Annaly(US:NLY)2025-05-01 13:00Financial Data and Key Metrics Changes - The economic return for Q1 2025 was 3%, consistent with the previous quarter, with earnings available for distribution per share at $0.72 [18][19] - Book value per share slightly declined to $19.02, a decrease of less than 1% quarter over quarter [19][22] - The common stock dividend was increased from $0.65 to $0.70 per share, reflecting earnings momentum [7][19] Business Line Data and Key Metrics Changes - The Agency portfolio saw a notional growth of $3.5 billion, driven by purchases of intermediate coupon TBAs [10][11] - The Residential Credit portfolio decreased by $340 million quarter over quarter, ending at $6.6 billion in market value [12][13] - The Mortgage Servicing Rights (MSR) portfolio remained relatively unchanged at $3.3 billion in market value [15][16] Market Data and Key Metrics Changes - Economic leverage increased modestly to 5.7 turns, remaining at the low end of the historical range [9][19] - The housing market showed signs of regional disparity, with home price appreciation slowing down due to increased inventory and affordability issues [13][60] - Inventory levels increased by 18% year over year, impacting existing home sales, which were at their lowest since February [57][58] Company Strategy and Development Direction - The company aims to maintain a conservative leverage approach amidst market volatility while focusing on agency investments due to attractive returns [17][37] - The strategic alignment with industry-leading sub-servicing partners is expected to create competitive advantages in the MSR business [15][16] - The company is optimistic about the potential for regulatory reforms that could positively impact the market dynamics [32][71] Management's Comments on Operating Environment and Future Outlook - Management noted that the macroeconomic environment remains uncertain, with volatility expected to persist [9][17] - The outlook for the housing market is stable in the long term, supported by low delinquencies and tight underwriting standards, despite short-term pullbacks [60][61] - The company is prepared for potential market fluctuations with a diversified and actively managed portfolio [17][22] Other Important Information - The company has approximately $7.5 billion in assets available for financing, reflecting a $600 million increase compared to the previous quarter [22] - The weighted average repo days extended to 50 days, indicating a strategic shift in financing [21] Q&A Session Summary Question: Update on book value quarter to date - The book value was off roughly 3.5% as of the latest update, improving from a 4.5% decline post-Easter [25] Question: Outlook for spreads and regulatory impacts - Swap spreads have tightened due to volatility, and regulatory reforms are anticipated to positively influence market conditions [26][32] Question: Thoughts on leverage amidst spread widening - The company is balancing the opportunity to increase leverage against the risks posed by high volatility [36][37] Question: Housing price moderation and systemic risks - Housing price increases are regional, with some areas experiencing declines, but overall, the market remains stable due to strong borrower equity [60][61] Question: Agency portfolio supply-demand dynamics - Demand from fixed income funds was strong before recent volatility, with banks and REITs also showing reasonable demand [85] Question: Impact of rate and spread volatility on loan acquisitions - The company is adopting a more defensive posture in response to increased spreads, but lock volumes remain stable [90]