Company: NLY-PF
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001628280-25-023811
Chunk: 132

Company: ANNALY CAPITAL MANAGEMENT INC
Filing Date: 2025-05-08
Form: 10-Q
Item: Part I, Item 1
Chunk 132
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Investment/Market Risk Management62Credit Risk Management63Counterparty Risk Management63Operational Risk Management64Compliance, Regulatory and Legal Risk Management65Critical Accounting Estimates65Valuation of Financial Instruments66Residential Securities66Residential Mortgage Loans66MSR66Interest Rate Swaps67Revenue Recognition67Consolidation of Variable Interest Entities67Use of Estimates67Glossary of Terms68

36

ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIESItem 2. Management’s Discussion and Analysis 

Overview

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 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.

For a full discussion of our business, refer to the section titled “Business Overview” in our most recent Annual Report on Form 10-K.

Business Environment 

The first quarter of 2025 (“Q1 2025”) saw the Trump Administration entering its second term, ready to make meaningful changes across several different policy areas including trade, immigration, fiscal policy, and regulation. While many initiatives, most notably easing of financial regulation, should be supportive of U.S. businesses and financial markets in the medium-term, rapid and concurrent reform announcements introduced uncertainty and financial market volatility in the short-term. 

The market volatility was primarily driven by the rollout of several tariff measures in March and April. These announcements have led to decreased business and consumer confidence, risking lower activity data in quarters to come if businesses or consumers alter their behavior. Of note, Q1 2025 activity data remained relatively strong, with consumption and business activity expanding at roughly the same rate as in prior quarters. However, aggregate U.S. gross domestic product (“GDP”) declined modestly in the quarter as higher import volumes reduced economic activity in the GDP growth calculation. Additionally, inflation slowed marginally in the quarter, with personal consumption expenditures excluding food and energy (“core PCE”) running at 3.5% seasonally adjusted annualized rate (“SAAR”), slightly below the 3.7% SAAR recording in Q1 202