Core Points - Advanced Flower Capital Inc. (AFC) declared a quarterly dividend of $0.15 per share for the quarter ending September 30, 2025, payable on October 15, 2025, to stockholders of record on September 30, 2025 [1] - The third quarter dividend remains consistent with the second quarter dividend, with the Board evaluating Distributable Earnings each quarter due to uncertainties regarding loan repayments [2] Company Overview - Advanced Flower Capital Inc. is a commercial mortgage real estate investment trust (REIT) that specializes in originating, structuring, underwriting, and managing senior secured mortgage loans, particularly for the cannabis industry in legalized states [3] - The company manages loans ranging from $10 million to over $100 million, secured by quality real estate assets and cash flows [3] Distributable Earnings - Distributable Earnings is a non-GAAP financial measure used by the company to evaluate performance, excluding certain transactions and GAAP adjustments [4][6] - The calculation of Distributable Earnings is similar to Core Earnings but includes Incentive Compensation earned during the period [5] - Distributable Earnings is defined as net income excluding stock-based compensation, depreciation, unrealized gains/losses, expected credit losses, and one-time events [6][7] - The company aims to distribute at least 90% of its annual REIT taxable income, with Distributable Earnings serving as a factor in determining dividend levels [7][8]

Core Insights - Annaly Capital (NYSE:NLY) had a normal quarter with minor changes, experiencing a slight decrease in the value of its assets, which was anticipated, and the stock is currently considered overpriced [1][15] Financial Performance - NLY recorded a minor quarterly book value (BV) decrease that aligned with expectations, with a total net valuation gain of $147 million during Q2 2025, outperforming the projected gain of $110 million [2][10] - Core earnings/EAD for NLY matched expectations with a slight increase compared to Q1 2025, driven by a larger on-balance sheet portfolio size [4][10] - The hedging coverage ratio decreased from 102% to 95%, which was anticipated, indicating a slight reduction in risk management strategies [3][6] Valuation Metrics - The reported GAAP BV per share was $18.45, slightly above the projected $18.35, reflecting a 0.54% outperformance [10] - The stock price is currently at $21.14, leading to a dividend yield of 13.25% and a payout ratio of 96%, indicating a high dividend relative to earnings [12] Market Position - NLY's performance in terms of BV decrease and core earnings increase is expected to outperform most agency mREIT peers, suggesting a relatively strong position in the market [5][14] - The company remains in a good position to maintain its quarterly dividend of $0.70 per common share, despite core earnings only slightly covering this amount [14]

Core Viewpoint - Two Harbors Investment (TWO) experienced a significant decline in book value (BV) during Q2 2025, attributed to legal losses and hedging decisions, leading to a recommendation of "hold" on shares [1][8][10]. Performance Summary - The actual quarterly BV decrease for TWO was 17.2%, which was worse than the projected 14.8% decline, indicating a severe underperformance [2][8]. - A unique legal dispute with the previous external manager negatively impacted TWO's BV during the quarter [2][10]. - Hedging decisions made by TWO had a negative effect on BV but positively influenced core earnings/EAD [3][7]. Portfolio Management - TWO maintained the size of its on-balance sheet fixed-rate agency MBS/investment portfolio, contrary to expectations of asset shedding due to legal issues [4][10]. - The company made bulk purchases of $6.4 billion in MSRs, resulting in a $2.0 billion increase in UPB, which was contrary to the anticipated decrease [5][10]. - The derivatives sub-portfolio underperformed expectations, primarily due to the lack of asset sales and an increase in the hedging coverage ratio from 77% to 85% [6][14]. Earnings Performance - Core earnings/EAD for TWO modestly outperformed expectations, driven by lower net interest expenses and higher net servicing income [7][8]. - The reported core earnings were $29.594 million, exceeding the projected $24 million, marking a 23.48% beat [18]. Valuation and Recommendations - TWO's current valuation is deemed appropriate, with a hold recommendation due to the ongoing legal matters and the need for spread stabilization [22][23]. - The company’s dividend yield stands at 15.45%, with a payout ratio of 107% [20].

Core Viewpoint - Armour Residential REIT (ARR) experienced a quarter that was largely as expected, with a slight decline in book value and weaker-than-anticipated earnings, primarily due to market fluctuations early in the quarter, although some recovery in June mitigated the impact [1][23]. Book Value and Earnings Performance - ARR reported a minor decrease in book value (BV) of 1.1% during Q2 2025, which was in line with expectations, but it underperformed compared to stronger peers in the agency mREIT sector [11][23]. - The on-balance sheet investment portfolio valuation gain was $16.5 million, closely matching the projected $20.0 million, leading to a BV underperformance of $0.04 per common share [3][23]. - Core earnings/EAD for Q2 2025 were reported at $67.9 million, which was a modest underperformance compared to the estimated $74.0 million, resulting in a variance of $0.071 per share [11][19]. Interest Income and Operational Expenses - Net interest income decreased from $36.3 million in Q1 2025 to $33.1 million in Q2 2025, a decline of $3.2 million, which was below the projected $37.5 million [7][23]. - Operational expenses increased from $13.1 million in Q1 2025 to $14.3 million in Q2 2025, which also contributed to the core earnings underperformance [8][23]. Hedging and Derivative Performance - ARR increased its hedging coverage ratio from 84% to 93% during Q2 2025, which was slightly above the projected range of 85%-90% [4][16]. - The company experienced a derivative valuation loss of $157 million, which was more severe than the anticipated loss of $150 million, contributing to a BV underperformance of $0.09 per common share [4][23]. Sector Comparison and Future Outlook - ARR's performance was weaker compared to peers like AGNC, DX, and NLY, which reported better results in terms of BV and core earnings [23]. - The company is currently rated as a HOLD, with expectations for stabilization in core earnings/EAD in Q3 2025 before any potential rating downgrades [13][24].

Core Insights - Manulife Financial Corporation (MFC) reported second-quarter 2025 core earnings of 69 cents per share, missing the Zacks Consensus Estimate by 2.8%, but showing a year-over-year improvement of 4.5% [1][9] - Core earnings totaled $1.2 billion (C$1.7 billion), reflecting a year-over-year decrease of 7.6% due to strong business growth in Global WAM, Asia, and Canada being offset by unfavorable life insurance claims experience in the U.S. and increased ECL provisions [1][9] New Business Metrics - New business value (NBV) for the quarter was $611 million (C$846 million), representing a year-over-year increase of 15.7% [2][9] - New business contractual service margin (CSM) reached $637 million (C$882 million), up 38.7% year over year [2][9] - Annualized premium equivalent (APE) sales increased by 12.8% year over year to $1.58 billion (C$2.2 billion), indicating strong sales momentum and margin expansion [2][9] Asset Management Performance - Average assets under management and administration in Global Wealth and Asset Management were $726 billion (C$1,005 billion), up 6.4% year over year [3] - Retail net outflows amounted to $3.2 billion, a significant increase of 32-fold year over year, primarily due to lower net sales through third-party intermediaries in North America and money market funds in Mainland China [3] Profitability and Financial Ratios - Core return on equity decreased by 70 basis points year over year to 15% [4] - Financial leverage ratio improved by 140 basis points to 25.6% at the end of the quarter [4] - Life Insurance Capital Adequacy Test ratio stood at 136% as of June 30, 2025, with adjusted book value per common share increasing by 7.4% year over year to $35.78 [4] Segment Performance - Global Wealth and Asset Management division's core earnings were $334 million (C$463 million), up 14.5% year over year [5] - Asia division's core earnings reached $520 million, a 13% increase year over year, with APE sales, new business CSM, and NBV rising by 31%, 34%, and 28% respectively [5] - Canada division's core earnings were $302 million (C$419 million), up 2.7% year over year, while APE sales decreased by 34% [6] - U.S. division reported core earnings of $141 million, down 53% year over year, despite strong business growth reflected in APE sales, new business CSM, and NBV increasing by 40%, 59%, and 12% respectively [7]

Core Insights - FirstEnergy Corp. reported second quarter 2025 GAAP earnings of $268 million, or $0.46 per share, on revenue of $3.4 billion, a significant increase from $45 million, or $0.08 per share, on revenue of $3.3 billion in the same quarter of 2024 [1][9] - Core Earnings (non-GAAP) for the second quarter of 2025 were $0.52 per share, slightly up from $0.51 per share in the second quarter of 2024, reflecting a year-over-year growth [2][10] - The company has deployed $2.5 billion in capital investments through the first half of 2025, aligning with its $5 billion investment plan for 2025 and a broader $28 billion Energize365 program for 2025-2029 [1][3] Financial Performance - Year-to-date GAAP earnings for June 2025 reached $1.09 per share, with Core Earnings at $1.19 per share, marking a 19% increase in Core Earnings year-over-year [1][10] - FirstEnergy affirmed its full-year 2025 Core Earnings guidance of $2.40 to $2.60 per share, targeting the upper half of this range [3][4] - The company expects a compounded annual growth rate of 6-8% in Core Earnings from 2025 through 2029, supported by its capital investment strategy [3][4] Segment Performance - In the Distribution segment, Core Earnings increased by $0.06 per share compared to the second quarter of 2024, primarily due to new base rates in Pennsylvania and lower operating expenses [5] - The Integrated segment's Core Earnings remained flat year-over-year, benefiting from a 14% growth in transmission rate base but offset by lower customer demand [6] - The Stand-Alone Transmission segment saw a decrease of $0.01 per share in Core Earnings compared to the previous year, despite an 8% increase in rate base due to capital investments [7] Special Items and Adjustments - The GAAP results for both the second quarter and first half of 2025 reflect the impact of special items, which include various adjustments that management believes are not indicative of ongoing core activities [12][16] - For the second quarter of 2025, total special items amounted to $0.06 per share, compared to $0.43 per share in the same quarter of 2024 [12]

Core Viewpoint - Dynex Capital (DX) reported a Q2 2025 performance that was largely in line with expectations, with a minor book value (BV) outperformance of 1.6% and core earnings meeting projections. Strong capital raises and timely mortgage-backed securities (MBS) purchases helped mitigate early-quarter volatility [1][2][9]. Financial Performance - The quarterly BV for DX showed a modest decrease, consistent with expectations, amidst a volatile environment for agency mREIT stocks. The BV fluctuations were influenced by market conditions, including a spike in mortgage interest rates and U.S. Treasury yields in early April 2025 [2][3]. - DX's management aggressively raised capital during Q2 2025, increasing on-balance sheet MBS by 25% and off-balance sheet MBS by 33%, exceeding initial projections of 15% and 20% respectively [4][10]. - Core earnings/EAD for DX improved, driven by net interest income that matched expectations, although NDR income slightly underperformed. Operational expenses were largely in line with projections [6][9]. Market Conditions - The early part of Q2 2025 saw market volatility due to proposed tariff policies, which led to increased mortgage interest rates and margin calls for some agency mREIT peers. However, DX was insulated from significant margin calls due to its cash reserves and equity issuance [3][4]. - As market conditions stabilized in May 2025, driven by trade negotiations and reduced economic risks, both stock market and MBS pricing rebounded, contributing to DX's performance [3][4]. Risk and Valuation - DX's risk/performance rating remains at 3, reflecting the need to navigate various risks including spread/basis, leverage, and interest rate fluctuations. The company is projected to experience 1-2 basis point cuts in the Federal Funds Rate in the latter half of 2025 [8][16]. - The current valuation of DX is deemed appropriate, with a HOLD recommendation in place. The company is expected to maintain its dividend payout, although future sustainability will be closely monitored [22][21].

Financial Performance - Net income attributable to common stockholders for Q4 2018 was $197 million, or $034 per share[6] - Net Core Earnings for Q4 2018 were $222 million, or $038 per share[6] - Book value was $1,1323 million, or $1966 per share in Q4[6] - A dividend of $043 per share was paid for Q4, equating to an 85% annualized dividend yield[6] Portfolio Activity - Originated $9080 million of floating-rate senior loans in Q4 2018[6] - Total loan originations for 2018 reached $27 billion[6] - The outstanding total loan portfolio was $41 billion, a 98% increase from Q4 2017[6] - 98% of the portfolio is floating-rate[6] Capitalization and Financing - $13 billion of undrawn financing capacity was available[6] - The non-mark-to-market term loan financing facility was increased by $4000 million to $10 billion[6] - A $10 billion managed collateralized loan obligation was issued, providing $8100 million of non-mark-to-market financing[6] Interest Rate Sensitivity - A 50 basis point increase in one-month USD LIBOR would increase net interest income by $44 million, or $008 per share, over the next twelve months[6]

Financial Performance - Net Income attributable to common stockholders was $24.8 million, or $0.43 per diluted share in 4Q'19[7] - Net Core Earnings were $25.5 million, or $0.44 per diluted share in 4Q'19[7] - The company paid a 4Q dividend of $0.43 per share, equating to an 80% annualized dividend yield[7] - Book value was $1,1220 million, or $1952 per share[7] Portfolio and Originations - The company originated $7641 million of floating-rate senior loans in 4Q'19[7] - Total loan originations for 2019 reached a record of $31 billion, a 14% increase from 2018[7] - The outstanding total portfolio was $51 billion, up 23% from 4Q'18[7] - Senior loans had a weighted average LTV of 66%[7] Financing and Interest Rate Sensitivity - The company had $16 billion of undrawn financing capacity[7] - 72% of outstanding portfolio financing was non-mark-to-market[7] - 999% of the loan portfolio was floating-rate[7]

Core Points - Advanced Flower Capital Inc. declared a quarterly dividend of $0.15 per share for the quarter ending June 30, 2025, payable on July 15, 2025 [1] - The second quarter dividend was affected by a realized loss related to a loan to Public Company A [2] Company Overview - Advanced Flower Capital Inc. is a commercial mortgage real estate investment trust (REIT) that provides loans to state law compliant cannabis operators in the U.S., with loans ranging from $10 million to over $100 million [3] - The company is based in West Palm Beach, Florida, and leverages a deep network and significant expertise in credit and cannabis to manage its loan portfolio [3] Financial Metrics - The company uses "Distributable Earnings" as a non-GAAP financial measure to evaluate performance, which excludes certain transactions and GAAP adjustments [4][6] - Distributable Earnings is defined as net income excluding stock-based compensation, depreciation, unrealized gains/losses, and other non-cash items [6] - The determination of Distributable Earnings is similar to Core Earnings but includes Incentive Compensation earned during the period [5] Dividend Policy - As a REIT, the company is required to distribute at least 90% of its annual taxable income, which influences its dividend payments [7] - Distributable Earnings is one of the factors considered by the Board of Directors when authorizing dividends, although it is not a direct measure of net taxable income [8]