Annaly(US:NLY)2025-10-30 20:16Financial Performance - Annaly generated earnings available for distribution of $0.73 per share, achieving an economic return of 8.1% for Q3 2025 and 11.5% year-to-date [184]. - Net income for Q3 2025 was $843.1 million, or $1.21 per basic common share, compared to $82.4 million, or $0.05 per share in Q3 2024 [212]. - Net interest income for Q3 2025 increased to $275.8 million from $13.4 million in Q3 2024, reflecting a significant improvement [212]. - Net servicing income for Q3 2025 was $126.3 million, up from $109.6 million in the same period last year [212]. - For the nine months ended September 30, 2025, net income was $1.0 billion, or $1.45 per share, compared to $538.7 million, or $0.80 per share in the same period of 2024 [213]. - Earnings available for distribution for Q3 2025 were $519.9 million, or $0.73 per average common share, compared to $382.5 million, or $0.66 per share in Q3 2024 [214]. - The annualized return on average equity for Q3 2025 was 23.69%, compared to 2.77% in Q3 2024 [215]. - Earnings available for distribution for the nine months ended September 30, 2025, were $1.5 billion, or $2.18 per average common share, compared to $1.1 billion, or $1.98 per average common share for the same period in 2024, reflecting a 36.4% increase in earnings [216]. Portfolio and Asset Management - The Agency MBS portfolio's market value increased by 10% quarter-over-quarter to $87.3 billion, supported by favorable macro conditions [185]. - The Residential Credit business's portfolio grew by $265 million to $6.9 billion in economic market value of assets, with record securitization volumes of $3.9 billion in Q3 2025 [190]. - The investment portfolio at period-end was $122.1 billion, up from $97.7 billion in the previous year [212]. - Total financial assets amount to $119.65 billion, with $82.26 billion in agency mortgage-backed securities [342]. - The portfolio composition as of September 30, 2025, includes 68.2% agency mortgage-backed securities and 27.5% residential mortgage loans [352]. Economic and Market Conditions - The U.S. economy showed resilience with a GDP growth forecast of 2.7% for Q3 2025, despite a government shutdown delaying data releases [197]. - Consumer spending growth tracked at 2.8% SAAR in Q3 2025, rebounding from 1.5% SAAR in the first half of the year [198]. - The housing market is experiencing slight negative home price appreciation, with continued pressure expected into the winter seasonals [192]. - Mortgage spreads tightened by 8 to 12 basis points relative to Treasury hedges during the quarter, with lower and intermediate coupons performing strongly [186]. Interest Rates and Leverage - The economic leverage decreased slightly to 5.7x, with cash and unencumbered Agency MBS totaling $5.9 billion [184]. - The Federal Reserve cut the target range for the Federal Funds rate by 25 bps to 4.00% - 4.25% in September 2025, with expectations of two additional cuts in 2025 [201]. - The 10-year Treasury yield ended Q3 2025 at 4.15%, down 8 bps from the previous quarter [202]. - The GAAP leverage at period-end was 7.1:1, consistent with the previous year [215]. - The economic leverage ratio indicates the use of capital coupled with borrowed funds to invest primarily in real estate-related investments, aiming for positive risk-adjusted returns [231]. Risk Management - The company utilizes interest rate swaps linked to SOFR to manage interest rate risk effectively [347]. - The company has continued to diversify its financing profile by adding new non-mark-to-market facilities and financing options under existing facilities for its Residential Credit operating segment [328]. - Liquidity stress testing is conducted to ensure sufficient liquidity under various market scenarios [343]. - The Cybersecurity Committee oversees cybersecurity risk management processes, including daily monitoring and escalation of issues as needed [362]. - The company closely monitors its REIT status and compliance with applicable regulations to mitigate compliance, regulatory, and legal risks [366]. Capital and Funding - Annaly raised approximately $1.1 billion of equity in Q3 2025, including $275 million from its first preferred stock issuance since 2019 [184]. - The company has authorized a new common stock repurchase program of up to $1.5 billion through December 31, 2029, replacing the previous program [302]. - The company issued 39.0 million and 102.0 million shares under the at-the-market sales program for proceeds of $823.3 million and $2.1 billion during the three and nine months ended September 30, 2025, respectively [306]. - The company reported a net fair value of ($21.2) million for interest rate swaps as of September 30, 2025 [294]. Operational Performance - G&A expenses increased to $148.4 million for the nine months ended September 30, 2025, up $21.0 million from the same period in 2024, primarily due to higher compensation and professional fees [273]. - The company has entered into Distribution Agency Agreements with various financial institutions, allowing for an aggregate offering price of up to $2.0 billion under the Current At-The-Market Sales Program [305]. - The company maintained liquid assets totaling $88.81 billion, representing 96.12% of the carrying amount of encumbered and unencumbered financial assets [336].