Annaly(US:NLY)2025-07-23 20:15Financial Performance - GAAP net income of $0.03 per average common share for the quarter, down from $0.15 in the prior quarter [5] - Net income attributable to Annaly was $57.1 million for Q2 2025, down from $124.2 million in Q1 2025, indicating a decline of 54% [16] - Basic net income per share available to common stockholders was $0.03 for Q2 2025, down from $0.15 in Q1 2025 [16] - Comprehensive income attributable to common stockholders was $67.2 million for Q2 2025, down from $317.3 million in Q1 2025 [16] - The company reported a net loss on investments and derivatives totaling $289.5 million in Q2 2025, compared to a loss of $159.7 million in Q1 2025 [16] Earnings and Distributions - Earnings available for distribution ("EAD") of $0.73 per average common share, slightly up from $0.72 in the previous quarter [5] - Earnings available for distribution (EAD) for June 30, 2025, was $489,906,000, an increase from $461,857,000 in March 31, 2025, and $377,139,000 in June 30, 2024 [28] - Earnings available for distribution attributable to common stockholders for June 30, 2025, was $452,646,000, compared to $424,700,000 in March 31, 2025, and $339,981,000 in June 30, 2024 [28] - The company declared a dividend of $0.70 per common share for the quarter ended June 30, 2025, consistent with the previous quarter [19] Asset and Portfolio Management - Total portfolio valued at $89.5 billion, including $79.5 billion in highly liquid Agency portfolio, which increased by 6% [5] - Annaly's Residential Credit portfolio remained stable at $6.6 billion, with record securitization issuance of $3.6 billion during the quarter [5] - Total assets increased to $112.14 billion as of June 30, 2025, up from $105.12 billion in the previous quarter, representing a 1.2% growth [14] - Total securities increased to $73,500,626,000 as of June 30, 2025, up from $67,044,753,000 a year earlier [21] - The total investment portfolio reached $107,525,878,000 as of June 30, 2025, an increase from $90,325,407,000 in the same quarter of 2024 [21] Interest Income and Expenses - Net interest income for Q2 2025 was $273.2 million, a significant increase from $220 million in Q1 2025, reflecting a 24% quarter-over-quarter growth [16] - Interest income rose to $1.42 billion in Q2 2025, compared to $1.32 billion in Q1 2025, marking an 8% increase [16] - Economic interest expense for Q2 2025 was $947,828 thousand, up from $892,748 thousand in Q1 2025 and $806,470 thousand in Q2 2024 [45] - Economic net interest income (excluding PAA) reached $467,203 thousand in Q2 2025, compared to $436,656 thousand in Q1 2025 and $363,549 thousand in Q2 2024 [45] Leverage and Capital Structure - GAAP leverage increased to 7.1x from 6.8x in the previous quarter, while economic leverage rose to 5.8x from 5.7x [5] - Total liabilities reached $98.67 billion, up from $92.03 billion in the previous quarter, an increase of 7.2% [14] - Total GAAP debt as of June 30, 2025, was $95,758,694,000, an increase from $88,629,051,000 in March 31, 2025, and $80,339,332,000 in June 30, 2024 [39] - The company utilizes a mix of debt and equity funding to maintain its desired capital profile and support liquidity during market stress [36] - The company’s capital structure includes repurchase agreements, loans, and securitizations, which are essential for funding its investments [36] Economic Returns and Ratios - Economic return of 0.7% for Q2 2025, with a 3.7% economic return for the first half of the year [5] - The annualized GAAP return on average equity for the quarter ended June 30, 2025, was 1.82%, down from 4.04% in the previous quarter [19] - Economic capital ratio decreased to 14.3% as of June 30, 2025, compared to 14.8% as of March 31, 2025, and 14.4% as of June 30, 2024 [40] - Annualized EAD return on average equity for June 30, 2025, was 14.86%, up from 14.43% in March 31, 2025, and 13.36% in June 30, 2024 [28] Market and Investment Strategy - The company remains optimistic about opportunities across its three investment strategies, focusing on diversified housing finance portfolio for risk-adjusted returns [4] - The weighted average net rate on interest rate swaps at period-end was -1.33% as of June 30, 2025, compared to -2.17% a year earlier [19] - The hedge ratio was 92% as of June 30, 2025, down from 98% a year earlier [19]