Annaly Capital Management Files 2024 10-K

TL;DR

Annaly's 2024 10-K is in. Full financials and strategy details out now.

AI Summary

Annaly Capital Management Inc. filed its 2024 10-K on February 13, 2025, reporting on its fiscal year ending December 31, 2024. The company, a real estate investment trust, is incorporated in Maryland and headquartered in New York. Key financial details and operational segments are outlined in the filing, which also includes information on preferred stock series and asset pledges.

Why It Matters

This filing provides investors with a comprehensive overview of Annaly Capital Management's financial performance, strategic positioning, and risk factors for the fiscal year 2024, crucial for investment decisions.

Risk Assessment

Risk Level: medium — As a real estate investment trust, Annaly is subject to market fluctuations, interest rate changes, and regulatory risks inherent in the financial sector.

Key Numbers

• 2024-12-31 — Fiscal Year End (Reporting period for the 10-K)
• 2025-02-13 — Filing Date (Date the 10-K was submitted to the SEC)

Key Players & Entities

• ANNALY CAPITAL MANAGEMENT INC (company) — Filer
• 2024-12-31 (date) — Fiscal Year End
• 2025-02-13 (date) — Filing Date
• New York (location) — Business Address City
• Maryland (location) — State of Incorporation

FAQ

Key Financial Figures

• $0.01 — ch Registered Common Stock, par value $0.01 per share NLY New York Stock Exchange
• $65.7 billion — lar basis. At December 31, 2024, we had $65.7 billion of repurchase agreements outstanding.
• $31.0 billion — eals as of December 31, 2024 comprising $31.0 billion of issuance since the beginning of 2018
• $11.0 billion — issued 21 OBX securitizations backed by $11.0 billion of residential whole loans. We utilize

Filing Documents

• nly-20241231.htm (10-K) — 4244KB
• a202410-knlyexhibit211.htm (EX-21.1) — 21KB
• a202410-knlyexhibit231.htm (EX-23.1) — 5KB
• a202410-knlyexhibit311.htm (EX-31.1) — 14KB
• a202410-knlyexhibit312.htm (EX-31.2) — 14KB
• a202410-knlyexhibit321.htm (EX-32.1) — 7KB
• a202410-knlyexhibit322.htm (EX-32.2) — 7KB
• nly-20241231_g1.jpg (GRAPHIC) — 100KB
• nly-20241231_g2.jpg (GRAPHIC) — 94KB
• nly-20241231_g3.jpg (GRAPHIC) — 200KB
• 0001628280-25-005451.txt ( ) — 18543KB
• nly-20241231.xsd (EX-101.SCH) — 102KB
• nly-20241231_cal.xml (EX-101.CAL) — 116KB
• nly-20241231_def.xml (EX-101.DEF) — 451KB
• nly-20241231_lab.xml (EX-101.LAB) — 1012KB
• nly-20241231_pre.xml (EX-101.PRE) — 748KB
• nly-20241231_htm.xml (XML) — 3464KB

Business

Business 1 Item 1A.

Risk Factors

Risk Factors 11 Item 1B. Unresolved Staff Comments 44 Item 1C. Cybersecurity 44 Item 2.

Properties

Properties 44 Item 3.

Legal Proceedings

Legal Proceedings 44 Item 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

Management's Discussion and Analysis of Financial Condition and Results of Operations 49 Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 91 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 91 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 91 Item 9A.

Controls and Procedures

Controls and Procedures 91 Item 9B. Other Information 94 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 94 PART III Item 10. Directors, Executive Officers and Corporate Governance 95 Item 11.

Executive Compensation

Executive Compensation 95 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 95 Item 13. Certain Relationships and Related Transactions, and Director Independence 96 Item 14. Principal Accounting Fees and Services 96 PART IV Item 15. Exhibits, Financial Statement Schedules 97 Exhibit Index 97 Item 16. Form 10-K Summary 100

Financial Statements

Financial Statements 101

Signatures

Signatures II-1 Special Note Regarding Forward-Looking Statements This presentation, other written or oral communications, and our public documents to which we refer contain or incorporate by reference certain forward-looking statements which are based on various assumptions (some of which are beyond our control) and may be identified by reference to a future period or periods or by the use of forward-looking terminology, such as "may," "will," "believe," "expect," "anticipate," "continue," or similar terms or variations on those terms or the negative of those terms. Such statements include those relating to the Company's future performance, macro outlook, the interest rate and credit environments, tax reform and future opportunities. Actual results could differ materially from those set forth in forward-looking statements due to a variety of factors, including, but not limited to, changes in interest rates; changes in the yield curve; changes in prepayment rates; the availability of mortgage-backed securities ("MBS") and other securities for purchase; the availability of financing and, if available, the terms of any financing; changes in the market value of the Company's assets; changes in business conditions and the general economy; the Company's ability to grow its residential credit business; the Company's ability to grow its mortgage servicing rights business; credit risks related to the Company's investments in credit risk transfer securities and residential mortgage-backed securities and related residential mortgage credit assets; risks related to investments in mortgage servicing rights; the Company's ability to consummate any contemplated investment opportunities; changes in government regulations or policy affecting the Company's business; the Company's ability to maintain its qualification as a REIT for U.S. federal income tax purposes; the Company's ability to maintain its exemption from registration under the Investment Company Act of 1940; and oper

BUSINESS

ITEM 1. BUSINESS PART I

BUSINESS

ITEM 1. BUSINESS "Annaly," "we," "us," or "our" refers to Annaly Capital Management, Inc. and our wholly-owned subsidiaries, except where it is made clear that the term means only the parent company. Refer to the section titled "Glossary of Terms" located at the end of Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations." for definitions of certain of the commonly used terms in this annual report on Form 10-K. The following description of our business should be read in conjunction with the Consolidated Financial Statements and the related Notes thereto, and the information set forth under the heading "Special Note Regarding Forward-Looking Statements" in Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations." INDEX TO ITEM 1. BUSINESS Page Business Overview 2 Business and Investment Strategy 2 Our Portfolio and Capital Allocation Policy 3 Risk Appetite 3 Capital Structure and Financing 4 Operating Platform 5 Risk Management 6 Information about our Executive Officers 6 Human Capital 7 Regulatory Requirements 8 Competition 9 Corporate Governance 9 Distributions 10 Available Information 10 1 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES

BUSINESS

ITEM 1. BUSINESS Business Overview Introduction We are a leading diversified capital manager with investment strategies across mortgage finance. Our principal business objective is to generate net income for distribution to our stockholders and optimize our returns through prudent management of our diversified investment strategies. We are an internally-managed Maryland corporation founded in 1997 that has elected to be taxed as a real estate investment trust ("REIT"). Our common stock is listed on the New York Stock Exchange under the symbol "NLY." We use our 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. We believe that our business objectives are supported by our size and conservative financial posture relative to the industry, the extensive experience of our employees, the diversity of our investment strategy, a comprehensive risk management approach, the availability and diversification of financing sources and our operational efficiencies. Investment Groups Our three investment groups are primarily comprised of the following: Investment Groups Description Annaly Agency Group Invests in Agency mortgage-backed securities ("MBS") collateralized by residential mortgages which are guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae and complementary investments within the Agency market, including Agency commercial MBS. Annaly Residential Credit Group Invests primarily in non-Agency residential whole loans and securitized products within the residential and commercial markets. Annaly Mortgage Servicing Rights Group Invests in mortgage servicing rights ("MSR"), which provide the right to service residential mortgage loans in exchange for a portion of the interest payments made on the loans. For more information refer to the Note titled "Segments" in the Notes to the Consolidated Financial Statements inc

BUSINESS

ITEM 1. 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. The partnership aims to identify innovative platforms and services that provide efficiencies across our core investment strategies. Our Portfolio and Capital Allocation Policy Under our capital allocation policy and subject to oversight by our Board of Directors ("Board"), we may allocate our investments within our target asset classes as we determine to be appropriate from time to time. Our Board may adopt changes to our capital allocation policy and targeted assets at its discretion. The nature of our assets and our operations are intended to meet our REIT qualification requirements and our exemption from registration as an investment company under the Investment Company Act of 1940, as amended ("Investment Company Act"). 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"). (2) Assets exclude assets t

BUSINESS

ITEM 1. BUSINESS Our Board has reviewed and approved the investment and operating policies and strategies that support our risk appetite statement set forth in this Form 10-K. Our Board has the power to modify or waive these policies and strategies to the extent that our Board, in its discretion, determines that the modification or waiver is in our best interests. Among other factors, market developments that affect our policies and strategies or that change our assessment of the market may cause our Board to revise our policies and strategies. We may seek to expand our capital base in order to further increase our ability to acquire new and different types of assets when the potential returns from new investments appear attractive relative to the targeted risk-adjusted returns. We may in the future acquire assets or companies by offering our debt or equity securities in exchange for such opportunities. Target Assets Within the confines of the risk appetite statement, we seek to generate the highest risk-adjusted returns on capital invested, after consideration of the following: The amount, nature and variability of anticipated cash flows from the asset across a variety of interest rate, yield, spread, financing cost, credit loss and prepayment scenarios; The liquidity of the asset; The ability to pledge the asset to secure collateralized borrowings; When applicable, the credit of the underlying borrower; The costs of financing, hedging and managing the asset; The impact of the asset to our REIT compliance and our exemption from registration under the Investment Company Act; and The capital and operational requirements associated with the purchase and financing of the asset. We target the purchase and sale of the following assets as part of our investment strategy. Our targeted assets and asset acquisition strategy may change over time as market conditions change and as our business evolves. Investment Group Targeted Asset Class Description Annaly

BUSINESS

ITEM 1. BUSINESS facilities, corporate bond issuance, convertible bonds, or other liabilities. Equity capital primarily consists of common and preferred stock. 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 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. ("Arcola"), provides direct access to third party funding as a member broker-dealer of the Financial Industry Regulatory Authority ("FINRA"). As an eligible institution, Arcola also raises funds through the General Collateral Finance Repo service offered by the Fixed Income Clearing Corporation ("FICC"), with FICC acting as the central counterparty. 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. 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 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 en

BUSINESS

ITEM 1. BUSINESS efficiencies while expanding the platform. Routine disaster recovery and penetration testing enhances our systems resiliency, security and recovery of critical systems throughout the computing estate. Risk Management Risk is a natural element of our business. Effective risk management is of critical importance to our business strategy. The objective of our risk management framework is to identify, measure, monitor and control the key risks to which we are subject. Our approach to risk management is comprehensive and has been designed to foster a holistic view of risk. For a full discussion of our risk management process and policies please refer to the section titled "Risk Management" of Part II, Item 7. "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

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View this 10-K filing on SEC EDGAR