more than 25% of our total assets. • TRSs are subject to tax at the regular corporate rates, are not required to distribute dividends, and the amount of dividends a TRS can pay to its parent REIT may be limited by REIT gross income tests. • If transactions between a REIT and a TRS are entered into on other than arm’s-length terms, the REIT may be subject to a penalty tax. • Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flow. • Complying with REIT requirements may cause us to forgo otherwise attractive opportunities and may force us to liquidate otherwise attractive investments. • Liquidation of assets may jeopardize our REIT qualification or create additional tax liability for us. 12 ANNALY CAPITAL MANAGEMENT, INC.
Furthermore, we are required to comply with various information reporting and other regulatory requirements to maintain our licenses, and there is no assurance that we will be able to satisfy those requirements or other regulatory requirements applicable to our businesses of acquiring and servicing mortgage loans on an ongoing basis.
Risk Factors required to comply with various information reporting and other regulatory requirements to maintain our licenses, and there is no assurance that we will be able to satisfy those requirements or other regulatory requirements applicable to our businesses of acquiring and servicing mortgage loans on an ongoing basis.
Arcola provides us greater depth and diversity of repurchase agreement funding while also limiting our counterparty exposure. To reduce our liquidity risk. we maintain a laddered approach to our repurchase agreements. At December 31, 2024, the weighted average days to maturity was 32 days.
Arcola provides us greater depth and diversity of repurchase agreement funding while also limiting our counterparty exposure. To reduce our liquidity risk. we maintain a laddered approach to our repurchase agreements. At December 31, 2025, the weighted average days to maturity was 35 days.
With 57% of our Operating Committee and 61% of our overall population as of December 31, 2024 identifying as either female and/or racially/ethnically diverse, we are driven by the belief that having a diverse group of employees supports our continued long-term success.
With 57% of our Operating Committee and 60% of our overall population as of December 31, 2025 identifying as either female and/or racially/ethnically diverse, we are driven by the belief that having a diverse group of employees supports our continued long-term success.
All employees are responsible for upholding these values, which form the bedrock of our culture and are vital to the continued success of our company. Guided by these values, we are committed to attracting, developing and retaining the best talent, with diverse experiences, perspectives and backgrounds.
These values are embedded in our professional and personal conduct and are vital to the continued success of our company. All employees are responsible for upholding these values, which form the bedrock of our culture. Guided by these values, we are committed to attracting, developing and retaining the best talent, with diverse experiences, perspectives and backgrounds.
We enter into collateralized borrowings with financial institutions meeting internal credit standards and we monitor the financial condition of these institutions on a regular basis. At December 31, 2024, we had $65.7 billion of repurchase agreements outstanding. Additionally, our wholly-owned subsidiary, Arcola Securities, Inc.
We enter into collateralized borrowings with financial institutions meeting internal credit standards and we monitor the financial condition of these institutions on a regular basis. At December 31, 2025, we had $81.9 billion of repurchase agreements outstanding. Additionally, our wholly-owned subsidiary, Arcola Securities, Inc.
December 31, 2024 December 31, 2023 GAAP leverage ratio 7.1:1 6.8:1 Economic leverage ratio * 5.5:1 5.7:1 GAAP capital ratio 12.3% 12.2% Economic capital ratio * 14.6% 14.0% * Represents a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section for additional information.
December 31, 2025 December 31, 2024 GAAP leverage ratio 7.2:1 7.1:1 Economic leverage ratio * 5.6:1 5.5:1 GAAP capital ratio 11.9% 12.3% Economic capital ratio * 14.9% 14.8% * Represents a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section for additional information.
Our application of GAAP produces financial results that fluctuate from one period to another. • Any new laws modifying the relationship between Fannie Mae, Freddie Mac and the federal government could affect our business model or business operations. • The Truth in Lending Act or other similar consumer protection laws and regulations expose an owner of whole mortgage loans and mortgage servicing rights to potential civil and administrative liability. • Our Residential Credit and MSR businesses are subject to complex and evolving legal and regulatory requirements, including how we oversee and are responsible for the actions of our third-party service providers, which exposes us to increased compliance, legal, and regulatory risk. • Changes in laws or regulations governing our operations or our failure to comply with those laws or regulations affects our business. • The focus on environmental, social, and governance and climate change issues by some investors, governmental bodies and other stakeholders, as well as existing and proposed laws and regulations related to these topics, and any divergence in the approach to these subjects by investors, governmental bodies and other stakeholders, affects our business, financial results and reputation. • We are subject to complex and evolving laws, regulations, rules, standards and contractual obligations regarding data privacy and security, which increases the cost of doing business, compliance risks and potential liability. • We are subject to risks and liabilities in connection with sponsoring, investing in and managing new funds and other investment accounts, including potential regulatory risks. • Loss of our Investment Company Act exemption from registration would adversely affect us.
Our application of GAAP produces financial results that fluctuate from one period to another. • Any new laws, regulations or administrative actions modifying the relationship between Fannie Mae, Freddie Mac and the federal government could affect our business model or business operations. • The Truth in Lending Act or other similar consumer protection laws and regulations expose an owner of whole mortgage loans and mortgage servicing rights to potential civil and administrative liability. • Our Residential Credit and MSR businesses are subject to complex and evolving legal and regulatory requirements, including how we oversee and are responsible for the actions of our third-party service providers, which exposes us to increased compliance, legal, and regulatory risk. • Changes in laws or regulations governing our operations or our failure to comply with those laws or regulations affects our business. • Evolving environmental, social and governance-related disclosure requirements and climate-related risks could adversely affect our business and results of operations. • We are subject to complex and evolving laws, regulations, rules, standards and contractual obligations regarding data privacy and security, which increases the cost of doing business, compliance risks and potential liability. • We are subject to risks and liabilities in connection with sponsoring, investing in and managing new funds and other investment accounts, including potential regulatory risks. • Loss of our Investment Company Act exemption from registration would adversely affect us.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Information about our Executive Officers The following table sets forth certain information as of February 13, 2025 concerning our executive officers: Name Age Title David L. Finkelstein 52 Chief Executive Officer and Co-Chief Investment Officer Serena Wolfe 45 Chief Financial Officer Steven F.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Information about our Executive Officers The following table sets forth certain information as of February 12, 2026 concerning our executive officers: Name Age Title David L. Finkelstein 53 Chief Executive Officer and Co-Chief Investment Officer Serena Wolfe 46 Chief Financial Officer Steven F.
RISK FACTORS Page Summary of Risk Factors 12 Risks Related to Our Liquidity and Funding 14 Risks of Ownership of Our Common Stock 19 Compliance, Regulatory & Legal Risks 20 Risks Related to Our Taxation as a REIT 25 Counterparty Risks 31 Investment and Market Related Risks 31 Operational and Cybersecurity Risks 37 Other Risks 43 11 ANNALY CAPITAL MANAGEMENT, INC.
RISK FACTORS Page Summary of Risk Factors 12 Risks Related to Our Liquidity and Funding 14 Risks of Ownership of Our Common Stock 19 Compliance, Regulatory & Legal Risks 20 Risks Related to Our Taxation as a REIT 24 Counterparty Risks 30 Investment and Market Related Risks 30 Operational and Cybersecurity Risks 36 Other Risks 42 11 ANNALY CAPITAL MANAGEMENT, INC.
Failure to procure or renew funding on favorable terms, or at all, affects our results and financial condition. 14 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 1A. Risk Factors One or more of our lenders could be unwilling or unable to provide us with financing. This potentially increases our financing costs and reduces our liquidity.
Risk Factors Failure to procure or renew funding on favorable terms, or at all, affects our results and financial condition. One or more of our lenders could be unwilling or unable to provide us with financing. This potentially increases our financing costs and reduces our liquidity.
As a result, we are unable to fully predict how laws or regulations that may be adopted in the future, will affect our business, results of operations and financial condition, or the environment for repurchase financing and other forms of borrowing, the investing environment for Agency MBS, non-Agency mortgage-backed securities and/or residential mortgage, and MSR. 21 ANNALY CAPITAL MANAGEMENT, INC.
We are unable to fully predict how laws or regulations that may be adopted in the future will affect our business, results of operations and financial condition, or the environment for repurchase financing and other forms of borrowing, the investing environment for Agency MBS, non-Agency MBS and/or residential mortgage, and MSR.
However, we may not be able to consistently achieve our desired leverage if we determine that the leverage would expose us to excessive risk, our lenders do not make funding available to us at acceptable rates, or our lenders require that we provide additional collateral to cover our borrowings.
However, we may not be able to consistently achieve our desired leverage if we determine that the leverage would expose us to excessive risk, our lenders do not make funding available to us at acceptable rates, or our lenders require that we provide additional collateral to cover our borrowings. 14 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 1A.
Our portfolio composition and capital allocation at December 31, 2024 and 2023 were as follows: December 31, 2024 December 31, 2023 Asset Classes Percentage of Portfolio Capital Allocation (2) Percentage of Portfolio Capital Allocation (2) Agency (1)(2) 87% 59% 88% 61% Residential Credit (2) 9% 22% 9% 21% MSR (2) 4% 19% 3% 18% (1) Includes to-be-announced forward contracts (“TBAs”).
Our portfolio composition and capital allocation at December 31, 2025 and 2024 were as follows: December 31, 2025 December 31, 2024 Asset Classes Percentage of Portfolio Capital Allocation (2) Percentage of Portfolio Capital Allocation (2) Agency (1)(2) 89% 62% 87% 59% Residential Credit (2) 7% 19% 9% 22% MSR (2) 4% 19% 4% 19% (1) Includes to-be-announced forward contracts (“TBAs”).
Finkelstein served as Annaly’s Chief Investment Officer, a role he also held from November 2016 until December 2021. Mr. Finkelstein also served as Annaly’s President from March 2020 until December 2022. Prior to that, Mr. Finkelstein served as Annaly’s Chief Investment Officer, Agency and RMBS beginning in February 2015 and as Annaly’s Head of Agency Trading beginning in August 2013.
Finkelstein also served as Annaly’s President from March 2020 until December 2022. Prior to that, Mr. Finkelstein served as Annaly’s Chief Investment Officer, Agency and RMBS beginning in February 2015 and as Annaly’s Head of Agency Trading beginning in August 2013. Prior to joining Annaly in 2013, Mr.
Acquiring the right to service residential mortgage loans and certain business purpose mortgage loans also requires us to maintain various state licenses, even though we currently do not expect to directly engage in loan servicing ourselves.
Acquiring the right to service residential mortgage loans and certain business purpose mortgage loans also requires us to maintain various state licenses, even though we currently do not expect to directly engage in loan servicing ourselves. Furthermore, we are 21 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 1A.
We utilize employee surveys, including an annual engagement survey, to create open and honest feedback channels that foster our ability to actively engage and involve our employees in the evolution of our culture and our human capital strategies to enhance our overall productivity and mitigate risk.
We utilize employee surveys, including an annual engagement survey, to create open and honest feedback channels that foster our ability to actively engage and involve our employees in the evolution of our culture. Our leaders review and incorporate survey feedback to enhance employee engagement and drive employee satisfaction.
We have elected, organized and operated in a manner that qualifies us to be taxed as a REIT under the Internal Revenue Code of 1986, as amended and regulations promulgated thereunder (the “Code”).
We continue to assess our business, risk management and compliance practices to conform to developments in the regulatory environment. We have elected, organized and operated in a manner that qualifies us to be taxed as a REIT under the Internal Revenue Code of 1986, as amended and regulations promulgated thereunder (the “Code”).
Department of the Treasury under the Biden Administration announced an agreement with each of Fannie Mae and Freddie Mac to modify the Preferred Stock Purchase Agreements to help ensure that the eventual release of Fannie Mae and Freddie Mac from conservatorship will be orderly and reflect certain existing practices.
Department of the Treasury under the Biden Administration announced modifications to the Preferred Stock Purchase Agreements to help ensure that the eventual release of Fannie Mae and Freddie Mac from conservatorship will be orderly and reflect certain existing practices, and the FHFA indicated that it would solicit public input before releasing either Fannie Mae or Freddie Mac from conservatorship.
Finkelstein is a member of the Treasury Market Practices Group sponsored by the Federal Reserve Bank of New York, as well as a member of the Financial Sector Advisory Council of the Federal Reserve Bank of Dallas. Mr.
Finkelstein held Agency MBS trading positions at Salomon Smith Barney, Citigroup Inc. and Barclays PLC. Mr. Finkelstein is a member of the Treasury Market Practices Group sponsored by the Federal Reserve Bank of New York, as well as a member of the Financial Sector Advisory Council of the Federal Reserve Bank of Dallas. Mr.
On December 7, 2012, as a result of numerous requests for no-action relief from the CPO registration requirement for operators of mortgage REITs, the Division of Swap Dealer and Intermediary Oversight (the predecessor to the Market Participants Division) of the CFTC issued no-action relief entitled “No-Action Relief from the Commodity Pool Operator Registration Requirement for Commodity Pool Operators of Certain Pooled Investment Vehicles Organized as Mortgage Real Estate Investment Trusts” that permits a CPO to receive relief from the requirement to register by filing a claim to perfect the use of the relief.
On December 7, 2012, as a result of numerous requests for no-action relief from the CPO registration requirement for operators of mortgage REITs, the Division of Swap Dealer and Intermediary Oversight (the predecessor to the Market Participants Division) of the CFTC issued no-action relief entitled “No-Action Relief from the Commodity Pool Operator 8 ANNALY CAPITAL MANAGEMENT, INC.
We utilize leverage to enhance the risk-adjusted returns generated for our stockholders. We generally expect to maintain an economic leverage ratio of no greater than 10:1 considerate of our overall capital allocation framework.
During the year ended December 31, 2025, we issued 29 OBX securitizations backed by $15.2 billion of residential whole loans. We utilize leverage to enhance the risk-adjusted returns generated for our stockholders. We generally expect to maintain an economic leverage ratio of no greater than 10:1 considerate of our overall capital allocation framework.
Campbell 52 President and Chief Operating Officer Anthony C. Green 50 Chief Corporate Officer, Chief Legal Officer and Secretary David L. Finkelstein has served as the Chief Executive Officer of Annaly since March 2020 and Co-Chief Investment Officer since January 2025. From November 2022 until January 2025, Mr.
Campbell 53 President and Chief Operating Officer David L. Finkelstein has served as the Chief Executive Officer of Annaly since March 2020 and Co-Chief Investment Officer since January 2025. From November 2022 until January 2025, Mr. Finkelstein served as Annaly’s Chief Investment Officer, a role he also held from November 2016 until December 2021. Mr.
BUSINESS – Annaly Residential Credit Group has established relationships with key mortgage loan originators and aggregators including well-known money center banks, allowing us to efficiently source proprietary originations suited to our risk parameters. – We have partnered with GIC Private Limited (“GIC”), a leading sovereign wealth fund, through the creation of a joint venture with the purpose of investing in residential credit assets, including newly-originated residential loans and securities issued by our subsidiaries. – We have partnered with Fifth Wall Ventures, the largest venture capital firm focused on technology for the real estate industry, through a commitment to invest in their funds that target investments in North American early- and late-stage real estate software and marketplace companies.
In addition, our wholly-owned subsidiary Onslow Bay Financial LLC (“Onslow Bay”) partners directly with mortgage technology companies to enhance the operations of our correspondent channel. – Annaly Mortgage Servicing Rights Group has established relationships with leading sub-servicing and recapture partners, allowing us to build and maintain a durable and high-quality MSR portfolio and benefit from our partners operational capabilities to enhance returns. – We have partnered with GIC Private Limited (“GIC”), a leading sovereign wealth fund, through the creation of a joint venture with the purpose of investing in residential credit assets, including newly-originated residential loans and securities issued by our subsidiaries. – We have partnered with Fifth Wall Ventures, the largest venture capital firm focused on technology for the real estate industry, through a commitment to invest in their funds that target investments in North American early- and late-stage real estate software and marketplace companies.
In addition to FHFA becoming the conservator of Fannie Mae and Freddie Mac, the U.S. Department of the Treasury entered into Preferred Stock Purchase Agreements with the FHFA and have taken various actions intended to provide Fannie Mae and Freddie Mac with additional liquidity in an effort to ensure their financial stability.
Department of the Treasury has entered into, and from time to time modified, Preferred Stock 20 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 1A. Risk Factors Purchase Agreements and related arrangements with the FHFA and has taken various actions intended to provide Fannie Mae and Freddie Mac with additional liquidity in an effort to ensure their financial stability.
The cost of whole loans and the servicing income derived from owning MSR could be affected by the CFPB categorizing any currently permissible fee or charge as “junk.” Our Residential Credit and MSR businesses are subject to complex and evolving legal and regulatory requirements, including how we oversee and are responsible for the actions of our third-party service providers, which exposes us to increased compliance, legal, and regulatory risk.
Our Residential Credit and MSR businesses are subject to complex and evolving legal and regulatory requirements, including how we oversee and are responsible for the actions of our third-party service providers, which exposes us to increased compliance, legal, and regulatory risk.
Principal and interest payments on Ginnie Mae certificates are directly guaranteed by the U.S. government. Principal and interest payments relating to the securities issued by Fannie Mae and Freddie Mac are only guaranteed by each respective Agency. 20 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 1A.
Principal and interest payments on Ginnie Mae certificates are directly guaranteed by the U.S. government. Principal and interest payments relating to the securities issued by Fannie Mae and Freddie Mac are only guaranteed by each respective Agency. In September 2008, Fannie Mae and Freddie Mac were placed into the conservatorship of the FHFA. In addition to the conservatorships, the U.S.
Any changes to the nature of the guarantees provided by Fannie Mae and Freddie Mac could redefine what constitutes an Agency mortgage-backed security and could have broad adverse market implications.
Any changes to the nature and structure of the guarantees provided by Fannie Mae and Freddie Mac could redefine what constitutes an Agency mortgage-backed security and could have broad adverse market implications, including potentially adversely affecting the types of assets we can buy, the costs of these assets, the terms on which we can finance them and our business operations.
Diversity, equity, and inclusion are essential tenets of our corporate culture. Our Human Capital Team, in coordination with an Inclusion Support Committee of Executive Sponsors, is responsible for overseeing and continuing to advance our diversity, equity and inclusion initiatives. We are committed to promoting diversity, including gender and racial/ethnic diversity, across all levels of our company.
Our Human Capital Team, in coordination with an Inclusion Support Committee of Executive Sponsors, is responsible for overseeing and continuing to advance our diversity and inclusivity initiatives. We value our diversity and promote an inclusive culture.
We also sponsor a wide range of initiatives that promote employee wellness and mental well-being, including access to talk therapy, health coaching, stress management support as well as a dedicated Wellness Week that includes a number of health and wellness related activities and seminars.
We sponsor a wide range of initiatives including access to talk therapy, health coaching, lifestyle management support as well as a dedicated Wellness Week that includes a number of health and wellness related activities and seminars. Over the last few years, we have also enhanced our parental and family care benefits to provide extended leave and fertility assistance.
These laws and regulations, which are frequently amended and adjusted, have, in recent years, led to an increase in both the scope of the requirements and the intensity of the supervision to which we are subject. The CFTC has jurisdiction over the regulation of swaps.
These laws and regulations, which are frequently amended and adjusted, have, in recent years, led to an increase in both the scope of the requirements and the intensity of the supervision to which we are subject. The second Trump Administration has implemented significantly different policies from the Biden Administration, including new proposed regulations and rescissions or withdrawals of previous guidance.
Further, the Chair of the MDC Committee liaises on certain human capital topics with the Chair of the Corporate Responsibility Committee of the Board as appropriate. As of December 31, 2024, we had 191 employees.
In addition, the Management Development and Compensation (“MDC”) Committee of the Board provides independent oversight of our policies and strategies related to human capital management. Further, the Chair of the MDC Committee liaises on certain human capital topics with the Chair of the Corporate Responsibility Committee of the Board as appropriate. As of December 31, 2025, we had 212 employees.
Our People and Culture Our employees are the driving force behind Annaly’s success, and we are committed to promoting their well-being, engagement, and development to help them reach their highest potential. Our culture is focused on fostering a diverse, inclusive, and rewarding work environment for all employees, with ongoing opportunities for career development, wellness, support, and empowerment.
Our People and Culture Our employees are the driving force behind Annaly’s success, and we are committed to promoting their well-being, engagement, and professional development. Our culture is focused on fostering an inclusive, empowering, and rewarding work environment for all employees. Our culture is built on five core values: ownership, humility, accountability, collaboration and diversity and inclusivity.
Additionally, we have both a tuition reimbursement and learning reimbursement plan that provide financial support toward the cost of furthering employee education in an area directly related to their job.
By aligning with our overall business strategy, we design our learning and development objectives to meet our employees’ needs and interests. Additionally, we have both tuition reimbursement and learning reimbursement plans that provide financial support toward the cost of furthering employee education in an area directly related to their job. 7 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES ITEM 1.
Annaly and our employees endeavor to meaningfully contribute to the communities where we live, work and invest by partnering with well-established non-profit organizations and through Annaly’s corporate giving, employee volunteerism and our employee charity match program.
Corporate and Employee Philanthropy and Volunteerism Through our corporate philanthropy, employee volunteerism, and employee charity match program, we partner with high-impact non-profit organizations to provide a meaningful contribution in the communities where we live, work, and invest.
The future roles of Fannie Mae and Freddie Mac could be significantly reduced and the nature of their guarantees could be eliminated or considerably limited relative to historical measurements. The U.S. Treasury could also stop providing credit support to Fannie Mae and Freddie Mac in the future.
Treasury could also alter the amount or nature of the credit support provided to Fannie Mae and Freddie Mac in the future.
Learning and Development We seek to advance and promote our employees’ capabilities and full potential by investing in a number of targeted learning and development opportunities. By aligning with our overall business strategy, we design our learning and development objectives to meet our employees’ needs and interests.
We remain committed to enhancing and promoting programs and practices that foster inclusivity and well-being both personally and professionally. Learning and Development We seek to advance and promote our employees’ capabilities and full potential by investing in a number of targeted learning and development opportunities.
Our registered investment adviser subsidiary is subject to periodic SEC examinations and other requirements under the Investment Advisers Act and related regulations primarily intended to benefit advisory clients. These additional requirements relate to, among other things, maintaining an effective and comprehensive compliance program, recordkeeping and reporting requirements and disclosure requirements.
These additional requirements relate to, among other things, maintaining an effective and comprehensive compliance program, recordkeeping and reporting requirements and disclosure requirements.
Regulatory Requirements The financial services industry is subject to extensive regulation and supervision, and changes to regulations and supervisory practices are continuously being considered by regulators and policy makers worldwide. We continue to assess our business, risk management and compliance practices to conform to developments in the regulatory environment.
This work has included promoting housing stability through supportive and affordable housing, supporting the advancement and professional development of underrepresented populations in finance, and supporting employee donations, volunteerism, and engagement. Regulatory Requirements The financial services industry is subject to extensive regulation and supervision, and changes to regulations and supervisory practices are continuously being considered by regulators and policy makers worldwide.
We also finance our investments in residential mortgage loans through the issuance of securitization transactions sponsored by our wholly-owned subsidiary Onslow Bay Financial LLC (“Onslow Bay”) under the Onslow Bay private-label securitization program (“OBX”).
We also finance our investments in residential mortgage loans through the issuance of securitization transactions sponsored under the Onslow Bay private-label securitization program (“OBX”). We are a programmatic securitization sponsor of new origination, residential whole loans with 101 deals as of December 31, 2025 comprising $46.2 billion of issuance since the beginning of 2018.
BUSINESS B.A. in Economics and Political Science from the University of Pennsylvania and a J.D. and LL.M. in International and Comparative Law from Cornell Law School. Human Capital Our Human Capital team oversees our company’s workforce management to ensure its objectives are strategically integrated with the firm’s goals and business plans.
BUSINESS Human Capital Our Human Capital team oversees our company’s workforce management to ensure its objectives are strategically integrated with the firm’s goals and business plans. We proactively review human capital management best practices to continually enhance our employee experience.
Compensation, Benefits and Wellness Our employee compensation program includes base salary, annual incentive bonuses, and stock-based awards. Employee compensation packages are designed to both align employee and stockholder interests and to provide incentives to attract, retain and motivate talented employees.
Employee compensation packages are designed to both align employee and stockholder interests and to provide incentives to attract, retain and motivate employees. In addition, we invest in a wide range of benefits and wellness initiatives that support healthy lifestyles and choices for our employees.
These provisions and duties impose restrictions and obligations on us with respect to our dealings with our subsidiary’s clients, including, for example, restrictions on agency, cross and principal 8 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES ITEM 1. BUSINESS transactions.
These provisions and duties impose restrictions and obligations on us with respect to our dealings with our subsidiary’s clients, including, for example, restrictions on agency, cross and principal transactions. Our registered investment adviser subsidiary is subject to periodic SEC examinations and other requirements under the Investment Advisers Act and related regulations primarily intended to benefit advisory clients.
In addition to addressing physical health and safety concerns, we recognize that people’s daily emotional lives and mental health play a key role in their overall wellness. As such, we continue to evaluate ways to promote and expand our mental health offerings. Additionally, we recognize that part of meeting employee needs includes institutionalizing broader and longer-term flexibility where appropriate.
We offer benefits including health and insurance coverage, health savings and flexible spending accounts, telemedicine benefits, 401(k) plans, paid time off, and family care resources. We recognize that people’s daily emotional lives and mental health play a key role in their overall wellness. As such, we continue to evaluate ways to promote and expand our mental health offerings.
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We are a programmatic securitization sponsor of new origination, residential whole loans with 72 deals as of December 31, 2024 comprising $31.0 billion of issuance since the beginning of 2018. During the year ended December 31, 2024, we issued 21 OBX securitizations backed by $11.0 billion of residential whole loans.
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As previously disclosed, effective January 1, 2026, Anthony C. Green retired as the Company's Chief Legal Officer, Chief Corporate Officer and Secretary and transitioned to the role of Senior Advisor to the Company, in which capacity he will serve through March 31, 2026. 6 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES ITEM 1.
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Prior to the Federal Reserve Bank of New York, Mr. Finkelstein held Agency MBS trading positions at Salomon Smith Barney, Citigroup Inc. and Barclays PLC. Mr.
Added
We remain committed to maintaining a growth-focused environment where employees feel encouraged to share honest, constructive feedback. Diversity & Inclusivity Across Annaly, our employees have a range of experiences that bring fresh perspectives, contribute to our agility, and foster ingenuity. We strive to create a work environment where all employees feel respected and empowered to contribute their unique vantage points.
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Green has served as Chief Corporate Officer of Annaly since January 2019 and as Chief Legal Officer and Secretary of Annaly since March 2017. Mr. Green previously served as Annaly’s Deputy General Counsel from 2009 until February 2017. Prior to joining Annaly, Mr.
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These network groups promote allyship, celebrate the strengths that arise from our differences, and foster a sense of community. Further, they provide opportunities for development, information sharing, networking, mentoring, and community outreach. Compensation, Benefits and Wellness Our employee compensation program includes base salary, annual incentive bonuses, and stock-based awards.
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Green was a partner in the Corporate, Securities, Mergers & Acquisitions Group at the law firm K&L Gates LLP. Mr. Green has over 25 years of experience in corporate and securities law. Mr. Green holds a 6 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES ITEM 1.
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The cumulative impact of these changes, and whether they will last over time, is unclear The CFTC has jurisdiction over the regulation of swaps.
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We proactively review human capital management best practices to continually enhance our employee experience. In addition, the Management Development and Compensation (“MDC”) Committee of the Board provides independent oversight of our policies and strategies related to human capital management.
Added
AND SUBSIDIARIES ITEM 1. BUSINESS Registration Requirement for Commodity Pool Operators of Certain Pooled Investment Vehicles Organized as Mortgage Real Estate Investment Trusts” that permits a CPO to receive relief from the requirement to register by filing a claim to perfect the use of the relief.
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Our culture is built on five core values: ownership, humility, accountability, collaboration and diversity, equity and inclusion. These values are embedded in our professional and personal conduct and are crucial to how we operate our business.
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In January 2025, the FHFA and the U.S.
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Our leaders review and incorporate survey feedback to increase employee engagement and drive positive changes throughout our company. We remain committed to maintaining an environment of consistent feedback as we strive for high employment satisfaction levels. Diversity, Equity & Inclusion The diversity of our employees enables our company to cultivate innovation, fresh perspectives, and adaptability.
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We cannot predict if, when or how the conservatorships will end, or what associated changes, if any, may be made to the structure, mandate or overall business practices of Fannie Mae and Freddie Mac.
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These employee networks help strengthen our inclusive culture by fostering a sense of belonging and engagement through targeted development and networking opportunities, knowledge exchanges, mentorship, coaching and volunteer efforts. Additionally, we recognize and understand that education, candid conversations, and continued training are key to embedding and advancing diversity, equity, and inclusion within our organization and culture.
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The U.S. housing finance system, including the role of Fannie Mae and Freddie Mac and the nature and structure of their guaranty obligations, remains subject to significant uncertainty and may be affected by legislative action, regulatory action or administrative initiatives.
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To further promote and foster such a foundation, our efforts also include offering firm-wide training on topics such as unconscious bias, allyship, and inclusive leadership. To that end, we have hosted various forums for employees to openly discuss their views and have provided opportunities for employee connection and networking, as well as actively sought feedback through periodic employee surveys.
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The Trump Administration has publicly discussed significant potential changes to Fannie Mae and Freddie Mac that could affect their roles, which could be significantly modified, and the nature and structure of their guarantees, which could be eliminated or considerably reduced. The U.S.
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In addition, we invest in a wide range of benefits and wellness initiatives that support healthy lifestyles and choices for our employees. We offer benefits including health and insurance coverage, health savings and flexible spending accounts, 7 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES ITEM 1. BUSINESS telemedicine benefits, 401(k) plans, paid time off, and family care resources.
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The CFPB, among other federal and state regulators, historically had broad authority to promulgate rules, supervise compliance and bring enforcement actions under these laws and regulations. Many mortgage lending and servicing standards that affect market practices and disclosures were adopted through CFPB rulemaking and guidance.
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Over the last few years, we have enhanced our parental and family care benefits to provide extended leave and fertility assistance. At Annaly, we understand that it is our responsibility to provide an environment where our employees feel safe, motivated, empowered, and prepared, regardless of whatever challenges may arise.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn the United States, a number of civil lawsuits have been initiated related to the foregoing and other concerns, any one of which may, among other things, require us to limit the ways in which our AI systems are trained and may affect our ability to develop our AI-powered products and solutions.
Biggest changeIn the United States, a number of civil lawsuits have been initiated related to the foregoing and other concerns, any one of which may, among other things, affect our ability to develop our own AI-powered products and solutions.
In light of the current regulatory environment, such exposure could be significant even though we might have contractual claims against our servicers for any failure to service the loans to the required standard.
In light of the current regulatory environment, such exposure could be significant even though we might have contractual claims against our servicers for any failure to service the loans to the required standard.
Mortgage servicers are subject to extensive federal, state and local laws, regulations and administrative decisions and failure to comply with such regulations can expose the servicer to fines, damages and losses.
Mortgage servicers are subject to extensive federal, state and local laws, regulations and administrative decisions and failure to comply with such regulations can expose the servicer to fines, damages and losses.
Risk Factors may be limited in the future and we may not be able to take advantage of attractive investment opportunities from time to time, as we can provide no assurance that we will be able to identify and make investments that are consistent with our investment objectives.
Risk Factors be limited in the future and we may not be able to take advantage of attractive investment opportunities from time to time, as we can provide no assurance that we will be able to identify and make investments that are consistent with our investment objectives.
Cybersecurity risks for financial services businesses are increasing in their frequency, sophistication and intensity, and have become increasingly difficult to detect, in part because of the proliferation of new technologies, including generative artificial intelligence, and the increased sophistication and activities of organized crime, hackers, terrorists, nation-states, state-sponsored actors and other external parties.
Cybersecurity risks for financial services businesses are increasing in their frequency, sophistication and intensity, and have become increasingly difficult to detect, in part because of the proliferation of new technologies, including generative artificial intelligence (“GenAI”), and the increased sophistication and activities of organized crime, hackers, terrorists, nation-states, state-sponsored actors and other external parties.
There is no assurance that we have not or will not experience a breach. In addition, certain third parties that facilitate our business activities have reported breaches in the past and may experience breaches in the future, and there is no assurance that the third parties that have not reported breaches or will not experience a breach in the future.
In addition, certain third parties that facilitate our business activities have reported breaches in the past and may experience breaches in the future, and there is no assurance that the third parties that have not reported breaches or will not experience a breach in the future.
Any such limitations are likely to cause delayed or reduced collections from mortgagors and generally increase servicing costs. As a consequence of the foregoing matters, our business, financial condition and results of operations could be adversely affected. 39 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 1A. Risk Factors Our investments in residential whole loans subject us to servicing-related risks.
Any such limitations are likely to cause delayed or reduced collections from mortgagors and generally increase servicing costs. As a consequence of the foregoing matters, our business, financial condition and results of operations could be adversely affected. 38 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 1A. Risk Factors Our investments in residential whole loans subject us to servicing-related risks.
Accordingly, defaults in the payment of principal and/or interest on our non-Agency mortgage-backed securities, residential whole loan investments, MSR and other investment assets of lower credit quality have in the past and may in the future result in our incurring losses of income from, and/or losses in market value relating to, these assets. 42 ANNALY CAPITAL MANAGEMENT, INC.
Accordingly, defaults in the payment of principal and/or interest on our non-Agency mortgage-backed securities, residential whole loan investments, MSR and other investment assets of lower credit quality have in the past and may in the future result in our incurring losses of income from, and/or losses in market value relating to, these assets. 41 ANNALY CAPITAL MANAGEMENT, INC.
Conversely, increases in interest rates are generally accompanied by decreased prepayments of mortgage loans, which have in the past and may in the future reduce our capital available to reinvest into higher-yielding assets. Competition may affect ability and pricing of our target assets. We operate in a highly competitive market for investment opportunities.
Conversely, increases in interest rates are generally accompanied by decreased prepayments of mortgage loans, which have in the past and may in the future reduce our capital available to reinvest into higher-yielding assets. Competition may affect availability and pricing of our target assets. We operate in a highly competitive market for investment opportunities.
However, we are nevertheless ultimately responsible, vis-à-vis the borrowers and state and federal regulators, for ensuring that these activities are performed in accordance with the terms of the related notes and mortgages and applicable laws and 40 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 1A. Risk Factors regulations.
However, we are nevertheless ultimately responsible, vis-à-vis the borrowers and state and federal regulators, for ensuring that these activities are performed in accordance with the terms of the related notes and mortgages and applicable laws and 39 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 1A. Risk Factors regulations.
For example, we rely on the mortgage servicers who service the mortgage loans underlying our MSR to, among other things, collect principal and interest payments on such mortgage loans and perform loss mitigation services in accordance with applicable laws and regulations.
For example, we rely on the mortgage servicers who service the mortgage loans in our portfolio and those underlying our MSR to, among other things, collect principal and interest payments on such mortgage loans and perform loss mitigation services in accordance with applicable laws and regulations.
Holders of our shares of common stock will be subject to the risk of volatile market prices and wide fluctuations in the market price of our shares of common stock. These factors have in the past and may in the future cause the market price of our shares 43 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 1A.
Holders of our shares of common stock will be subject to the risk of volatile market prices and wide fluctuations in the market price of our shares of common stock. These factors have in the past and may in the future cause the market price of our shares 42 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 1A.
We cannot provide assurance that the competitive pressures we face will not have a material adverse effect on our business, financial condition and results of operations. Also, as a result of this competition, desirable investments in our target assets 41 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 1A.
We cannot provide assurance that the competitive pressures we face will not have a material adverse effect on our business, financial condition and results of operations. Also, as a result of this competition, desirable investments in our target assets may 40 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 1A.
For example, generative artificial intelligence has been known to produce false or “hallucinatory” inferences or output, and certain generative artificial intelligence uses machine learning and predictive analytics, which can create inaccurate, incomplete, or misleading content, unintended biases and other discriminatory or unexpected results, errors or inadequacies, any of which may not be easily detectable by us or any of our related service providers.
For example, GenAI has been known to produce false or “hallucinatory” inferences or output, and certain GenAI uses machine learning and predictive analytics, which can create inaccurate, incomplete, or misleading content, unintended biases and other discriminatory or unexpected results, errors or inadequacies, any of which may not be easily detectable by us or any of our related service providers.
Risk Factors Cyberattacks or other information security breaches of our Company's, service providers' or counterparties' systems or networks affect our business, reputation and financial condition.
Item 1A. Risk Factors Cyberattacks or other information security breaches of our Company's, service providers' or counterparties' systems or networks affect our business, reputation and financial condition.
For example, any legislation or regulation intended to reduce or prevent foreclosures through, among other things, loan modifications may reduce the value of mortgage loans, including those underlying our MSR.
For example, any legislation or regulation intended to reduce or prevent foreclosures through, among other things, loan modifications may reduce the value of mortgage loans, including those in our portfolio and those underlying our MSR.
This framework would categorize AI systems, based on the risks associated with such AI systems’ intended purposes, as creating unacceptable or high risks, with all other AI systems being considered low risk.
This framework would categorize AI systems, based on the risks associated with such AI systems’ intended purposes, as creating unacceptable or high risks, with all other AI systems being considered limited or minimal risk.
Similarly, legislation delaying the initiation or completion of foreclosure proceedings on specified types of residential mortgage loans or otherwise limiting the ability of mortgage servicers to take actions that may be essential to preserve the value of the mortgage loans may also reduce the value of mortgage loans underlying our MSR.
Similarly, legislation delaying the initiation or completion of foreclosure proceedings on specified types of residential mortgage loans or otherwise limiting the ability of mortgage servicers to take actions that may be essential to preserve the value of the mortgage loans may also reduce the value of mortgage loans in our portfolio and those underlying our MSR.
We depend on a variety of services provided by third party service providers related to our investments in MSR as well as for general operating purposes.
We depend on a variety of services provided by third party service providers related to our investments in mortgage loans and MSR as well as for general operating purposes.
The use of generative artificial intelligence, a relatively new and emerging technology in the early stages of commercial use, exposes us to additional risks, such as damage to our reputation, competitive position, and business, legal and regulatory risks and additional costs.
The use of GenAI, a relatively new and emerging technology in the early stages of commercial use, exposes us to additional risks, such as damage to our reputation, competitive position, and business, legal and regulatory risks and additional costs.
Accordingly, while AI systems may help provide more tailored or personalized user experiences, if the content, analyses, or recommendations that AI systems assist in producing in our products and solutions are, or are perceived to be, deficient, inaccurate, biased, unethical or otherwise flawed, our reputation, competitive position and business may be materially and adversely affected. 38 ANNALY CAPITAL MANAGEMENT, INC.
While AI systems may help automate processes or provide more tailored or personalized user experiences, if the content, analyses, or recommendations that AI systems assist in producing are, or are perceived to be, deficient, inaccurate, biased, unethical or otherwise flawed, our reputation, competitive position and business may be materially and adversely affected. 37 ANNALY CAPITAL MANAGEMENT, INC.
We use, or may in the future use, artificial intelligence, generative artificial intelligence, machine learning and similar tools and technologies (collectively, “AI”) in connection with our business.
We use, or may in the future use, artificial intelligence, GenAI, machine learning and similar tools and technologies (collectively, “AI”) in connection with our business, including in our business or through third-party service providers.
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Item 1A. Risk Factors The focus on environmental, social, and governance and climate change issues by some investors, governmental bodies and other stakeholders, as well as existing and proposed laws and regulations related to these topics, and any divergence in the approach to these subjects by different investors, governmental bodies and other stakeholders, affects our business, financial results and reputation.
Added
There is no assurance that we have not or will not experience a breach. There is no assurance that our cybersecurity incident response plan will allow us to successfully mitigate or recover from potential attacks.
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Our business faces increasing public scrutiny related to environmental, social, and governance activities. A variety of organizations measure the performance of companies on such topics, and the results of these assessments are widely publicized. Major institutional investors have publicly emphasized the importance of such measures to their investment decisions.
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These issues are also increasingly important to the general public and the media, and actual or perceived underperformance with respect to these topics could result in negative press or sentiment with respect to our business. In addition, actual or perceived effects of climate change could negatively impact house prices, housing-related costs, and borrower behavior.
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There is also governmental and regulatory interest across jurisdictions in improving the definition, measurement and disclosure of environmental, social, and governance factors in order to allow investors to validate and better understand related claims.
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To the extent we communicate environmental, social, and governance or climate-related statements, initiatives, commitments or goals in our SEC filings or in other disclosures, we face the risk of being accused of “greenwashing” to the extent our practices and policies do not match such claims.
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In addition, the SEC has established a climate and environmental, social, and governance task force to develop initiatives to identify related misconduct consistent with increased investor reliance on climate and environmental, social, and governance related disclosure and investment. As a result, the SEC has brought enforcement actions based on such disclosures not matching actual investment processes.
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In addition, the SEC under the Biden Administration finalized a rule requiring the disclosure of certain greenhouse gas emissions and climate-related risks; however, its enforcement has been stayed pending litigation challenging the rule.
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It remains to be seen what impact the Trump Administration will have on the SEC’s climate rule and the SEC’s climate and environmental, social, and governance task force and enforcement actions more generally; however, President Trump's campaign indicated that his administration will likely take a different approach to environmental, social and governance matters.
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In addition, in recent years “anti-environmental, social and governance” sentiment has increased in parts of the U.S., with several states and Congress having proposed or enacted “anti-environmental, social and governance” policies, legislation, or initiatives or issued related legal opinions.
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As such, we face increased scrutiny from stakeholders and governmental bodies who have diverging views related to business practices and company activities related to environmental, social and governance topics and climate change, which could result in reputational harm, litigation and other adverse consequences.
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Similar laws and regulations related to the disclosure and/or diligence of environmental, social, and governance and climate change-related risks have been enacted or proposed in U.S. states such as California, as well as the European Union and other jurisdictions.
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In addition, going forward, different jurisdictions at the state, federal and international level may pursue diverging approaches to environmental, social and governance and climate change-related matters.
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Compliance with any such new laws or regulations, and any diverging approaches to such laws and regulations in different jurisdictions, increases our regulatory burden and could make compliance more difficult and expensive, affect the manner in which we conduct our business and adversely affect our profitability and returns to our investors.
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We are subject to complex and evolving laws, regulations, rules, standards and contractual obligations regarding data privacy and security, which increases the cost of doing business, compliance risks and potential liability.
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We are subject to complex and evolving laws, regulations, rules, standards and contractual obligations relating to data privacy and the security of personal information, and any failure to comply with these laws, regulations, rules, standards and contractual obligations could expose us to liability and/or reputational damage.
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The legal and regulatory environment surrounding data privacy and security in the U.S. and international jurisdictions is constantly evolving. New business initiatives have increased, and may continue to increase, the extent to which we are subject to such U.S. and international data privacy and security regulations.
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As new data privacy and security-related laws, regulations, rules and standards are implemented, the time and resources needed for us to comply with such laws, regulations, rules and standards, as well as our potential liability for non-compliance and reporting obligations in the case of cyberattacks, information security breaches or other similar incidents, may significantly increase.
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Compliance with these laws, regulations, rules and standards may require us to change our policies, procedures and technology for information security, which could, among other things, make us more vulnerable to operational failures and to monetary penalties for breach of such laws, regulations, rules and standards.
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In the U.S., there are numerous federal, state and local data privacy and security laws and regulations governing the collection, sharing, use, retention, disclosure, security, storage, transfer and other processing of personal information.
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At the federal level, we are subject to, among other laws and regulations, the Gramm Leach Bliley Act (which regulates the confidentiality and security of customer information obtained by financial institutions and certain other types of financial services businesses) and regulations under it.
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Additionally, numerous states have enacted, or are in the process of enacting or considering, comprehensive state-level data privacy and security laws and regulations. Moreover, laws in all 50 U.S. states require 23 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 1A.
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Risk Factors businesses to provide notice under certain circumstances to consumers whose personal information has been disclosed as a result of a data breach. Further, when required by applicable laws, regulations, rules and industry standards, we strive to provide or cause our service providers to provide privacy policies which are accurate and comprehensive.
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We cannot, however, ensure that the disclosure of these privacy policies and other statements regarding our practices will be sufficient to protect us from claims, proceedings, liability or adverse publicity relating to data privacy and security or with respect to the legally permissible sharing of data.
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Although we endeavor to comply with our privacy policies and to ensure our service providers do the same, occurrence or allegations of noncompliance are possible and could subject us to potential government or legal action, including action based on arguments that the publication of these policies were deceptive, unfair, or misrepresentative of our actual practices.
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Any concerns about our data privacy and security practices, even if unfounded, could damage our reputation and adversely affect our business.
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Any failure or perceived failure by us to comply with our privacy policies, or applicable data privacy and security laws, regulations, rules, standards or contractual obligations, or any compromise of security that results in unauthorized access to, or unauthorized loss, destruction, use, modification, acquisition, disclosure, release or transfer of personal information, may result in requirements to modify or cease certain operations or practices, the expenditure of substantial costs, time and other resources, proceedings or actions against us, legal liability, governmental investigations, enforcement actions, claims, fines, judgments, awards, penalties, sanctions and costly litigation (including class actions).
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Any of the foregoing could harm our reputation, distract our management and technical personnel, increase our costs of doing business, adversely affect the demand for our products and services, and ultimately result in the imposition of liability, any of which could have a material adverse effect on our business, financial condition and results of operations.
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We are subject to risks and liabilities in connection with sponsoring, investing in and managing new funds and other investment accounts, including potential regulatory risks. We have, and may in the future, sponsor, manage and serve as general partner and/or manager of new funds or investment accounts.
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Such sponsorship and management of, and investment in, such funds and accounts may involve risks not otherwise present with a direct investment in such funds’ and accounts’ target investments, including, for example: • the possibility that investors in the funds/accounts might become bankrupt or otherwise be unable to meet their capital commitment obligations; • that operating and/or management agreements of a fund/account may restrict our ability to transfer or liquidate our interest when we desire or on advantageous terms; • that our relationships with the investors will be generally contractual in nature and may be terminated or dissolved under the terms of the agreements, or we may be removed as general partner and/or manager (with or without cause), and in such event, we may not continue to manage or invest in the applicable fund/account; • that disputes between us and the investors may result in litigation or arbitration that would increase our expenses and prevent our officers and directors from focusing their time and effort on our business and result in subjecting the investments owned by the applicable fund/account to additional risk; and • that we may incur liability for obligations of a fund/account by reason of being its general partner or manager.
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We have a subsidiary that is registered with the SEC as an investment adviser under the Investment Advisers Act. As a result, we are subject to the anti-fraud provisions of the Investment Advisers Act and to fiduciary duties derived from these provisions that apply to our relationships with that subsidiary’s clients.
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These provisions and duties impose restrictions and obligations on us with respect to our dealings with our subsidiary’s clients, including, for example, restrictions on agency, cross and principal transactions. Our registered investment adviser subsidiary is subject to periodic SEC examinations and other requirements under the Investment Advisers Act and related regulations primarily intended to benefit advisory clients.
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These additional requirements relate to, among other things, maintaining an effective and comprehensive compliance program, recordkeeping and reporting requirements and disclosure requirements. The Investment Advisers Act generally grants the SEC broad administrative powers, including the power to limit or restrict an investment adviser from conducting advisory activities in the event it fails to comply with federal securities laws.
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Additional sanctions that may be imposed for failure to comply with applicable requirements under the Investment Advisers Act include the prohibition of individuals from associating with an investment adviser, the revocation of registrations and other censures and fines.
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We may in the future be required to register one or more entities as a commodity pool operator or commodity trading adviser, subjecting those entities to the regulations and oversight of the Commodity Futures Trading Commission and the National Futures Association. We may also become subject to various international regulations on the asset management industry. 24 ANNALY CAPITAL MANAGEMENT, INC.
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AND SUBSIDIARIES Item 1A. Risk Factors Loss of our Investment Company Act exemption from registration would adversely affect us. We intend to conduct our business so as not to become regulated as an investment company under the Investment Company Act. We currently rely on the exemption from registration provided by Section 3(c)(5)(C) of the Investment Company Act.
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Section 3(c)(5)(C), as interpreted by the staff of the SEC, requires us to invest at least 55% of our assets in “mortgages and other liens on and interest in real estate” (“Qualifying Real Estate Assets”) and at least 80% of our assets in Qualifying Real Estate Assets plus our other real estate related assets.
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The assets that we acquire, therefore, are limited by this provision of the Investment Company Act and the rules and regulations promulgated under the Investment Company Act.
Removed
We rely on an SEC interpretation that “whole pool certificates” that are issued or guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae (“Agency Whole Pool Certificates”) are Qualifying Real Estate Assets under Section 3(c)(5)(C).
Removed
This interpretation was promulgated by the SEC staff in a no-action letter in the 1980s, was reaffirmed by the SEC in 1992 and has been commonly relied upon by mortgage REITs. On August 31, 2011, the SEC issued a concept release titled “Companies Engaged in the Business of Acquiring Mortgages and Mortgage-Related Instruments” (SEC Release No. IC-29778).
Removed
In this concept release, the SEC announced it was reviewing interpretive issues related to the Section 3(c)(5)(C) exemption.
Removed
Among other things, the SEC requested comments on whether it should revisit whether Agency Whole Pool Certificates may be treated as interests in real estate (and presumably Qualifying Real Estate Assets) and whether companies, such as us, whose primary business consists of investing in Agency Whole Pool Certificates are the type of entities that Congress intended to be encompassed by the exclusion provided by Section 3(c)(5)(C).
Removed
If the SEC changes its views regarding which securities are Qualifying Real Estate Assets or real estate related assets, adopts a contrary interpretation with respect to Agency Whole Pool Certificates or otherwise believes we do not satisfy the exemption under Section 3(c)(5)(C), we could be required to restructure our activities or sell certain of our assets.
Removed
The net effect of these factors will be to lower our net interest income, which could negatively affect the market price of shares of our capital stock and our ability to distribute dividends.
Removed
If we fail to qualify for exemption from registration as an investment company, our ability to use leverage would be substantially reduced, and we would not be able to conduct our business as described. Our business will be materially and adversely affected if we fail to qualify for this exemption.
Removed
Risks Related to Our Taxation as a REIT Our failure to maintain our qualification as a REIT would have adverse tax consequences. We believe that since 1997 we have qualified for taxation as a REIT for U.S. federal income tax purposes under Sections 856 through 860 of the Code.
Removed
We plan to continue to meet the requirements for taxation as a REIT. The determination that we are a REIT requires an analysis of various factual matters and circumstances that may not be totally within our control.
Removed
For example, to maintain our qualification as a REIT, at least 75% of our gross income must come from real estate sources and 95% of our gross income must come from real estate sources and certain other sources that are itemized in the REIT tax laws.
Removed
Additionally, our ability to satisfy the REIT asset tests depends upon our analysis of the characterization and fair market values of our assets, some of which are not susceptible to precise determination, and for which we will not obtain independent appraisals.
Removed
The proper classification of an instrument as debt or equity for U.S. federal income tax purposes may be uncertain in some circumstances, which could affect the application of the REIT asset requirements.
Removed
We are also required to distribute to stockholders at least 90% of our REIT taxable income (determined without regard to the deduction for dividends paid and by excluding any net capital gain). Even a technical or inadvertent mistake could jeopardize our REIT status.
Removed
Furthermore, Congress and the Internal Revenue Service (“IRS”) might make changes to the tax laws and regulations, and the courts might issue new rulings that make it more difficult or impossible for us to remain qualified as a REIT.
Removed
We also indirectly own interests in entities that have elected to be taxed as REITs under the U.S. federal income tax laws, or “Subsidiary REITs.” Subsidiary REITs are subject to the various REIT qualification requirements that are applicable to us.
Removed
If any Subsidiary REIT were to fail to qualify as a REIT, then (i) that Subsidiary REIT would become subject to regular U.S. federal, state, and local corporate income tax, (ii) our interest in such Subsidiary REIT would cease to be a qualifying asset for purposes of the REIT asset tests, and (iii) it is possible that we would fail certain of the REIT asset tests, in which event we also would fail to maintain our qualification as a REIT unless we could avail ourselves of certain relief provisions.
Removed
While we believe that the Subsidiary REITs have qualified as REITs under the Code, we have joined each Subsidiary REIT in filing “protective” TRS elections under Section 856(l) of the Code. We cannot assure you that such “protective” TRS elections would be effective to avoid adverse consequences to us.
Removed
Moreover, even if the “protective” TRS elections were to be effective, the Subsidiary REITs would be subject to regular corporate income tax, and we cannot assure you that we would not fail to satisfy the requirement that not more than 20% of the value of our total assets may be represented by the securities of one or more TRSs.
Removed
If we fail to maintain our qualification as a REIT, we would be subject to U.S. federal income tax at regular corporate rates. Also, unless the IRS were to grant us relief under certain statutory provisions, we would remain disqualified as a REIT for four years following the year we first fail to qualify.
Removed
If we fail to maintain our qualification as a REIT, we would have to 25 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 1A. Risk Factors pay significant income taxes and would therefore have less money available for investments or for distributions to our stockholders. This would likely have a significant adverse effect on the value of our equity.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS From time to time, we are involved in various claims and legal actions arising in the ordinary course of business. As of December 31, 2024, we were not party to any pending material legal proceedings and we are not aware of any contemplated material proceedings by governmental authorities. ITEM 4.
Biggest changeITEM 3. LEGAL PROCEEDINGS From time to time, we are involved in various claims and legal actions arising in the ordinary course of business. As of December 31, 2025, we were not party to any pending material legal proceedings and we are not aware of any contemplated material proceedings by governmental authorities. ITEM 4.
MINE SAFETY DISCLOSURES None. 44 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities PART II
MINE SAFETY DISCLOSURES None. 43 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 44 PART II Item 5. Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 45 Item 6. Reserved 48 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 49 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 91 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 43 PART II Item 5. Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 44 Item 6. Reserved 47 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 48 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 92 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe aggregate liquidation value of the Current Preferred Stock that may be repurchased by us pursuant to the Current Preferred Stock Repurchase Program, as of December 31, 2024, was approximately $1.6 billion.
Biggest changeThe aggregate liquidation value of the Preferred Stock that may be repurchased by us pursuant to the Preferred Stock Repurchase Program, as of December 31, 2024, was approximately $1.6 billion. The Preferred Stock Repurchase Program replaces our previous repurchase plan for all of our existing outstanding Preferred Stock, which expired on December 31, 2024.
The timing, manner, price and amount of any repurchases will be determined by us in our discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors.
The timing, manner, price and amount of any repurchases will be determined by us in our discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors.
In previous filings, we included the Bloomberg Mortgage REIT Index, or BBG REIT Index, in the share performance graph and table. As a result of the discontinuation of the BBG REIT Index in 2024, we have replaced the BBG REIT Index with the Performance Peer Group.
In previous filings, we included the Bloomberg Mortgage REIT Index, or BBG REIT Index, in the share performance graph and table. As a result of the discontinuation of the BBG REIT Index in 2024, we replaced the BBG REIT Index with the Performance Peer Group.
The comparison is for the five-year period ended December 31, 2024and assumes the reinvestment of dividends. The graph and table assume that $100 was invested in our common stock, the S&P 500 Index and the Performance Peer Group on the last trading day of the initial year shown in the graph.
The comparison is for the five-year period ended December 31, 2025 and assumes the reinvestment of dividends. The graph and table assume that $100 was invested in our common stock, the S&P 500 Index and the Performance Peer Group on the last trading day of the initial year shown in the graph.
The authorization does not obligate us to acquire any particular amount of Preferred Stock and the program may be suspended or discontinued at our discretion without prior notice. 47 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 6. Selected Financial Data
The authorization does not obligate us to acquire any particular amount of Preferred Stock and the program may be suspended or discontinued at our discretion without prior notice. 46 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 6. Selected Financial Data
Market for Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities In January 2025, we announced that our Board authorized a repurchase plan for all of our existing outstanding Preferred Stock (as defined below, the “Current Preferred Stock Repurchase Program”).
Market for Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities In January 2025, we announced that our Board authorized a repurchase plan for all of our existing outstanding Preferred Stock (as defined below, the “Preferred Stock Repurchase Program”).
The authorization does not obligate us to acquire any particular amount of common stock and the program may be suspended or discontinued at our discretion without prior notice. 46 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 5.
The authorization does not obligate us to acquire any particular amount of common stock and the program may be suspended or discontinued at our discretion without prior notice. 45 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 5.
“Risk Factors.” No dividends can be paid on our common stock unless we have paid full cumulative dividends on our preferred stock. From the date of issuance of our preferred stock through December 31, 2024, we have paid full cumulative dividends on our preferred stock.
“Risk Factors.” No dividends can be paid on our common stock unless we have paid full cumulative dividends on our preferred stock. From the date of issuance of our preferred stock through December 31, 2025, we have paid full cumulative dividends on our preferred stock.
Companies comprising the Performance Peer Group include AGNC Investment Corp., ARMOUR Residential REIT, Inc., Chimera Investment Corporation, Dynex Capital, Inc., Ellington Financial Inc., Invesco Mortgage Capital, Inc., MFA Financial, Inc., New York Mortgage Trust, Orchid Island Capital, Inc., Redwood Trust, Inc., Rithm Capital Corp., and Two Harbors Investment Corp.
Companies comprising the Performance Peer Group include Adamas Trust, Inc., AGNC Investment Corp., ARMOUR Residential REIT, Inc., Chimera Investment Corporation, Dynex Capital, Inc., Ellington Financial Inc., Invesco Mortgage Capital, Inc., MFA Financial, Inc., Orchid Island Capital, Inc., Redwood Trust, Inc., Rithm Capital Corp., and Two Harbors Investment Corp.
Purchases made pursuant to the Current Common Stock Repurchase Program will be made in either the open market or in privately negotiated transactions from time to time as permitted by securities laws and other legal requirements.
Purchases made pursuant to the Preferred Stock Repurchase Program will be made in either the open market or in privately negotiated transactions from time to time as permitted by securities laws and other legal requirements.
No shares were repurchased with respect to the Prior Preferred Stock Repurchase Program during the year ended December 31, 2024. Purchases made pursuant to the Current Preferred Stock Repurchase Program will be made in either the open market or in privately negotiated transactions from time to time as permitted by securities laws and other legal requirements.
No shares were repurchased with respect to the Common Stock Repurchase Program during the year ended December 31, 2025. Purchases made pursuant to the Common Stock Repurchase Program will be made in either the open market or in privately negotiated transactions from time to time as permitted by securities laws and other legal requirements.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock began trading publicly on October 8, 1997 and is traded on the New York Stock Exchange under the trading symbol “NLY.” As of January 31, 2025, we had 578,357,904 shares of common stock issued and outstanding which were held by approxima tely 464,395 beneficial holders.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock began trading publicly on October 8, 1997 and is traded on the New York Stock Exchange under the trading symbol “NLY.” As of January 30, 2026, we had 718,386,976 shares of common stock issued and outstanding which were held by approxima tely 650,445 beneficial holders.
Share Repurchase In January 2025, we announced that our Board authorized the repurchase of up to $1.5 billion of our outstanding shares of common stock through December 31, 2029 (the “Current Common Stock Repurchase Program”).
Share Repurchase In January 2025, we announced that our Board authorized the repurchase of up to $1.5 billion of our outstanding shares of common stock through December 31, 2029 (the “Common Stock Repurchase Program”). The Common Stock Repurchase Program replaces our previous $1.5 billion share repurchase program, which expired on December 31, 2024.
The cumulative total return of the Performance Peer Group was weighted according to the respective issuer's stock market capitalization at the beginning of the performance period.
The cumulative total return of the Performance Peer Group was weighted according to the respective issuer's stock market capitalization at the beginning of the performance period. 44 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities Five-Year Share Performance 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Annaly Capital Management, Inc. 100 102 105 83 87 94 S&P 500 Index 100 118 152 125 157 197 Performance Peer Group 100 68 79 57 67 71 The information in the share performance graph and table has been obtained from sources believed to be reliable, but neither the accuracy nor completeness can be guaranteed.
Market for Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities Five-Year Share Performance 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 Annaly Capital Management, Inc. 100 103 81 85 91 128 S&P 500 Index 100 129 105 133 166 196 Performance Peer Group 100 117 83 97 103 122 The information in the share performance graph and table has been obtained from sources believed to be reliable, but neither the accuracy nor completeness can be guaranteed.
The Current Common Stock Repurchase Program replaces our previous $1.5 billion share repurchase program, which expired on December 31, 2024 (the “Prior Common Stock Repurchase Program”). No shares were repurchased with respect to the Prior Common Stock Repurchase Program during the year ended December 31, 2024.
The Preferred Stock Repurchase Program became effective on January 1, 2025, and will expire on December 31, 2029. No shares were repurchased with respect to the Preferred Stock Repurchase Program during the year ended December 31, 2025.
Removed
For the five-year period ended December 31, 2023, an investment of $100 at the beginning of the period would have resulted in a value of $93 in our common stock, $98 in the BBG REIT Index, and $85 in the Performance Peer Group. 45 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 5.
Removed
The Current Preferred Stock Repurchase Program replaces our previous repurchase plan for all of our existing outstanding Preferred Stock, which expired on December 31, 2024 (the “Prior Preferred Stock Repurchase Program”). The Current Preferred Stock Repurchase Program became effective on January 1, 2025, and will expire on December 31, 2029.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeThe 10-year Treasury Inflation Protected Security (“TIPS”), which subtracts the expected inflation rate from the bond’s nominal yield, rose 52 bps as market participants revised upward their estimate of the Fed’s neutral rate in light of the resilient macroeconomy. Meanwhile, the mortgage basis, or the spread between the 30-year Agency MBS coupon and 10-year U.S.
Biggest changeMeanwhile, market‑based measures of inflation expectations remained well‑anchored throughout the year. In addition, interest rate volatility declined significantly, contributing to a tightening of the mortgage basis, or the spread between the 30‑year Agency MBS coupon and the 10‑year U.S. Treasury rate, which ended the year 39 bps tighter.
Refer to the section titled “Glossary of Terms” located at the end of this Item 7 for definitions of commonly used terms in this annual report on Form 10-K. This section of our Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
Refer to the section titled “Glossary of Terms” located at the end of this Item 7 for definitions of commonly used terms in this annual report on Form 10-K. This section of our Form 10-K generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Page Overview 51 Business Environment 51 Economic Environment 52 Results of Operations 53 Net Income (Loss) Summary 54 Non-GAAP Financial Measures 55 Earnings Available for Distribution, Earnings Available for Distribution Attributable to Common Stockholders, Earnings Available for Distribution Per Average Common Share and Annualized EAD Return on Average Equity 55 Premium Amortization Expense 57 Economic Leverage and Economic Capital Ratios 57 Interest Income (excluding PAA), Economic Interest Expense and Economic Net Interest Income (excluding PAA) 58 Experienced and Projected Long-term CPR 59 Average Yield on Interest Earning Assets (excluding PAA), Net Interest Spread (excluding PAA), Net Interest Margin (excluding PAA), and Average Economic Cost of Interest Bearing Liabilities 60 Economic Interest Expense and Average Economic Cost of Interest Bearing Liabilities 61 Other Income (Loss) 62 General and Administrative Expenses 62 Return on Average Equity 63 Unrealized Gains and Losses - Available-for-Sale Investments 63 Financial Condition 64 Residential Securities 64 Contractual Obligations 66 Commitments and Contractual Obligations with Unconsolidated Entities 67 Capital Management 67 Stockholders’ Equity 67 Capital Stock 67 Leverage and Capital 68 Risk Management 69 Risk Appetite 69 Governance 69 Description of Risks 71 Liquidity and Funding Risk Management 71 Funding 71 Excess Liquidity 73 Maturity Profile 74 Stress Testing 75 Liquidity Management Policies 75 Investment/Market Risk Management 75 Credit Risk Management 76 Counterparty Risk Management 77 Operational Risk Management 78 Compliance, Regulatory and Legal Risk Management 79 Critical Accounting Estimates 79 Valuation of Financial Instruments 79 Residential Securities 79 Residential Mortgage Loans 80 MSR 80 Interest Rate Swaps 80 Revenue Recognition 81 Consolidation of Variable Interest Entities 81 Use of Estimates 81 Glossary of Terms 82 50 ANNALY CAPITAL MANAGEMENT, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Page Overview 50 Business Environment 50 Economic Environment 52 Income Tax Reform 53 Results of Operations 53 Net Income (Loss) Summary 54 Non-GAAP Financial Measures 55 Earnings Available for Distribution, Earnings Available for Distribution Attributable to Common Stockholders, Earnings Available for Distribution Per Average Common Share and Annualized EAD Return on Average Equity 55 Premium Amortization Expense 57 Economic Leverage and Economic Capital Ratios 57 Interest Income (excluding PAA), Economic Interest Expense and Economic Net Interest Income (excluding PAA) 58 Experienced and Projected Long-term CPR 59 Average Yield on Interest Earning Assets (excluding PAA), Net Interest Spread (excluding PAA), Net Interest Margin (excluding PAA), and Average Economic Cost of Interest Bearing Liabilities 60 Economic Interest Expense and Average Economic Cost of Interest Bearing Liabilities 61 Other Income (Loss) 62 General and Administrative Expenses 62 Return on Average Equity 63 Unrealized Gains and Losses - Available-for-Sale Investments 63 Financial Condition 64 Residential Securities 64 Contractual Obligations 67 Commitments and Contractual Obligations with Unconsolidated Entities 67 Capital Management 67 Stockholders’ Equity 68 Capital Stock 68 Leverage and Capital 69 Risk Management 70 Risk Appetite 70 Governance 70 Description of Risks 72 Liquidity and Funding Risk Management 72 Funding 72 Excess Liquidity 74 Maturity Profile and Interest Rate Sensitivity 75 Stress Testing 76 Liquidity Management Policies 76 Investment/Market Risk Management 76 Credit Risk Management 77 Counterparty Risk Management 78 Operational Risk Management 78 Compliance, Regulatory and Legal Risk Management 80 Critical Accounting Estimates 80 Valuation of Financial Instruments 80 Residential Securities 80 Residential Mortgage Loans 81 MSR 81 Interest Rate Swaps 81 Revenue Recognition 82 Consolidation of Variable Interest Entities 82 Use of Estimates 82 Glossary of Terms 83 49 ANNALY CAPITAL MANAGEMENT, INC.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended December 31, 2023. 49 ANNALY CAPITAL MANAGEMENT, INC.
Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Form 10-K can be found in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended December 31, 2024. 48 ANNALY CAPITAL MANAGEMENT, INC.
ITEM 6. [Reserved] 48 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis ITEM 7.
ITEM 6. [Reserved] 47 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis ITEM 7.
This Management Discussion and Analysis section contains analysis and discussion of financial results computed in accordance with U.S. generally accepted accounting principles (“GAAP”) and non-GAAP measurements.
Certain of such risks and uncertainties are described herein (see “Special Note Regarding Forward-Looking Statements” above) and in Part I, Item 1A. “Risk Factors”. This Management Discussion and Analysis section contains analysis and discussion of financial results computed in accordance with U.S. generally accepted accounting principles (“GAAP”) and non-GAAP measurements.
Job openings trended lower but remained elevated relative to pre-pandemic averages, while layoffs stayed low. As a result of the more balanced labor market, wage growth – as measured by the Employment Cost Index - decelerated from a pace of 4.3% yoy at the end of 2023 to a still healthy 3.8% yoy at the end of 2024.
As a result of the softer labor market, wage growth, as measured by the Employment Cost Index, decelerated from a pace of 3.8% yoy at the end of 2024 to a still healthy 3.5% yoy at the end of the third quarter of 2025.
Treasury rate, widened slightly, ending the year 11 bps tighter than in December 2023. The following table below presents interest rates and spreads at each date presented: As of December 31, 2024 2023 2022 30-Year mortgage current coupon 5.83% 5.25% 5.39% Mortgage basis 126 bps 137 bps 152 bps 10-Year U.S.
The following table below presents interest rates and spreads at each date presented: As of December 31, 2025 2024 2023 30-Year mortgage current coupon 5.04% 5.83% 5.25% Mortgage basis 87 bps 126 bps 137 bps 10-Year U.S. Treasury rate 4.17% 4.57% 3.88% OIS SOFR Swaps 1-Month 3.67% 4.32% 5.35% 6-Month 3.58% 4.25% 5.15% 52 ANNALY CAPITAL MANAGEMENT, INC.
AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis particularly in gasoline and fuel. The core measure, which does not include price changes in food and energy sectors, measured 2.8% year-over year, also slightly slower than at the end of 2023.
The core measure, which does not include price changes in food and energy sectors, measured 2.8% yoy as of November – slightly slower than at the end of 2024. Despite the firmness in the overall rate, there were some positive developments.
Monthly employment growth slowed but remained in healthy territory, with the economy adding 186,000 in total nonfarm payroll jobs per month in 2024, compared to 251,000 per month in 2023. The unemployment rate ended the year at 4.1%, increasing only 0.3 percentage points relative to a year earlier, and has remained below 4.3% since November 2021.
However, labor demand also slowed, with employers adding 584,000 jobs, compared to employment growth of 2.6 million and 2.0 million in 2023 and 2024, respectively. Thus, the supply and demand for labor remained in a fragile balance. The unemployment rate ended the year at 4.4%, increasing 0.3 percentage points compared to a year earlier.
Price pressures moderated throughout 2024, but progress has been slow and inflation is still at levels above the Fed’s 2% target. The headline Personal Consumption Expenditure Chain Price Index (“PCE”), the Fed’s preferred inflation gauge, measured 2.6% in December 2024, modestly slower than the 2.7% pace in December 2023. Notably, energy prices saw a decline, 52 ANNALY CAPITAL MANAGEMENT, INC.
Inflation was little changed on a yoy rate in 2025 and progress towards the Fed’s 2% target remained slow. The headline Personal Consumption Expenditure Chain Price Index, the Fed’s preferred inflation gauge, measured 2.8% yoy in November 2025, essentially unchanged from the 2.7% yoy pace in December 2024.
Removed
"Exhibits, Financial Statement Schedules." Business Environment U.S. real economic growth remained at its above-trend pace in 2024, marking a second consecutive year of strong U.S. economic growth despite continued elevated interest rates. The strength of the U.S. economy was primarily driven by consumption, as individuals benefitted from robust wage growth and a moderation of inflation pressures.
Added
"Exhibits, Financial Statement Schedules." Business Environment The year 2025 saw a meaningful shift in U.S. policy by the second Trump Administration, though the economy saw less impact in aggregate than many had expected early in the year.
Removed
Government spending also supported economic growth, while investment activity contributed somewhat less than in 2023. Separately, the U.S. economy broadly appears to have benefitted from recent strong immigration flows, which helped balance labor market supply and demand, and improved productivity gains.
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The Trump Administration pushed changes in several different areas, most notably tariffs on U.S. goods imports, which led to $288 billion in U.S. customs revenues in 2025, nearly three times the average customs revenues of prior years.
Removed
Financial markets observed a constructive 2024, with equities recording strong returns given the healthy economic picture, best seen in the 25.0% total return for the S&P 500 Index. Interest rates, however, remained volatile throughout the year, though were generally more rangebound than in 2023.
Added
In addition, Congress passed the One Big Beautiful Bill Act (“OBBB”), effectively extending the majority of the 2017 Tax Cuts and Jobs Act provisions, while offering some additional benefits, including an elimination of taxes on tips and Social Security for some taxpayers.
Removed
Ten-year Treasury yields traded in a range between 3.6% and 4.7%, generally narrower than in 2023, when the range was 3.3% to 5.0%.
Added
The tax reform passage has buoyed business sentiment and is expected to support investment growth and consumption, mainly through higher tax refunds in the first part of 2026. Finally, the Administration strictly enforced immigration laws and drove efforts to deport more immigrants without proper documentation, which appears to have been one of the factors weighing on the labor market.
Removed
Nonetheless, interest rates generally remained elevated relative to the period between the 2008 financial crisis and the 2020 pandemic, which has led to increased speculation that the lower interest rates in that period were more of an outlier than a new normal.
Added
U.S. employment growth slowed meaningfully in 2025, while the unemployment rate rose slightly to 4.4%. U.S. economic growth, however, remained robust, with the economy growing 2.5% at a seasonally adjusted annualized rate (“SAAR”) in the first three quarters, above expectations for growth coming into the year.
Removed
For now, the U.S. economy remains strong, which in turn suggests healthy economic growth can occur even at these higher interest rate levels. The Federal Reserve (“the Fed”) lowered the Federal Funds Target Rate (“Fed Funds Rate”) in the second half of 2024.
Added
Growth was once again driven by consumption, as consumers showed little pause amid declining sentiment and higher prices from tariffs. Of note, the tariff pass-through to consumers has been slower than most economists expected, though goods inflation increased over the year.
Removed
As inflation rates fell from their peak in the summer of 2022 and hiring slowed over the summer months, the risk that a Fed Funds Rate at a peak of 5.25-5.50% would unduly constrain economic growth and the labor market rose.
Added
Aggregate inflation, as measured by the Consumer Price Index excluding food and energy prices, has moderated somewhat over the course of 2025, with the year-over-year (“yoy”) rate falling from 3.21% to 2.65%.
Removed
Consequently, the Fed lowered the Fed Funds Rate by 1% over the course of three meetings between September and December, even though inflation remained above 2% annual rates. Given continued strength in both inflation and economic activity, Fed officials have signaled a more gradual approach going forward, waiting for further inflation progress to lower the rate further.
Added
Meanwhile, the housing market remained relatively weak as measured by aggregate activity levels, with existing home sales averaging 4.1 million annualized units per month in 2025, essentially in line with 2024 activity levels, while new home sales remained subdued.
Removed
Regarding their balance sheet policy, the Fed slowed the decline in their securities portfolio mid-year by reducing the cap on Treasury securities runoff from $60 billion per month to $25 billion. Combined with the decline in their mortgage-backed securities portfolio, the Fed’s security portfolio declined $668 billion in 2024 and continues to decline at a $60 billion per month pace.
Added
In an environment of modest increases in supply, but continued challenged affordability, home prices were little changed for the U.S. in aggregate, rising 0.10% yoy according to Zillow albeit with meaningful regional disparities. For example, many southern and western states saw continued rise in supply on top of already elevated inventory levels, leading to larger declines in home prices.
Removed
Of note, given the lower Fed Funds Rate and relatively less movement in long-term Treasury rates, the yield curve steepened, with the 2-year 10-year Treasury spread, the difference between yields of those maturities, turning positive for the first time in over two years.
Added
Meanwhile central states typically saw steadier inventory levels and therefore enjoyed price appreciation above the national average. Similar to 2024, when the Fed lowered the Federal Funds Target Rate (“Fed Funds Rate”) in the second half of the year, a weaker labor market and rangebound inflation allowed the Fed to further reduce monetary policy rates.
Removed
In addition, long-term Treasuries appeared increasingly driven by investors’ increased demand for compensation to hold longer maturity securities, with rising term premia driving much of the increase in long-term Treasury yields seen in 2024.
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With the Fed Funds Rate reaching a range of 3.50-3.75% at the December Federal Open Market Committee (“FOMC”) meeting, officials have signaled a more gradual approach going forward, waiting for additional economic data to lower the rate further.
Removed
Additionally, the U.S. presidential election outcome amplified the rise in term premia, as expectations for a permanent extension of the 2017 “Tax Cuts and Jobs Act” was estimated to further increase the U.S. budget deficit according to estimates by the Congressional Budget Office.
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Regarding its balance sheet policy, the Fed ended the $2.4 trillion decline in its securities portfolio in December 2025 by announcing purchases of Treasury bills starting at $40 billion per month.
Removed
Meanwhile, residential investment slowed as high mortgage rates curbed demand for housing and housing construction, particularly in the second half of the year. In this economic environment, the housing market saw limited changes in aggregate as inventories and activity remain subdued relative to the pre-pandemic averages, which supported home prices. National home prices rose roughly 3.0% in 2024.
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The purchases are designed to maintain a stable ratio of reserves to nominal gross domestic product (“GDP”) of around 10% and alleviate funding rate volatility, which had occurred around quarter end and Treasury security settlement dates. Fixed income markets ultimately saw a rangebound trading environment that allowed for strong returns, with the Bloomberg Aggregate U.S.
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Historically low affordability for prospective homeowners, as mortgage rates remained above 51 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis 6.0% for nearly the entire year and existing homeowners’ inability to move homes without a meaningful increase in housing costs (the so called “lock in effect”), have supported home prices at low levels of sales turnover.
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Bond Market Index registering a 7.3% total return in 2025, the strongest annual return since 2020. The stellar 50 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7.
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However, there has been increased regional differentiation, with larger growth in supply in states and cities in the Southern and Western United States, which in turn saw price changes below the national average.
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Management’s Discussion and Analysis performance was driven by the 75 basis points (“bps”) of Fed rate cuts that resulted in (i) interest rates close to levels at which monetary policy is no longer deemed restrictive, (ii) robust fixed income fund flows, and (iii) declining interest rate volatility, which has returned to levels not seen since 2021.
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Areas of home price weakness generally correspond to areas with easier zoning restrictions and greater ability to build new homes, though many of them also saw more notable price increases following the pandemic driven by housing shortages and outsized population growth.
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Markets initially saw a spike in volatility following the Trump Administration’s April tariff announcement that were surprising both in scale and charged rates.
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In this environment, Annaly generated an 11.9% economic return in 2024, underscoring the efficacy of our diversified housing finance model and our disciplined portfolio and risk management. We proactively managed our leverage profile throughout the year, reducing aggregate leverage modestly from 5.7x at the end of 2023 to 5.5x at the end of 2024.
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However, softer tariff implementation than initially threatened, legal challenges, less volatile economic data than in recent years, and more predictable monetary policy ultimately led to a gradual and meaningful decline in implied and realized volatility between May 2025 and the end of the year.
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Similar to 2023, a portion of the reduced leverage is driven by further diversification into the Residential Credit and mortgage servicing rights (“MSR”) businesses, which now represent 2 percentage points more of our capital than at year end 2023. Both businesses are less levered than Agency MBS.
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Meanwhile, Treasury yields declined across nearly all maturities – with yields falling between 77 bps in 2-year Treasuries and 40 bps in 10-year Treasuries – apart from the 30-year Treasury bond, which saw a modest rise in yields. The yield changes were primarily driven by expectations for easier monetary policy.
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Finally, as a result of constructive financial markets, we were able to raise $1.6 billion in accretive equity capital over the course of the year. Given the increased capital base, Annaly’s aggregate portfolio grew to $80.9 billion as of December 31, 2024, up roughly $6.5 billion relative to the same date a year earlier.
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The market and economic environment were beneficial to Annaly’s portfolio and strategy, helping the company deliver a 20.2% aggregate economic return for the year, including a 5.5% book value gain.
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Of note, we grew assets and capital in each of our three businesses. The Agency MBS portfolio grew its assets to $70.6 billion as we added a modest amount of assets across the major asset classes in the portfolio.
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The strong economic return was achieved while maintaining conservative leverage over the course of the year, with economic leverage increasing modestly to 5.6x on December 31, 2025 from 5.5x a year earlier.
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The increases were focused on our continued purchases of prepayment protected Agency MBS specified pools in production coupons, which added attractive cash flows that also offered prepayment protection.
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Given strong investor demand for mortgage REITs, Annaly was able to raise $2.6 billion in common equity capital through its at-the-market sales program at accretive levels and issued a Series J preferred stock in what marked the first sizeable non-rated preferred stock issuance in several years.
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In addition, Annaly began to hold a larger balance of “to be announced” (“TBA”) securities after holding a modestly negative balance at the end of 2023, though at $3.1 billion, our TBA position remains small relative to recent years.
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Most of the capital was allocated to the Agency business, which saw portfolio assets rise by $22.3 billion yoy to $92.9 billion on December 31, 2025. In line with the asset growth, the Agency business saw its capital allocation increase marginally from 59% on December 31, 2024 to 62% a year later.
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This smaller share is largely a function of the continued unattractive financing conditions in the TBA market relative to repurchase agreement (“repo”) funding of specified pools. In addition, larger loan sizes have left TBAs with elevated prepayment risks.
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Annaly’s Agency MBS portfolio benefited from meaningful tailwinds throughout most of 2025 as Agency MBS supply and demand moved into much better balance. For one, the slow housing market activity reduced MBS supply relative to recent years. Meanwhile, demand broadened across investors as demonstrated by mortgage REIT equity raises and strong collateralized mortgage obligation creation.
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Finally, Annaly modestly increased our portfolio of Agency commercial mortgage-backed securities to $3.3 billion market value as the asset class continues to offer an attractive stable cash flow in volatile interest rate markets.
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Mutual fund inflows remained strong as well, maintaining money managers as the anchor buyer. Finally, the Government-sponsored enterprises (“GSEs”) added to their retained portfolios for the first time in many years, a factor that was boosted further early in 2026 by the Administration’s directive to the GSEs to buy $200 billion in Agency MBS to support housing affordability.
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Our Residential Credit business portfolio continued to grow strongly driven by Annaly’s residential whole loan acquisition strategy, through which the business acquired $13 billion in loans, predominantly through our correspondent channel. The strategy continued to allow us to control all aspects of the loan making process, including asset selection, counterparties and loss mitigation.
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Our Agency MBS investment activity focused on deploying capital raised primarily in higher coupon specified pool collateral, which offered attractive prospective returns and protection against potential higher prepayment speeds.
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Extracting favorable economics and long-term non-recourse financing, our Residential Credit business issued a record 21 securitizations under Annaly’s Onslow Bay (“OBX”) shelf in 2024, worth a total of $11.0 billion. Given the stable housing market, a strong network of counterparties and robust demand for residential credit assets, we expect to continue to grow the strategy in 2025.
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Annaly’s holdings of 5.0% and higher coupon specified pools rose by $17.7 billion notional over the course of the year, while some of the increase was offset by smaller balances in to-be-announced (“TBA”) securities in these coupons.
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Finally, Annaly also continued to grow its MSR strategy, further increasing assets through purchases predominantly of low-coupon bulk MSR packages, growing the portfolio to $3.3 billion market value. Annaly continued to opportunistically buy MSR bulk packages, which generally saw healthy demand into somewhat lower trading volumes than in 2023.Our strategy continued to focus on predominantly low coupon, high quality MSR.
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In addition, the Agency commercial mortgage-backed security portfolio grew by $3.2 billion market value, nearly doubling on the year, as Agency CMBS offered an attractive substitute for lower coupons, while trading at more attractive valuations for most of the year.
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The current weighted average note rate of the MSR portfolio is 3.20%, up only slightly from a year ago and well below prevailing mortgage rates at the end of 2024. Economic Environment In 2024, the U.S. economy performed strongly, with the gross domestic product (“GDP”) rising by 2.8% on a year-over-year (“yoy”) basis.
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Annaly’s residential credit business grew its portfolio by $1.0 billion in market value over the course of 2025, while the business represents 19% of the firm’s capital on December 31, 2025.
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This marks the second consecutive year of robust growth, following a 2.9% increase in real GDP in 2023, despite elevated interest rates. This economic resilience was driven by a strong income growth and sound financial market performance, which generated wealth gains across households. Consequently, consumer spending made up a majority of U.S. aggregate demand in 2024.
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Growth in the portfolio focused nearly entirely on our asset creation strategy, as the portfolio reduced its holdings of third-party securities by $589 million over the course of the year. Meanwhile, holdings of retained Onslow Bay securities grew $990 million over the same period.
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Personal consumption expenditures rose at a 5.3% annual rate per month in 2024, down from 6.4% in 2024, though slower price gains resulted in stronger inflation-adjusted consumption than in 2023.
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Annaly’s wholly-owned subsidiary Onslow Bay priced 29 securitizations for an aggregate $15.2 billion, and settled $18 billion of whole loans, representing a 38% increase in both loan acquisitions and securitization volumes yoy. These securitizations further cemented Onslow Bay’s position as the largest non-bank issuer of Prime Jumbo and Expanded Credit MBS.
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The labor force benefited from stable employment and sustained wage growth throughout 2024, with the supply and demand of the labor market now in better balance compared to the end of 2023.
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Among the securitizations issued in 2025, five were private transactions in which Onslow Bay tailored securities to meet our partners’ target durations. In addition, OBX introduced a number of innovative deal structures, which have since been adopted by numerous other market participants.
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Measures of inflation have shown uneven progress in the services sector, with shelter inflation slowing at a very gradual pace and remaining above pre-pandemic averages. Additionally, survey measures of short-run inflation expectations continued to decline in 2024, while longer-term inflation expectations appear well anchored.
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Despite the high volumes, the underlying credit quality of Onslow Bay’s loan production is little changed, as the aggregate borrowers’ original FICO score was 761 and the original loan-to-value ratio was 67%.
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The inflation outlook for 2025 is uncertain, as many policy proposals from President Donald Trump’s new administration – such as expansionary fiscal policy, immigration restrictions, and tariffs – indicate potential inflationary pressures. U.S Treasury yields moved higher given the resilience of the U.S. economy and elevated supply of Treasury debt hitting the market during the year.
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Finally, we also continued to grow our MSR business, increasing the portfolio by 15% yoy to $3.8 billion in market value, or 19% of the firm’s equity capital on December 31, 2025.
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The yield on the 10-year Treasury note ended the year 69 basis points (“bps”) higher at 4.57%, despite the 100 bps move lower in the Fed Funds rate.
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Notably, our acquisitions made us the second largest buyer of conventional MSR in 2025, onboarding nearly $60 billion in unpaid principal balance throughout the year, and ranked as the sixth largest non-bank Agency servicer.
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Treasury rate 4.57% 3.88% 3.87% OIS SOFR Swaps 1-Month 4.32% 5.35% 4.36% 6-Month 4.25% 5.15% 4.80% Results of Operations The results of our operations are affected by various factors, many of which are beyond our control. Certain of such risks and uncertainties are described herein (see “Special Note Regarding Forward-Looking Statements” above) and in Part I, Item 1A. “Risk Factors”.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAs of and for the Years Ended December 31, 2024 2023 2022 (dollars in thousands, except per share data) Interest income $ 4,840,034 $ 3,731,581 $ 2,778,887 Interest expense 4,592,238 3,842,965 1,309,735 Net interest income 247,796 (111,384) 1,469,152 Servicing and related income 485,406 364,157 246,926 Servicing and related expense 49,469 37,652 25,145 Net servicing income 435,937 326,505 221,781 Other income (loss) 514,651 (1,651,591) 243,787 Less: Total general and administrative expenses 171,356 162,553 162,729 Income (loss) before income taxes 1,027,028 (1,599,023) 1,771,991 Income taxes 15,260 39,434 45,571 Net income (loss) 1,011,768 (1,638,457) 1,726,420 Less: Net income (loss) attributable to noncontrolling interests 9,862 4,714 1,095 Net income (loss) attributable to Annaly 1,001,906 (1,643,171) 1,725,325 Less: Dividends on preferred stock 154,551 141,676 110,623 Net income (loss) available (related) to common stockholders $ 847,355 $ (1,784,847) $ 1,614,702 Net income (loss) per share available (related) to common stockholders Basic $ 1.62 $ (3.61) $ 3.93 Diluted $ 1.62 $ (3.61) $ 3.92 Weighted average number of common shares outstanding Basic 521,737,554 494,541,323 411,348,484 Diluted 522,747,610 494,541,323 411,621,758 Other information Investment portfolio at period-end $ 98,185,671 $ 87,396,467 $ 78,469,860 Average total assets $ 96,690,348 $ 88,177,773 $ 78,768,785 Average equity $ 11,868,202 $ 11,437,590 $ 11,616,995 GAAP leverage at period-end (1) 7.1:1 6.8:1 6.0:1 GAAP capital ratio at period-end (2) 12.3 % 12.2 % 13.9 % Annualized return (loss) on average total assets 1.05 % (1.86 %) 2.19 % Annualized return (loss) on average equity 8.53 % (14.33 %) 14.86 % Net interest margin (3) 0.26 % (0.13 %) 1.92 % Average yield on interest earning assets (4) 5.15 % 4.32 % 3.64 % Average GAAP cost of interest bearing liabilities (5) 5.38 % 5.13 % 2.03 % Net interest spread (0.23 %) (0.81 %) 1.61 % Weighted average experienced CPR for the period 7.4 % 6.5 % 12.2 % Weighted average projected long-term CPR at period-end 8.6 % 9.4 % 7.8 % Common stock book value per share $ 19.15 $ 19.44 $ 20.79 Non-GAAP metrics * Interest income (excluding PAA) $ 4,825,793 $ 3,733,235 $ 2,418,300 Economic interest expense (5) $ 3,338,791 $ 2,257,912 $ 943,574 Economic net interest income (excluding PAA) $ 1,487,002 $ 1,475,323 $ 1,474,726 Premium amortization adjustment cost (benefit) $ (14,241) $ 1,654 $ (360,587) Earnings available for distribution (6) $ 1,564,625 $ 1,554,014 $ 1,850,138 Earnings available for distribution per average common share $ 2.70 $ 2.86 $ 4.23 Annualized EAD return on average equity (excluding PAA) 13.28 % 13.71 % 16.02 % Economic leverage at period-end (1) 5.5:1 5.7:1 6.3:1 Economic capital ratio at period-end (2) 14.6 % 14.0 % 13.4 % Net interest margin (excluding PAA) (3) 1.57 % 1.62 % 2.03 % Average yield on interest earning assets (excluding PAA) (4) 5.13 % 4.33 % 3.16 % Average economic cost of interest bearing liabilities (5) 3.91 % 3.01 % 1.46 % Net interest spread (excluding PAA) 1.22 % 1.32 % 1.70 % * Represents a non-GAAP financial measure.
Biggest changeAs of and for the Years Ended December 31, 2025 2024 2023 (dollars in thousands, except per share data) Interest income $ 5,959,205 $ 4,840,034 $ 3,731,581 Interest expense 4,823,705 4,592,238 3,842,965 Net interest income 1,135,500 247,796 (111,384) Servicing and related income 579,592 485,406 364,157 Servicing and related expense 60,273 49,469 37,652 Net servicing income 519,319 435,937 326,505 Other income (loss) 589,630 514,651 (1,651,591) Less: Total general and administrative expenses 199,629 171,356 162,553 Income (loss) before income taxes 2,044,820 1,027,028 (1,599,023) Income taxes (6,870) 15,260 39,434 Net income (loss) 2,051,690 1,011,768 (1,638,457) Less: Net income (loss) attributable to noncontrolling interests 24,428 9,862 4,714 Net income (loss) attributable to Annaly 2,027,262 1,001,906 (1,643,171) Less: Dividends on preferred stock 157,931 154,551 141,676 Net income (loss) available (related) to common stockholders $ 1,869,331 $ 847,355 $ (1,784,847) Net income (loss) per share available (related) to common stockholders Basic $ 2.92 $ 1.62 $ (3.61) Diluted $ 2.92 $ 1.62 $ (3.61) Weighted average number of common shares outstanding Basic 639,513,399 521,737,554 494,541,323 Diluted 641,042,741 522,747,610 494,541,323 Other information Investment portfolio at period-end $ 132,050,338 $ 98,185,671 $ 87,396,467 Average total assets $ 116,457,006 $ 96,690,348 $ 88,177,773 Average equity $ 14,082,463 $ 11,868,202 $ 11,437,590 GAAP leverage at period-end (1) 7.2:1 7.1:1 6.8:1 GAAP capital ratio at period-end (2) 11.9 % 12.3 % 12.2 % Annualized return (loss) on average total assets 1.76 % 1.05 % (1.86 %) Annualized return (loss) on average equity 14.57 % 8.53 % (14.33 %) Net interest margin (3) 1.02 % 0.26 % (0.13 %) Average yield on interest earning assets (4) 5.36 % 5.15 % 4.32 % Average GAAP cost of interest bearing liabilities (5) 4.75 % 5.38 % 5.13 % Net interest spread 0.61 % (0.23 %) (0.81 %) Weighted average experienced CPR for the period 8.5 % 7.4 % 6.5 % Weighted average projected long-term CPR at period-end 10.8 % 8.6 % 9.4 % Common stock book value per share $ 20.21 $ 19.15 $ 19.44 Non-GAAP metrics * Interest income (excluding PAA) $ 5,992,656 $ 4,825,793 $ 3,733,235 Economic interest expense (5) $ 4,056,448 $ 3,338,791 $ 2,257,912 Economic net interest income (excluding PAA) $ 1,936,208 $ 1,487,002 $ 1,475,323 Premium amortization adjustment cost (benefit) $ 33,451 $ (14,241) $ 1,654 Earnings available for distribution (6) $ 2,024,863 $ 1,564,625 $ 1,554,014 Earnings available for distribution per average common share $ 2.92 $ 2.70 $ 2.86 Annualized EAD return on average equity (excluding PAA) 14.47 % 13.28 % 13.71 % Economic leverage at period-end (1) 5.6:1 5.5:1 5.7:1 Economic capital ratio at period-end (2) 14.9 % 14.8 % 14.2 % Net interest margin (excluding PAA) (3) 1.70 % 1.57 % 1.62 % Average yield on interest earning assets (excluding PAA) (4) 5.39 % 5.13 % 4.33 % Average economic cost of interest bearing liabilities (5) 3.99 % 3.91 % 3.01 % Net interest spread (excluding PAA) 1.40 % 1.22 % 1.32 % * Represents a non-GAAP financial measure.
The timing, manner, price and amount of any repurchases will be determined by us in our discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors.
The timing, manner, price and amount of any repurchases will be determined by us in our discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors.
For further discussion, please see the risk factors titled “We are highly dependent on information systems and networks, many of which are operated by third parties” and “Cyberattacks or other information security breaches of our Company's, service providers' or counterparties' systems or networks affect our business, reputation and financial condition” in Part I, Item 1A.
For further discussion, please see the risk factors titled “We are highly dependent on information systems and networks, many of which are operated by third parties” and “Cyberattacks or other information security breaches of our Company's, service providers' or counterparties' systems or network affect our business, reputation and financial condition” in Part I, Item 1A.
We also have processes in place to oversee and identify material risks from cybersecurity threats associated with our use of third party service providers upon which we depend on to perform various business processes related to our operations, including mortgage loan servicers and sub-servicers.
We also have processes in place to oversee and identify material risks from cybersecurity threats associated with our use of third party service providers upon which we depend to perform various business processes related to our operations, including mortgage loan servicers and sub-servicers.
Tangible Economic Return Refers to the Company’s change in tangible book value (calculated by summing common stock, additional paid-in capital, accumulated other comprehensive income (loss) and accumulated deficit less intangible assets) plus dividends declared divided by the prior period’s tangible book value.
T Tangible Economic Return Refers to the Company’s change in tangible book value (calculated by summing common stock, additional paid-in capital, accumulated other comprehensive income (loss) and accumulated deficit less intangible assets) plus dividends declared divided by the prior period’s tangible book value.
Processes for assessing, identifying and managing cybersecurity risks include cybersecurity risk assessments, use of key risk indicators, vendor cybersecurity risk management, employee training, including phishing exercises and cybersecurity awareness training, penetration testing, evaluation of cybersecurity insurance and periodic engagements by our internal audit department, which determines whether our cybersecurity program and information security practices align with relevant parts of the National Institute of Standards and Technology (“NIST”) framework.
Processes for assessing, identifying and managing cybersecurity risks include cybersecurity risk assessments, use of key risk indicators, vendor cybersecurity risk management, employee training, including phishing exercises and cybersecurity awareness training, penetration testing, evaluation of cybersecurity insurance and periodic engagements by our internal audit department, which validates whether our cybersecurity program and information security practices align with relevant parts of the National Institute of Standards and Technology (“NIST”) framework.
Pass-Through Security A securitization structure where a GSE or other entity “passes” the amount collected from the borrowers every month to the investor, after deducting fees and expenses. 87 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis Pool A collection of mortgage loans assembled by an originator or master servicer as the basis for a security.
Pass-Through Security A securitization structure where a GSE or other entity “passes” the amount collected from the borrowers every month to the investor, after deducting fees and expenses. 88 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis Pool A collection of mortgage loans assembled by an originator or master servicer as the basis for a security.
Factor A decimal value reflecting the proportion of the outstanding principal balance of a mortgage security, which changes over time, in relation to its original principal value. Fannie Mae Federal National Mortgage Association. 84 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis Federal Deposit Insurance Corporation (“FDIC”) An independent agency created by the U.S.
Factor A decimal value reflecting the proportion of the outstanding principal balance of a mortgage security, which changes over time, in relation to its original principal value. 85 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis Fannie Mae Federal National Mortgage Association. Federal Deposit Insurance Corporation (“FDIC”) An independent agency created by the U.S.
Actual results could differ materially from those estimates. 81 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis Glossary of Terms A Adjustable-Rate Loan / Security A loan / security on which interest rates are adjusted at regular intervals according to predetermined criteria. The adjustable interest rate is tied to an objective, published interest rate index.
Actual results could differ materially from those estimates. 82 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis Glossary of Terms A Adjustable-Rate Loan / Security A loan / security on which interest rates are adjusted at regular intervals according to predetermined criteria. The adjustable interest rate is tied to an objective, published interest rate index.
Therefore, while we are not aware of any cybersecurity threats or 78 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis incidents that are reasonably likely to have a material effect on our business strategy, results of operations or financial condition, the likelihood and severity of such risks are difficult to predict.
Therefore, while we are not aware of any cybersecurity threats or incidents that are reasonably likely to have a material effect on our business strategy, results of operations, or financial 79 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis condition the likelihood and severity of such risks are difficult to predict.
Capital Ratio (GAAP Capital Ratio) Calculated as total stockholders’ equity divided by total assets. 82 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis Carry The amount an asset earns over its hedging and financing costs. A positive carry happens when the rate on the securities being financed is greater than the rate on the funds borrowed.
Capital Ratio (GAAP Capital Ratio) Calculated as total stockholders’ equity divided by total assets. 83 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis Carry The amount an asset earns over its hedging and financing costs. A positive carry happens when the rate on the securities being financed is greater than the rate on the funds borrowed.
Y Yield-to-Maturity The expected rate of return of a bond if it is held to its maturity date; calculated by taking into account the current market price, stated redemption value, coupon payments and time to maturity and assuming all coupons are reinvested at the same rate; equivalent to the internal rate of return. 90 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES
Y Yield-to-Maturity The expected rate of return of a bond if it is held to its maturity date; calculated by taking into account the current market price, stated redemption value, coupon payments and time to maturity and assuming all coupons are reinvested at the same rate; equivalent to the internal rate of return. 91 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES
(7) MSR amortization utilizes purchase date cash flow assumptions and actual unpaid principal balances and is calculated as the difference between projected MSR yield income and net servicing income for the period. From time to time, we enter into TBA forward contracts as an alternate means of investing in and financing Agency MBS.
(6) MSR amortization utilizes purchase date cash flow assumptions and actual unpaid principal balances and is calculated as the difference between projected MSR yield income and net servicing income for the period. From time to time, we enter into TBA forward contracts as an alternate means of investing in and financing Agency MBS.
(2) Represents the amount of cash and/or securities pledged as collateral to each counterparty less the aggregate of repurchase agreement and other secured financing and derivatives for each counterparty. 77 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis Operational Risk Management We are subject to operational risk in each of our business and support functions.
(2) Represents the amount of cash and/or securities pledged as collateral to each counterparty less the aggregate of repurchase agreement and other secured financing and derivatives for each counterparty. Operational Risk Management 78 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis We are subject to operational risk in each of our business and support functions.
On August 6, 2020, we entered into separate Amended and Restated Distribution Agency Agreements (as amended by Amendment No. 1 to the Amended and Restated Distribution Agency Agreements on August 6, 2021, and Amendment No. 2 to the Amended and Restated Distribution Agency Agreements on November 3, 2022, collectively, the “Prior Sales Agreements”) with each of Barclays Capital Inc., BofA Securities, Inc., Citigroup Global Markets Inc., Goldman Sachs & Co.
On August 6, 2020, we entered into separate Amended and Restated Distribution Agency Agreements (as amended by Amendment No. 1 to the Amended and Restated Distribution Agency Agreements on August 6, 2021, and Amendment No. 2 to the Amended and Restated Distribution Agency Agreements on November 3, 2022, collectively, the “2020 Sales Agreements”) with each of Barclays Capital Inc., BofA Securities, Inc., Citigroup Global Markets Inc., Goldman Sachs & Co.
The quality and character of the Residential Securities that we pledge as collateral under the repurchase agreements and interest rate swaps did not materially change at December 31, 2024 compared to the same period in 2023, and our counterparties did not materially alter any requirements, including required haircuts, related to the collateral we pledge under repurchase agreements and interest rate swaps during the year ended December 31, 2024.
The quality and character of the Residential Securities that we pledge as collateral under the repurchase agreements and interest rate swaps did not materially change at December 31, 2025, compared to the same period in 2024, and our counterparties did not materially alter any requirements, including required haircuts, related to the collateral we pledge under repurchase agreements and interest rate swaps during the year ended December 31, 2025.
Our Chief Compliance Officer has reporting lines to the Audit Committee. 70 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis Description of Risks We are subject to a variety of risks due to the business we operate. Risk categories are an important component of a robust enterprise-wide risk management framework.
Our Chief Compliance Officer has reporting lines to the Audit Committee. 71 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis Description of Risks We are subject to a variety of risks due to the business we operate. Risk categories are an important component of a robust enterprise-wide risk management framework.
Monetary Policy Action taken by the Federal Open Market Committee of the Federal Reserve System to influence the money supply or interest rates. 86 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis Mortgage-Backed Security (“MBS”) A security representing a direct interest in a pool of mortgage loans.
Monetary Policy Action taken by the Federal Open Market Committee of the Federal Reserve System to influence the money supply or interest rates. 87 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis Mortgage-Backed Security (“MBS”) A security representing a direct interest in a pool of mortgage loans.
Management’s Discussion and Analysis Average Yield on Interest Earning Assets (excluding PAA), Net Interest Spread (excluding PAA), Net Interest Margin (excluding PAA) and Average Economic Cost of Interest Bearing Liabilities Net interest spread (excluding PAA), which is the difference between the average yield on interest earning assets (excluding PAA) and the average economic cost of interest bearing liabilities, which represents annualized economic interest expense divided by average interest bearing liabilities, and net interest margin (excluding PAA), which is calculated as the sum of interest income (excluding PAA) plus TBA dollar roll income and CMBX coupon income less economic interest expense divided by the sum of average interest earning assets plus average TBA contract and CMBX balances, provide management with additional measures of our profitability that management relies upon in monitoring the performance of the business.
Average Yield on Interest Earning Assets (excluding PAA), Net Interest Spread (excluding PAA), Net Interest Margin (excluding PAA) and Average Economic Cost of Interest Bearing Liabilities Net interest spread (excluding PAA), which is the difference between the average yield on interest earning assets (excluding PAA) and the average economic cost of interest bearing liabilities, which represents annualized economic interest expense divided by average interest bearing liabilities, and net interest margin (excluding PAA), which is calculated as the sum of interest income (excluding PAA) plus TBA dollar roll income and CMBX coupon income less economic interest expense divided by the sum of average interest earning assets plus average TBA contract and CMBX balances, provide management with additional measures of our profitability that management relies upon in monitoring the performance of the business.
E Earnings available for distribution (“EAD”) and Earnings available for distribution Per Average Common Share Non-GAAP financial measure defined as the sum of (a) economic net interest income, (b) TBA dollar roll income and CMBX coupon income, (c) net servicing income less realized amortization of MSR, (d) other income (loss) (excluding depreciation expense related to commercial real estate and amortization of intangibles, non-EAD income allocated to equity method investments and other non-EAD components of other income (loss)), (e) general and administrative expenses (excluding transaction expenses and non-recurring items), and (f) income taxes (excluding the income tax effect of non-EAD income (loss) items) and excludes (g) the premium amortization adjustment representing the cumulative impact on prior periods, but not the current period, of quarter-over-quarter changes in estimated long-term prepayment speeds related to our Agency mortgage-backed securities.
E Earnings available for distribution (“EAD”) and Earnings available for distribution Per Average Common Share Non-GAAP financial measure defined as the sum of (a) economic net interest income, (b) TBA dollar roll income and CMBX coupon income, (c) net servicing income less realized amortization of MSR, (d) other income (loss) (excluding amortization of intangibles, non-EAD income allocated to equity method investments and other non-EAD components of other income (loss)), (e) general and administrative expenses (excluding transaction expenses and non-recurring items), and (f) income taxes (excluding the income tax effect of non-EAD income (loss) items) and excludes (g) the premium amortization adjustment representing the cumulative impact on prior periods, but not the current period, of quarter-over-quarter changes in estimated long-term prepayment speeds related to our Agency mortgage-backed securities.
Debt funding may include the use of repurchase agreements, loans, securitizations, participations issued, lines of credit, asset backed lending facilities, corporate bond issuance, convertible bonds, mortgages payable or other liabilities. Equity capital primarily consists of common and preferred stock.
Debt funding may include the use of repurchase agreements, loans, securitizations, participations issued, lines of credit, asset backed lending facilities, corporate bond issuance, convertible bonds or other liabilities. Equity capital primarily consists of common and preferred stock.
At December 31, 2024 and December 31, 2023 the majority of our debt represented repurchase agreements and other secured financing arrangements collateralized by a pledge of our Residential Securities, residential mortgage loans, and MSR. All of our Residential Securities are currently accepted as collateral for these borrowings.
At December 31, 2025 and December 31, 2024 the majority of our debt represented repurchase agreements and other secured financing arrangements collateralized by a pledge of our Residential Securities, residential mortgage loans, and MSR. All of our Residential Securities are currently accepted as collateral for these borrowings.
We maintain a conservative approach to these facilities, generally over-collateralizing the lines against margin calls. The following table provides information on our repurchase agreements and other secured financing by maturity date at December 31, 2024.
We maintain a conservative approach to these facilities, generally over-collateralizing the lines against margin calls. The following table provides information on our repurchase agreements and other secured financing by maturity date at December 31, 2025.
(4) Represents unrealized (gains) losses allocated to equity interests in a portfolio of MSR, which is a component of Other, net in the Consolidated Statements of Comprehensive Income (Loss). (5) Represents costs incurred in connection with securitizations of residential whole loans.
(3) Represents unrealized (gains) losses allocated to equity interests in a portfolio of MSR, which is a component of Other, net in the Consolidated Statements of Comprehensive Income (Loss). (4) Represents costs incurred in connection with securitizations of residential whole loans.
Critical Accounting Estimates The preparation of our consolidated financial statement in accordance with generally accepted accounting principles in the United States requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.
Critical Accounting Estimates The preparation of our consolidated financial statements in accordance with generally accepted accounting principles in the United States requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.
Item 7. Management’s Discussion and Analysis Net Income (Loss) Summary The following table presents financial information related to our results of operations as of and for the years ended December 31, 2024, 2023 and 2022.
Item 7. Management’s Discussion and Analysis Net Income (Loss) Summary The following table presents financial information related to our results of operations as of and for the years ended December 31, 2025, 2024 and 2023.
Residential Securities Substantially all of our Agency MBS at December 31, 2024 and December 31, 2023 were backed by single-family residential mortgage loans and were secured with a first lien position on the underlying single-family properties.
Residential Securities Substantially all of our Agency MBS at December 31, 2025 and December 31, 2024 were backed by single-family residential mortgage loans and were secured with a first lien position on the underlying single-family properties.
Economic Interest Expense Non-GAAP financial measure that is comprised of GAAP interest expense, the net interest component of interest rate swaps and net interest on initial margin, which is reported in Other, net in the Company’s Consolidated Statements of Comprehensive Income (Loss).
Economic Interest Expense Non-GAAP financial measure that is comprised of GAAP interest expense, the net interest component of interest rate swaps and net interest on initial margin related to interest rate swaps, which is reported in Other, net in the Company’s Consolidated Statements of Comprehensive Income (Loss).
We believe this measure provides management and investors with additional detail to enhance their understanding of our operating results and trends by excluding the component of premium amortization expense representing the cumulative effect of quarter-over-quarter changes in estimated long-term prepayment speeds related to our Agency MBS (other than interest-only securities, multifamily and reverse mortgages), which can obscure underlying trends in the performance of the portfolio.
We believe this measure provides management and investors with additional detail to enhance their understanding of our operating results and trends by excluding the component of premium amortization expense representing the cumulative effect of quarter-over-quarter changes in estimated long-term prepayment speeds related to our Agency MBS (other than interest-only securities, multifamily and reverse mortgages), which can obscure underlying trends in the performance of the portfolio. 58 ANNALY CAPITAL MANAGEMENT, INC.
Economic interest expense is comprised of GAAP interest expense, the net interest component of interest rate swaps (which includes net interest on variation margin related to interest rate swaps) and net interest on initial margin related to interest rate swaps, which is reported in Other, net in the Company’s Consolidated Statements of Comprehensive Income (Loss).
Economic interest expense is comprised of GAAP interest expense, the net interest component of interest rate swaps, and net interest on initial margin related to interest rate swaps, which is reported in Other, net in the Company’s Consolidated Statements of Comprehensive Income (Loss).
Refer to the “Non-GAAP Financial Measures” section for additional information. (1) TBA dollar roll income and CMBX coupon income each represent a component of Net gains (losses) on derivatives. CMBX coupon income totaled $0.0 million, $1.5 million and $4.4 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Refer to the “Non-GAAP Financial Measures” section for additional information. (1) TBA dollar roll income and CMBX coupon income each represent a component of Net gains (losses) on derivatives. CMBX coupon income totaled $0.0 million, $0.0 million and $1.5 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Management’s Discussion and Analysis Commitments and Contractual Obligations with Unconsolidated Entities We do not have any commitments or contractual obligations arising from arrangements with unconsolidated entities that have or are reasonably likely to have a material effect on our financial condition, revenues or expenses, results of operations, liquidity, cash requirements or capital resources.
Commitments and Contractual Obligations with Unconsolidated Entities We do not have any commitments or contractual obligations arising from arrangements with unconsolidated entities that have or are reasonably likely to have a material effect on our financial condition, revenues or expenses, results of operations, liquidity, cash requirements or capital resources.
The Risk Committee and the Audit Committee jointly oversee practices and policies related to cybersecurity and receive regular reports from management throughout the year on cybersecurity and related risks. The Management Development and Compensation Committee is responsible for oversight of risk related to our compensation policies and practices and other human capital matters such as succession and culture.
Management’s Discussion and Analysis Committee and the Audit Committee jointly oversee practices and policies related to cybersecurity and receive regular reports from management throughout the year on cybersecurity and related risks. The Management Development and Compensation Committee is responsible for oversight of risk related to our compensation policies and practices and other human capital matters such as succession and culture.
Given our current portfolio composition, if mortgage principal prepayment rates were to increase over the life of our mortgage-backed securities, all other factors being equal, our net interest income would decrease during the life of these mortgage-backed securities as we would be required to amortize our net premium balance into income over a shorter time period.
Management’s Discussion and Analysis Given our current portfolio composition, if mortgage principal prepayment rates were to increase over the life of our mortgage-backed securities, all other factors being equal, our net interest income would decrease during the life of these mortgage-backed securities as we would be required to amortize our net premium balance into income over a shorter time period.
At December 31, 2024 and December 31, 2023 we had in our Consolidated Statements of Financial Condition a total of $1.3 billion and $1.4 billion, respectively, of unamortized discount (which is the difference between the remaining principal value and current amortized cost of our Residential Securities acquired at a price below principal value) and a total of $2.5 billion and $2.4 billion, respectively, of unamortized premium (which is the difference between the remaining principal value and the current amortized cost of our Residential Securities acquired at a price above principal value).
At December 31, 2025 and December 31, 2024 we had in our Consolidated Statements of Financial Condition a total of $1.2 billion and $1.3 billion, respectively, of unamortized discount (which is the difference between the remaining principal value and current amortized cost of our Residential Securities acquired at a price below principal value) and a total of $2.9 billion and $2.5 billion, respectively, of unamortized premium (which is the difference between the remaining principal value and the current amortized cost of our Residential Securities acquired at a price above principal value).
(2) The amounts reflected in the table above are on a settlement date basis and may differ from the total positions reported in the Consolidated Statements of Financial Condition. (3) Excludes securitized residential mortgage loans transferred or pledged to consolidated VIEs carried at fair value of $22.0 billion.
(2) The amounts reflected in the table above are on a settlement date basis and may differ from the total positions reported in the Consolidated Statements of Financial Condition. (3) Excludes securitized residential mortgage loans transferred or pledged to consolidated VIEs carried at fair value of $32.1 billion.
Management’s Discussion and Analysis Variation Margin Cash or securities provided by a party to collateralize its obligations under a transaction as a result of a change in value of such transaction since the trade was executed or the last time collateral was provided. Volatility A statistical measure of the variance of price or yield over time.
Variation Margin Cash or securities provided by a party to collateralize its obligations under a transaction as a result of a change in value of such transaction since the trade was executed or the last time collateral was provided. Volatility A statistical measure of the variance of price or yield over time.
Our actual economic leverage ratio varies from time to time based upon various factors, including our management’s opinion of the level of risk of our assets and liabilities, our liquidity position, our level of unused borrowing capacity, the availability of credit, over-collateralization levels required by lenders when we pledge assets to secure borrowings and our assessment of domestic and international market conditions.
Our actual economic leverage ratio varies from time to time based upon various factors, including our management’s opinion of the level of risk of our assets and liabilities, our liquidity position, our level of unused borrowing capacity, the availability of credit, over-collateralization levels required by lenders when we pledge assets to secure borrowings and our assessment of domestic and international market conditions. 69 ANNALY CAPITAL MANAGEMENT, INC.
(6) TBA dollar roll income and CMBX coupon income each represent a component of Net gains (losses) on derivatives in the Consolidated Statements of Comprehensive Income (Loss). CMBX coupon income totaled $0.0 million, $1.5 million and $4.4 million for the years ended December 31, 2024, 2023 and 2022, respectively.
(5) TBA dollar roll income and CMBX coupon income each represent a component of Net gains (losses) on derivatives in the Consolidated Statements of Comprehensive Income (Loss). CMBX coupon income totaled $0.0 million, $0.0 million and $1.5 million for the years ended December 31, 2025, 2024 and 2023, respectively.
See the interest rate sensitivity and interest rate shock analysis and discussions within this Item 7 for further information. 80 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis Revenue Recognition Description: Interest income from coupon payments is accrued based on the outstanding principal amounts of the Residential Securities and their contractual terms.
Refer to the interest rate sensitivity and interest rate shock analysis and discussions within this Item 7 for further information. 81 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis Revenue Recognition Description: Interest income from coupon payments is accrued based on the outstanding principal amounts of the Residential Securities and their contractual terms.
(2) The adjustment to add back Net (gains) losses on derivatives does not include the net interest component of interest rate swaps which is reflected in earnings available for distribution. The net interest component of interest rate swaps totaled $1.2 billion, $1.6 billion and $366.2 million for the years ended December 31, 2024, 2023 and 2022, respectively.
(2) The adjustment to add back Net (gains) losses on derivatives does not include the net interest component of interest rate swaps which is reflected in earnings available for distribution. The net interest component of interest rate swaps totaled $716.5 million, $1.2 billion and $1.6 billion for the years ended December 31, 2025, 2024 and 2023, respectively.
The table does not include the effect of net interest rate payments on our interest rate swap agreements. The net swap payments will fluctuate based on monthly changes in the receive rate. At December 31, 2024, the interest rate swaps had a net fair value of $14.0 million.
The table does not include the effect of net interest rate payments on our interest rate swap agreements. The net swap payments will fluctuate based on monthly changes in the receive rate. At December 31, 2025, the interest rate swaps had a net fair value of ($9.0) million.
Capital requirements are based on maintaining levels above approved thresholds, ensuring the quality of our capital appropriately reflects our asset mix, market and funding structure.
Management’s Discussion and Analysis Capital requirements are based on maintaining levels above approved thresholds, ensuring the quality of our capital appropriately reflects our asset mix, market and funding structure.
We have continued to diversify our financing profile adding new non-mark-to-market facilities and financing options under existing facilities for our Residential Credit operating segment. At December 31, 2024, we had total financial assets and cash pledged against existing liabilities of $70.5 billion. The weighted average haircut was approximately 3% on repurchase agreements.
We have continued to diversify our financing profile adding new non-mark-to-market facilities and financing options under existing facilities for our Residential Credit operating segment. At December 31, 2025, we had total financial assets and cash pledged against existing liabilities of $87.2 billion. The weighted average haircut was approximately 3% on repurchase agreements.
In general, as prepayment speeds and expectations of prepayment speeds on our Agency MBS portfolio increase, related purchase premium amortization increases, thereby reducing the yield on such assets. The following table presents the weighted average experienced CPR and weighted average projected long-term CPR on our Agency MBS portfolio as of and for the periods presented.
In general, as prepayment speeds and expectations of prepayment speeds on our Agency MBS portfolio increase, related purchase premium amortization increases, thereby reducing the yield on such assets. The following table presents the weighted average experienced CPR and weighted average projected long-term CPR on our Agency MBS portfolio as of and for the periods presented. 59 ANNALY CAPITAL MANAGEMENT, INC.
The interest rate sensitivity of our assets and liabilities in the following table at December 31, 2024 could vary substantially based on actual prepayment experience. 74 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7.
The interest rate sensitivity of our assets and liabilities in the following table at December 31, 2025 could vary substantially based on actual prepayment experience. 75 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7.
The following table presents estimates at December 31, 2024. Actual results could differ materially from these estimates.
The following table presents estimates at December 31, 2025. Actual results could differ materially from these estimates.
The amount of this exposure is the difference between the amount loaned to us plus interest due to the counterparty and the fair value of the collateral pledged by us to the lender including accrued interest receivable on such collateral. We also use interest rate swaps and other derivatives to manage interest rate risk.
The amount of this exposure is the difference between the amount loaned to us plus interest due to the counterparty and the fair value of the collateral pledged by us to the lender including accrued interest receivable on such collateral. We also use interest rate swaps and other derivatives that are not centrally cleared to manage interest rate risk.
Total economic assets include the implied market value of TBA derivatives and net of debt issued by securitization vehicles. (3) Net interest margin represents our interest income less interest expense divided by the average interest earning assets. Net interest margin does not include net interest component of interest rate swaps.
Total economic assets include the implied market value of TBA derivatives and net of debt issued by securitization vehicles (excluding structured repurchase transactions) and participations issued. (3) Net interest margin represents our interest income less interest expense divided by the average interest earning assets. Net interest margin does not include net interest component of interest rate swaps.
The major risks impacting capital are liquidity and funding risk, investment/market risk, credit risk, counterparty risk, operational risk and compliance, regulatory and legal risk. For further discussion of the risks we are subject to, please see Part I, Item 1A. “Risk Factors” of this annual report on Form 10-K.
The major risks impacting capital are liquidity and funding risk, investment/market risk, credit risk, counterparty risk, operational risk and compliance, regulatory and legal risk. For further discussion of the risks we are subject to, please see Part I, Item 1A. “Risk Factors” of this annual report on Form 10-K. 67 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7.
V Value-at-Risk (“VaR”) A statistical technique which measures the potential loss in value of an asset or portfolio over a defined period for a given confidence interval.
Management’s Discussion and Analysis V Value-at-Risk (“VaR”) A statistical technique which measures the potential loss in value of an asset or portfolio over a defined period for a given confidence interval.
The change in earnings available for distribution for the year ended December 31, 2024 compared to the same period in 2023 was primarily due to higher coupon income, resulting from higher residential mortgage loan balances and purchasing securities higher up in the coupon stack, and higher net servicing income.
The change in earnings available for distribution for the year ended December 31, 2025 compared to the same period in 2024 was primarily due to higher coupon income, resulting from higher residential mortgage loan and securities balances, and higher net servicing income.
On September 20, 2024, we entered into new Distribution Agency Agreements (collectively, the “Sales Agreements”) with each of Barclays Capital Inc., BNP Paribas Securities Corp., BofA Securities, Inc., Citizens JMP Securities, LLC, Goldman Sachs & Co. LLC, J.P.
On September 20, 2024, we entered into separate Distribution Agency Agreements (collectively, the “2024 Sales Agreements”) with each of Barclays Capital Inc., BNP Paribas Securities Corp., BofA Securities, Inc., Citizens JMP Securities, LLC, Goldman Sachs & Co. LLC, J.P.
Pursuant to the Prior Sales Agreements, we offered and sold shares of common stock, having an aggregate offering price of up to $1.5 billion, from time to time through any of the Prior Sales Agents (the “Prior At-the-Market Sales Program”).
Pursuant to the 2020 Sales Agreements, we offered and sold shares of our common stock, having an aggregate offering price of up to $1.5 billion, from time to time through any of the 2020 Sales Agents (the “2020 At-The-Market Sales Program”).
Morgan Securities LLC, Keefe, Bruyette & Woods, Inc., Morgan Stanley & Co., LLC, RBC Capital Markets, LLC, UBS Securities LLC and Wells Fargo Securities, LLC (collectively, the “Sales Agents”), which terminated and replaced the Prior Sales Agreements.
Morgan Securities LLC, Keefe, Bruyette & Woods, Inc., Morgan Stanley & Co., LLC, RBC Capital Markets, LLC, UBS Securities LLC and Wells Fargo Securities, LLC (collectively, the “2024 Sales Agents”), which terminated and replaced the 2020 Sales Agreements.
Change in Interest Rate (1) Estimated Percentage Change in Portfolio Value (2) Estimated Change as a % on NAV (2)(3) Projected Percentage Change in Economic Net Interest Income (4) -75 Basis points 0.1% 0.5% 0.1% -50 Basis points 0.1% 1.0% 0.3% -25 Basis points 0.1% 0.8% 0.3% +25 Basis points (0.2%) (1.3%) (0.8%) +50 Basis points (0.4%) (2.9%) (2.1%) +75 Basis points (0.7%) (4.8%) (3.6%) MBS Spread Shock (1) Estimated Change in Portfolio Market Value (2) Estimated Change as a % on NAV (2)(3) -25 Basis points 1.3% 9.8% -15 Basis points 0.8% 5.9% -5 Basis points 0.3% 1.9% +5 Basis points (0.3%) (1.9%) +15 Basis points (0.8%) (5.8%) +25 Basis points (1.3%) (9.6%) (1) Interest rate and MBS spread sensitivity are based on results from third party models in conjunction with inputs from our internal investment professionals.
Change in Interest Rate (1) Estimated Percentage Change in Portfolio Value (2) Estimated Change as a % on NAV (2)(3) Projected Percentage Change in Economic Net Interest Income (4) -75 Basis points (0.3%) (2.2%) (0.5%) -50 Basis points (0.1%) (0.7%) —% -25 Basis points —% —% 0.5% +25 Basis points (0.1%) (0.8%) (0.6%) +50 Basis points (0.3%) (2.2%) (1.9%) +75 Basis points (0.5%) (4.0%) (3.6%) MBS Spread Shock (1) Estimated Change in Portfolio Market Value (2) Estimated Change as a % on NAV (2)(3) -25 Basis points 1.2% 8.8% -15 Basis points 0.7% 5.3% -5 Basis points 0.2% 1.7% +5 Basis points (0.2%) (1.7%) +15 Basis points (0.7%) (5.2%) +25 Basis points (1.2%) (8.6%) (1) Interest rate and MBS spread sensitivity are based on results from third party models in conjunction with internally derived inputs, analysis, and adjustments.
Our portfolio composition, based on balance sheet values, at December 31, 2024 and 2023 was as follows: December 31, 2024 December 31, 2023 Category Agency mortgage-backed securities 68.6 % 75.9 % Credit risk transfer securities 0.8 % 1.1 % Non-agency mortgage-backed securities 1.5 % 2.4 % Residential mortgage loans (1) 26.0 % 17.9 % Commercial mortgage-backed securities 0.1 % 0.3 % Mortgage servicing rights 3.0 % 2.4 % (1) Includes assets transferred or pledged to securitization vehicles.
Our portfolio composition, based on balance sheet values, at December 31, 2025 and 2024 was as follows: December 31, 2025 December 31, 2024 Category Agency mortgage-backed securities 67.8 % 68.6 % Credit risk transfer securities 0.2 % 0.8 % Non-agency mortgage-backed securities 1.1 % 1.5 % Residential mortgage loans (1) 28.1 % 26.0 % Commercial mortgage-backed securities — % 0.1 % Mortgage servicing rights (2) 2.8 % 3.0 % (1) Includes assets transferred or pledged to securitization vehicles.
Average interest bearing liabilities is based on daily balances. Interest Earning Assets Refers to Residential Securities, U.S. Treasury securities, reverse repurchase agreements, commercial real estate debt and preferred equity interests, residential mortgage loans and corporate debt. Average interest earning assets is based on daily balances. 85 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7.
Average interest bearing liabilities is based on daily balances. Interest Earning Assets Refers to Residential Securities, U.S. Treasury securities, reverse repurchase agreements, commercial real estate debt and residential mortgage loans. Average interest earning assets is based on daily balances. 86 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7.
Components of Annualized Return on Average Equity Economic Net Interest Income/ Average Equity (1) Net Servicing Income/Average Equity Other Income (Loss)/Average Equity (2) G&A Expenses/ Average Equity Income Taxes/ Average Equity Return on Average Equity For the years ended December 31, 2024 12.22 % 3.67 % (5.79 %) (1.44 %) (0.13 %) 8.53 % December 31, 2023 12.88 % 2.85 % (28.30 %) (1.42 %) (0.34 %) (14.33 %) December 31, 2022 15.80 % 1.91 % (1.06 %) (1.40 %) (0.39 %) 14.86 % (1) Economic net interest income includes the net interest component of interest rate swaps and, beginning with the quarter ended June 30, 2024, net interest on initial margin related to interest rate swaps, which is reported in Other, net in the Company’s Consolidated Statements of Comprehensive Income (Loss).
Components of Annualized Return on Average Equity Economic Net Interest Income/ Average Equity (1) Net Servicing Income/Average Equity Other Income (Loss)/Average Equity (2) G&A Expenses/ Average Equity Income Taxes/ Average Equity Return on Average Equity For the years ended December 31, 2025 13.15 % 3.69 % (0.90 %) (1.42 %) 0.05 % 14.57 % December 31, 2024 12.22 % 3.67 % (5.79 %) (1.44 %) (0.13 %) 8.53 % December 31, 2023 12.88 % 2.85 % (28.30 %) (1.42 %) (0.34 %) (14.33 %) (1) Economic net interest income includes the net interest component of interest rate swaps and, beginning with the quarter ended June 30, 2024, net interest on initial margin related to interest rate swaps, which is reported in Other, net in the Company’s Consolidated Statements of Comprehensive Income (Loss).
The following table illustrates the impact of the PAA on premium amortization expense for our Residential Securities portfolio for the periods presented: For the Years Ended December 31, 2024 2023 2022 (dollars in thousands) Premium amortization expense $ 98,813 $ 165,158 $ 48,013 Less: PAA cost (benefit) (14,241) 1,654 (360,587) Premium amortization expense (excluding PAA) $ 113,054 $ 163,504 $ 408,600 Economic Leverage and Economic Capital Ratios We use capital coupled with borrowed funds to invest primarily in real estate related investments, earning the spread between the yield on our assets and the cost of our borrowings and hedging activities.
The following table illustrates the impact of the PAA on premium amortization expense for our Residential Securities portfolio for the periods presented: For the Years Ended December 31, 2025 2024 2023 (dollars in thousands) Premium amortization expense $ 163,636 $ 98,813 $ 165,158 Less: PAA cost (benefit) 33,451 (14,241) 1,654 Premium amortization expense (excluding PAA) $ 130,185 $ 113,054 $ 163,504 Economic Leverage and Economic Capital Ratios We use capital coupled with borrowed funds to invest primarily in real estate related investments, earning the spread between the yield on our assets and the cost of our borrowings and hedging activities.
Our economic leverage ratio is computed as the sum of recourse debt, cost basis of TBA and CMBX derivatives outstanding, and net forward purchases (sales) of investments divided by total equity. Recourse debt consists of repurchase agreements, other secured financing and U.S Treasury securities sold, not yet purchased.
Our economic leverage ratio is computed as the sum of recourse debt, cost basis of TBA derivatives outstanding, and net forward purchases (sales) of investments divided by total equity. Recourse debt consists of repurchase agreements, other secured financing, structured repurchase transactions (included within Debt issued by securitization vehicles) and U.S. Treasury securities sold, not yet purchased.
The assets listed in this table include $70.5 billion of assets that have been pledged as collateral against existing liabilities at December 31, 2024. Please refer to the Encumbered and Unencumbered Assets table for related information.
The assets listed in this table include $87.2 billion of assets that have been pledged as collateral against existing liabilities at December 31, 2025. Please refer to the Encumbered and Unencumbered Assets table for related information.
December 31, 2024 December 31, 2023 (dollars in thousands) Unrealized gain $ 4,221 $ 5,051 Unrealized loss (1,021,903) (1,340,451) Accumulated other comprehensive income (loss) $ (1,017,682) $ (1,335,400) Unrealized changes in the estimated fair value of available-for-sale investments may have a direct effect on our potential earnings and dividends: positive changes will increase our equity base and allow us to increase our borrowing capacity while negative changes tend to reduce borrowing capacity.
December 31, 2025 December 31, 2024 (dollars in thousands) Unrealized gain $ 5,704 $ 4,221 Unrealized loss (494,270) (1,021,903) Accumulated other comprehensive income (loss) $ (488,566) $ (1,017,682) Unrealized changes in the estimated fair value of available-for-sale investments may have a direct effect on our potential earnings and dividends: positive changes will increase our equity base and allow us to increase our borrowing capacity while negative changes tend to reduce borrowing capacity.
Variable Interest Entity (“VIE”) An entity in which equity investors (i) do not have the characteristics of a controlling financial interest, and/or (ii) do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. 89 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7.
Variable Interest Entity (“VIE”) An entity in which equity investors (i) do not have the characteristics of a controlling financial interest, and/or (ii) do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties.
Net interest income for the year ended December 31, 2024 was $247.8 million compared to ($111.4) million for the same period in 2023. Net gains (losses) on investments and other for the year ended December 31, 2024 was ($1.8) billion compared to ($2.1) billion for the same period in 2023.
Net gains (losses) on investments and other for the year ended December 31, 2025 was $1.7 billion compared to ($1.8) billion for the same period in 2024. Net interest income for the year ended December 31, 2025 was $1.1 billion compared to $247.8 million for the same period in 2024.
Current Face The current remaining monthly principal on a mortgage security. Current face is computed by multiplying the original face value of the security by the current principal balance factor. D Dealer Person or organization that underwrites, trades and sells securities, e.g., a principal market-maker in securities.
Current Face The current remaining monthly principal on a mortgage security. Current face is computed by multiplying the original face value of the security by the current principal balance factor. D Dealer Person or organization that underwrites, trades and sells securities, e.g., a principal market-maker in securities. 84 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7.
Net interest on variation margin related to interest rate swaps was previously and is currently included in the Net interest component of interest rate swaps in the Company's Consolidated Statements of Comprehensive Income (Loss) for all periods presented. 60 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7.
Net interest on variation margin related to interest rate swaps is included in the Net interest component of interest rate swaps in the Company’s Consolidated Statements of Comprehensive Income (Loss). 60 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7.
The change in net gains (losses) on other derivatives was primarily due to favorable changes in net gains (losses) on futures contracts, which was $257.5 million for the year ended December 31, 2024 compared to ($6.8) million for the same period in 2023, net gains (losses) on TBA derivatives, which was ($16.7) million for the year ended December 31, 2024 compared to ($140.8) million for the same period in 2023, and net gains (losses) on interest rate swaptions, which was ($105.9) million for the year ended December 31, 2024 compared to ($148.8) million for the same period in 2023, partially offset by an unfavorable change in net gains (losses) on purchase commitments, which was ($10.0) million for the year ended December 31, 2024 compared to $7.9 million for the same period in 2023.
The change in net gains (losses) on other derivatives was primarily due to unfavorable changes in net gains (losses) on futures contracts, which was ($619.5) million for the year ended December 31, 2025 compared to $257.5 million for the same period in 2024, partially offset by favorable changes in net gains (losses) on TBA derivatives, which was $135.7 million for the year ended December 31, 2025 compared to ($16.7) million for the same period in 2024, net gains (losses) on interest rate swaptions, which was ($10.0) million for the year ended December 31, 2025 compared to ($105.9) million for the same period in 2024, and net gains (losses) on purchase commitments, which was $3.4 million for the year ended December 31, 2025 compared to ($10.0) million for the same period in 2024.
Management’s Discussion and Analysis responsibility for ESG oversight, and the Corporate Responsibility Committee meets jointly with other Committees from time to time in order to review areas of shared responsibility. Risk assessment and risk management are the responsibility of our management. A series of management committees has oversight or decision-making responsibilities for risk management activities.
The full Board has overall responsibility for this oversight, and the Corporate Responsibility Committee meets jointly with other Committees from time to time in order to review areas of shared responsibility. Risk assessment and risk management are the responsibility of our management. A series of management committees has oversight or decision-making responsibilities for risk management activities.
These included expanded product offerings for residential whole loans, including a component not subject to margin calls, and a two-year facility for OBX retained securities not subject to margin calls. The following table presents our outstanding debt balances and associated weighted average rates and days to maturity at December 31, 2024: 72 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7.
These included expanded product offerings for residential whole loans, including a component not subject to margin calls. The following table presents our outstanding debt balances and associated weighted average rates and days to maturity at December 31, 2025: 73 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7.
(2) Economic interest expense is comprised of GAAP interest expense, the net interest component of interest rate swaps, and, beginning with the quarter ended June 30, 2024, net interest on initial margin related to interest rate swaps, which is reported in Other, net in the Company’s Consolidated Statements of Comprehensive Income (Loss).
(2) Economic interest expense is comprised of GAAP interest expense, the net interest component of interest rate swaps, and net interest on initial margin related to interest rate swaps, which is reported in Other, net in the Company’s Consolidated Statements of Comprehensive Income (Loss).
Management’s Discussion and Analysis Other Income (Loss) 2024 Compared with 2023 Net Gains (Losses) on Investments and Other Net gains (losses) on disposal of investments and other was ($1.1) billion for the year ended December 31, 2024 compared with ($2.9) billion for the same period in 2023.
Management’s Discussion and Analysis Other Income (Loss) 2025 Compared with 2024 Net Gains (Losses) on Investments and Other Net gains (losses) on disposal of investments and other was ($391.4) million for the year ended December 31, 2025 compared with ($1.1) billion for the same period in 2024.
Similarly, if mortgage principal prepayment rates were to decrease over the life of our mortgage-backed securities, all other factors being equal, our net interest income would increase during the life of these mortgage-backed securities as we would amortize our net premium balance over a longer time period. 64 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7.
Similarly, if mortgage principal prepayment rates were to decrease over the life of our mortgage-backed securities, all other factors being equal, our net interest income would increase during the life of these mortgage-backed securities as we would amortize our net premium balance over a longer time period.
Economic interest expense is comprised of GAAP interest expense, the net interest component of interest rate swaps, and, beginning with the quarter ended June 30, 2024, net interest on initial margin related to interest rate swaps, which is reported in Other, net in the Company’s Consolidated Statements of Comprehensive Income (Loss).
Economic interest expense is comprised of GAAP interest expense, the net interest component of interest rate swaps, and net interest on initial margin related to interest rate swaps, which is reported in Other, net in the Company’s Consolidated Statements of Comprehensive Income (Loss).
During the year ended December 31, 2024, under the at-the-market sales program, we issued 77.9 million shares for proceeds of $1.6 billion, net of commissions and fees. During the year ended December 31, 2023, under the at-the-market sales program, we issued 31.4 million shares for proceeds of $0.7 billion, net of commissions and fees.
During the year ended December 31, 2025, under the at-the-market sales program, we issued 127.9 million shares for proceeds of $2.6 billion, net of commissions and fees. During the year ended December 31, 2024, under the at-the-market sales program, we issued 77.9 million shares for proceeds of $1.6 billion, net of commissions and fees.
Residual In securitizations, the residual is the tranche that collects any cash flow from the collateral that remains after obligations to the other tranches have been met. Return on Average Equity Calculated by taking earnings divided by average stockholders’ equity. Reverse Repurchase Agreement Refer to Repurchase Agreement. The buyer of securities effectively provides a collateralized loan to the seller.
Residual In securitizations, the residual is the tranche that collects any cash flow from the collateral that remains after obligations to the other tranches have been met. Return on Average Equity Calculated by taking earnings divided by average stockholders’ equity. Reverse Repurchase Agreement Refer to Repurchase Agreement.
GAAP Net income (loss) was $1.0 billion, which includes $9.9 million attributable to noncontrolling interests, or $1.62 per average basic common share, for the year ended December 31, 2024 compared to ($1.6) billion, which includes $4.7 million attributable to noncontrolling interests, or ($3.61) per average basic common share, for the same period in 2023.
GAAP Net income (loss) was $2.1 billion, which includes $24.4 million attributable to noncontrolling interests, or $2.92 per average basic common share, for the year ended December 31, 2025 compared to $1.0 billion, which includes $9.9 million attributable to noncontrolling interests, or $1.62 per average basic common share, for the same period in 2024.
Under the terms of the Sales Agreements, we may offer and sell shares of our common stock, having an aggregate offering price of up to $1.5 billion, from time to time through any of the Sales Agents (the “Current At-the-Market Sales Program” and, together with the Prior At-the-Market Sales Program, the “at-the-market sales program”).
Under the terms of the Sales Agreements, we may offer and sell shares of our common stock, having an aggregate offering price of up to $2.5 billion (the “Shares”), from time to time through any of the Sales Agents (the "Current At-The-Market Sales Program" and, together with the 2020 At-The-Market Sales Program, the 2024 At-The-Market Sales Program and the Prior At-The-Market Sales Program, the "at-the-market sales program").
Our GAAP leverage ratio at December 31, 2024 and 2023 was 7.1:1 and 6.8:1, respectively. Our economic leverage ratio, which is computed as the sum of Recourse Debt, cost basis of TBA and CMBX derivatives outstanding, and net forward purchases (sales) of investments divided by total equity was 5.5:1 and 5.7:1, at December 31, 2024 and 2023, respectively.
Our economic leverage ratio, which is computed as the sum of Recourse Debt, cost basis of TBA derivatives outstanding, and net forward purchases (sales) of investments divided by total equity was 5.6:1 and 5.5:1, at December 31, 2025 and 2024, respectively. Our GAAP capital ratio at December 31, 2025 and 2024 was 11.9% and 12.3%, respectively.
Net gains (losses) on other derivatives was $124.9 million for the year ended December 31, 2024 compared to ($294.6) million for the same period in 2023.
Net gains (losses) on other derivatives was ($490.4) million for the year ended December 31, 2025 compared to $124.9 million for the same period in 2024.

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