Annaly Capital Management, Inc. (NLY): Business Model Canvas [Dec-2025 Updated]

You're looking to cut through the noise and really understand the mechanics behind Annaly Capital Management, Inc., especially given their recent 13.9% dividend yield, and honestly, it's a masterclass in spread and leverage for a mortgage REIT. At its core, the business is about skillfully managing a massive $97.8 billion investment portfolio, heavily weighted in Agency MBS, by constantly balancing the cost of short-term funding-like that 3.96% average cost of funds in Q3 2025-against asset yields, all while using derivatives to keep interest rate hedges tight. We've broken down the entire operation into the nine essential building blocks, from their key activities like programmatic securitization to their core customer segments seeking that high income, so you can see precisely where the risk and the reward live in this model.

Annaly Capital Management, Inc. (NLY) - Canvas Business Model: Key Partnerships

You're looking at the essential relationships that keep Annaly Capital Management, Inc. (NLY) running its complex mortgage finance engine. These aren't just vendors; these are the critical counterparties that enable the leverage and scale required of the world's largest residential mortgage real estate investment trust (REIT).

Major investment banks for repurchase agreements (repo financing)

Securing short-term funding through repurchase agreements (repo) is the lifeblood of Annaly Capital Management, Inc.'s Agency MBS strategy. The ability to consistently roll and upsize this financing is paramount. For instance, in the third quarter of 2025, management reported adding approximately $8.6 billion of repo principal at attractive spreads. This followed an addition of about $5 billion of repo principal in the second quarter of 2025. The focus on duration management is clear; the weighted average repo days extended to 50 days as of March 31, 2025, and was maintained at a healthy 49 days as of June 30, 2025. While specific bank names aren't always public, the scale of the financing infrastructure is evident across Annaly Capital Management's other secured facilities.

Here's a look at the capacity across the secured financing facilities supporting the credit businesses as of late 2025:

PennyMac Financial Services for MSR subservicing and recapture

The partnership with PennyMac Financial Services, Inc. is a strategic move to enhance Annaly Capital Management, Inc.'s Mortgage Servicing Rights (MSR) strategy. On October 1, 2025, the firms announced an agreement where Annaly purchased an MSR portfolio from PennyMac, with PennyMac handling all servicing and recapture activities for those loans. This initial transaction involved MSR with an unpaid principal balance (UPB) of an initial $12 billion. This helps Annaly grow its MSR holdings, which stood at a market value of $3.5 billion as of September 30, 2025, comprising approximately 680,000 loans totaling $219 billion in UPB as of June 30, 2025. To put PennyMac's servicing scale into perspective, as of June 30, 2025, they serviced loans totaling $700 billion in UPB.

Fannie Mae, Freddie Mac, and Ginnie Mae (Agency MBS guarantors)

The relationship with the Government-Sponsored Enterprises (GSEs) is foundational, as their guarantees on Agency MBS eliminate credit risk for Annaly Capital Management, Inc.'s largest asset class. The Agency Group is the core, and as of September 30, 2025, this portfolio amounted to $87.3 billion, representing about 98% of the entire securities portfolio. This portfolio saw a 10% increase in Q3 2025. Annaly Capital Management, Inc. deploys capital into specific coupon securities to optimize carry and prepayment protection.

Key areas of deployment in the Agency MBS portfolio as of late 2025 included:

• Specified pools with call protection in the 5.5% and 6.0% coupon range.
• TBA (To-Be-Announced) securities in the 4.0% and 4.5% coupon range (as of Q1 2025).

Institutional counterparties for derivative and hedging transactions

To manage the interest rate risk inherent in holding long-duration assets funded by short-term liabilities, Annaly Capital Management, Inc. relies heavily on derivatives. The firm maintained a defensive hedge position throughout 2025. As of the third quarter of 2025, the hedge ratio remained unchanged at 92%. New hedges were primarily allocated to swaps, which offer a favorable carry profile, though the firm maintains the nimbleness to adjust between swaps and treasury risk based on market signals.

Correspondent channel partners for residential whole loan sourcing

The Residential Credit strategy, executed primarily through the Onslow Bay Financial LLC (OBX) subsidiary, depends on its network of originators. OBX acts as a preeminent correspondent aggregator, purchasing closed, funded residential whole loans directly from its partners. This channel is highly diversified, featuring over 260+ approved correspondents, which mitigates reliance on any single counterparty. This focus on proprietary assets through the correspondent channel remains a key emphasis for manufacturing high-quality assets.

Milestones and volumes from the correspondent channel through late 2025:

• OBX closed its 100th residential whole loan securitization (OBX 2025-NQM22).
• Cumulative issuance for OBX since 2015 is more than $45 billion.
• Since inception in April 2021 through September 30, 2025, OBX aggregated $30 billion in expanded credit loans.
• In Q2 2025 alone, OBX generated $5.3 billion of locks and funded $3.7 billion of loans.

Finance: draft Q4 2025 counterparty exposure report by January 15, 2026.

Annaly Capital Management, Inc. (NLY) - Canvas Business Model: Key Activities

You're focused on the core engine driving Annaly Capital Management, Inc.'s performance, which means looking directly at the actions they take daily to manage their assets and capital structure. These aren't abstract goals; they are concrete, measurable activities that define their business.

Active management of the $87.3 billion Agency MBS portfolio

The primary activity centers on the Agency mortgage-backed securities (MBS) portfolio, which stood at $87.3 billion in market value as of the third quarter of 2025, representing a 10% quarter-over-quarter growth. This segment is the largest part of the total investment portfolio, which aggregated $97.8 billion. Management's action here involves deploying newly raised accretive capital predominantly into these high-quality, liquid Agency MBS and CMBS. Specifically, they are focused on enhancing prepay protection and carry by adding specified pools in the 5.5% through 6.0% coupon ranges.

Executing interest rate hedges to maintain a stable 92% hedge ratio

A critical, ongoing activity is risk mitigation through hedging. Annaly Capital Management actively executes interest rate hedges to protect the portfolio's value against adverse rate movements. The firm has maintained a defensively positioned hedge portfolio, keeping the hedge ratio stable at 92% through the third quarter of 2025. This involves maintaining a balanced mix of swaps and Treasuries, with a noted overweight in swaps due to the superior carry.

Programmatic securitization of Residential Credit assets, closing $3.9 billion in Q3 2025

Annaly Capital Management continues its role as a programmatic securitization sponsor within its Residential Credit strategy. This activity involves structuring and closing deals to recycle capital and realize gains. In the third quarter of 2025, the Residential Credit Group priced eight securitizations totaling $3.9 billion. This effort supported the segment's growth, bringing the Residential Credit portfolio to approximately $6.9 billion in economic market value.

Here's a quick look at the portfolio structure driving these activities as of late 2025:

Raising accretive capital, like the $1.1 billion in Q3 2025, for portfolio expansion

To fund portfolio growth, Annaly Capital Management actively engages in capital raising activities. In the third quarter of 2025, the firm successfully raised $1.1 billion of accretive capital. This capital raise included $823 million of common equity and $275 million of preferred stock. This inflow of capital is a direct input for the key activity of deploying into Agency MBS, as the majority of the capital raised was allocated there.

Managing the Mortgage Servicing Rights (MSR) portfolio for durable cash flow

Managing the MSR portfolio is key for durable cash flow and hedging against prepayment risk on Agency MBS. The MSR portfolio increased by 6% in the third quarter of 2025 to a market value of $3.5 billion. A significant action in this area was a new subservicing/MSR purchase agreement with PennyMac, which enhances recapture economics on approximately $12 billion in unpaid principal balance (UPB) of low-note-rate MSR. The portfolio itself is characterized by:

• Portfolio consists of low coupon, high-quality conventional MSR.
• Weighted average note rate of 3.27%.
• Portfolio value increased by $215 million in market value during Q3 2025.
• Purchases included approximately $300 million in market value across three bulk packages.

These activities collectively supported an economic return of 8.1% for the third quarter of 2025.

Annaly Capital Management, Inc. (NLY) - Canvas Business Model: Key Resources

You need to understand the core assets Annaly Capital Management, Inc. (NLY) relies on to execute its strategy. These aren't just buildings; for a mortgage REIT, the resources are financial scale, proprietary systems, and a specific legal structure.

The sheer size of the balance sheet is a primary resource, allowing Annaly Capital Management, Inc. (NLY) to deploy capital efficiently across its diversified platforms. As of the third quarter of 2025, the scale looked like this:

That liquidity position is critical for maneuvering in the fixed-income markets. Specifically, the available liquid assets include about $5.9 billion in cash and unencumbered Agency MBS, which supports their financing flexibility. The total unencumbered assets, representing excess liquidity, stood at $7.4 billion at the end of Q3 2025.

Beyond the balance sheet numbers, Annaly Capital Management, Inc. (NLY) depends on its intellectual capital and regulatory standing. These intangible assets help shape investment decisions and maintain tax efficiency.

• Proprietary credit and risk management models and expertise, used to identify prepayment trends and optimize risk-adjusted returns across its Agency, Residential Credit, and MSR strategies.
• The Real Estate Investment Trust (REIT) tax status, which generally shields taxable income from federal corporate tax, provided the company adheres to distribution rules.
• The regulatory requirement to distribute aggregate dividends equaling at least 90% of its REIT taxable income for each taxable year, with an endeavor to distribute at least 100% to avoid corporate tax liability.

The firm's economic leverage was maintained at 5.7x as of September 30, 2025, while the hedge ratio remained steady at 92%, showing active management of interest rate risk using these internal models and expertise.

Annaly Capital Management, Inc. (NLY) - Canvas Business Model: Value Propositions

You're looking at the core benefits Annaly Capital Management, Inc. delivers to its investors and the market, grounded in its structure as a mortgage REIT. Honestly, the primary draw for many is the income stream, which is substantial.

High dividend yield, recently around 13.9%, for income-focused investors

The current dividend yield for Annaly Capital Management, Inc. (NLY) is hovering around 12.30%, based on the latest figures, with an annual dividend of $2.80 per share paid quarterly. The last declared quarterly dividend per share was $0.70, with an ex-dividend date of September 30, 2025. This focus on high, consistent payout is central to the value proposition for income-focused investors. What this estimate hides is the payout ratio, which was reported at 125.31% or 117.72% depending on the source, suggesting a reliance on distributable earnings to cover the dividend.

Diversified exposure across Agency, Residential Credit, and MSR segments

Annaly Capital Management, Inc. doesn't put all its eggs in one basket; it actively manages capital across three distinct investment groups. This diversification is key to balancing risk and return profiles across different parts of the mortgage market. As of Q3 2025, the capital allocation looked like this:

The total investment portfolio size as of September 30, 2025, stood at $97.8 billion.

Investment in Agency MBS, offering an implied government guarantee on principal

The Agency Group is the bedrock, providing stability. This segment invests in mortgage-backed securities guaranteed by government-sponsored enterprises like Fannie Mae and Freddie Mac. As of September 30, 2025, this highly liquid portion of the portfolio amounted to $87.3 billion, with most assets carrying an actual or implied 'AAA' rating. This structure offers the crucial value of principal and interest payment guarantees from government-sponsored entities, making it relatively safer.

Active risk management to navigate interest rate and prepayment volatility

To manage the inherent risks in holding long-duration assets, Annaly Capital Management, Inc. employs active hedging. For instance, as of March 31, 2025, the company maintained a defensive duration and hedge position with a 95% hedge ratio. The management team targets specific returns based on market positioning; for example, illustrative levered returns for Agency MBS were projected in the 15%-17% range.

Access to a non-bank issuer platform for residential credit securitization

The Residential Credit Group, managed through its subsidiary Onslow Bay Financial LLC, provides access to the private-label market and serves a segment underserved by traditional banks. Annaly Capital Management, Inc. is recognized as the largest non-bank issuer of Prime Jumbo and Expanded Credit MBS. This platform has been prolific:

• Cumulative issuance for Onslow Bay has surpassed $45 billion since 2015.
• The platform has sponsored 99 deals comprising $45.3 billion of issuance since the beginning of 2018 in its programmatic securitization program.
• As of December 1, 2025, Onslow Bay closed its 100th residential whole loan securitization.

Finance: draft Q4 2025 leverage projection by Monday.

Annaly Capital Management, Inc. (NLY) - Canvas Business Model: Customer Relationships

You're looking at how Annaly Capital Management, Inc. keeps its diverse set of stakeholders informed and engaged. For a company like Annaly Capital Management, Inc., the 'customer' isn't just one group; it spans public shareholders, massive institutional funds, and the critical counterparties that keep the financing engine running. It's all about transparency and deep, direct connection points.

Transparent quarterly earnings calls and investor presentations for public shareholders

Annaly Capital Management, Inc. makes a point of laying out the numbers clearly for its public shareholders. You can expect detailed materials following each quarter's close. For instance, following the third quarter of 2025, the company announced results on October 22, 2025, providing the Q3 2025 Earnings Press Release, Investor Presentation, and Financial Supplement. This level of detail helps you see exactly how the business is performing against its goals. The focus is definitely on showing how the dividend is supported by core earnings.

Here's a snapshot of the dividend coverage from that latest report:

Dedicated investor relations team for institutional and retail inquiries

The weight of institutional money definitely influences how Annaly Capital Management, Inc. manages investor relations. As of late October 2025, institutions held a substantial 56% ownership stake in Annaly Capital Management, Inc.. To keep this influential group happy, the top 25 shareholders alone control about 43% of the company. The IR team manages communication with these large players, alongside the retail base. By September 2025, a total of 21 institutions reported holding a stake in Annaly Capital Management, Inc.. The IR contact information is readily available, listing a phone number of 1-888-8 ANNALY and the email investor@annaly.com.

Direct, ongoing relationships with major Wall Street funding counterparties

The relationships with funding counterparties are absolutely key; they are the lifeblood for financing the asset portfolio. Annaly Capital Management, Inc. diversifies its exposure by using repurchase agreements (repos) with multiple firms. You can see the scale of these relationships in the warehouse facilities:

• Residential Credit facility capacity was $4.2 billion across 10 counterparties as of June 30, 2025.
• MSR business had committed warehouse capacity of $2.1 billion across 4 counterparties as of June 30, 2025.
• The weighted average days to maturity for committed MSR warehouse facilities was 56 days.

The company also maintains significant unencumbered assets, ending Q2 2025 at approximately $6 billion, which includes $4.7 billion in cash and unencumbered Agency MBS, providing a strong buffer.

Proactive communication regarding dividend policy and coverage

You've seen the numbers, but the communication around them is what matters to the retail investor. Annaly Capital Management, Inc. consistently emphasizes that its Earnings Available for Distribution (EAD) covers the common stock cash dividend. For Q3 2025, the $0.73 EAD per share comfortably covered the $0.70 dividend. This is a core message, reinforcing the stability of the payout that many investors rely on. The company's principal business objective is to generate net income for distribution to its stockholders.

Sophisticated, data-driven engagement with loan originators and servicers

On the origination and servicing side, Annaly Capital Management, Inc. uses strategic partnerships and its own platforms to source high-quality assets. This is defintely where the data-driven approach comes in. For example, the Residential Credit correspondent channel, through its Enso Bay joint venture, generated $5.3 billion in locks and funded $3.7 billion of loans in Q2 2025. Furthermore, the Residential Credit Group has been active in securitizations, pricing eight securitizations totaling $4.2 billion since the start of 2025 (as of the Q1 report). A major recent development involves the MSR portfolio: Annaly entered a subservicing relationship with PennyMac Financial Services, Inc. to enhance recapture economics on an initial $12 billion in UPB of MSR, effective October 1, 2025. Finance: draft 13-week cash view by Friday.

Annaly Capital Management, Inc. (NLY) - Canvas Business Model: Channels

You're looking at how Annaly Capital Management, Inc. gets its assets to market and its capital into the business, which is all about high-volume, regulated financial plumbing. The channels they use are critical for deploying capital and managing the balance sheet effectively.

New York Stock Exchange (NYSE) for common and preferred stock trading is the primary public interface for equity capital. Annaly Capital Management, Inc. common stock trades under NLY. As of late 2025, the company's market capitalization hovers around $15.58 billion. Shares outstanding are reported in the hundreds of millions, specifically around 683,031K shares. Trading activity varies; for instance, a recent day saw a volume of 659,731 shares traded, while another day reported a volume of 4,051,616 shares.

For the core business of buying and selling mortgage-backed securities (MBS) and derivatives, Annaly Capital Management, Inc. relies on institutional trading desks. These desks execute transactions in the primary and secondary markets. The Agency MBS portfolio, the largest segment, reached a market value of just over $87 billion as of the end of the third quarter of 2025. Overall, the total investment portfolio stood at $97.8 billion at that time. To manage the interest rate risk inherent in these assets, the firm maintains a high hedge ratio, which was reported at 92%.

Short-term funding is channeled through the repurchase agreement (repo) market. This is where Annaly Capital Management, Inc. secures liquidity to finance its asset holdings. In the third quarter of 2025, the weighted average repo days maintained a healthy position of 49 days. This funding structure supports an economic leverage ratio that ticked down to 5.7x. The firm actively manages its financing capacity; for example, in Q3 2025, they added approximately $8.6 billion of repo principal. Furthermore, the Residential Credit business had total facility capacity of $4.3 billion with 40% utilization as of September 30, 2025, while the MSR warehouse capacity stood at $2.1 billion with 50% utilization.

Loan acquisition flows through the Residential Credit Group's correspondent channel, primarily via its subsidiary, Onslow Bay Financial LLC. This channel is a major source of assets for the credit strategies. In Q3 2025, Onslow Bay closed 8 transactions totaling a record $3.9 billion. The cumulative issuance from this platform since 2015 now exceeds $45 billion, which includes $32 billion in Non-QM issuance. The Residential Credit portfolio market value reached approximately $6.9 billion by the end of Q3 2025.

The firm accesses new equity capital through direct-to-investor capital raises. This is a crucial channel for funding asset deployment. In the third quarter of 2025 alone, Annaly Capital Management, Inc. raised $1.1 billion of accretive equity. This raise included approximately $800 million sourced through its At-The-Market (ATM) common equity program. Additionally, the company reopened the preferred market, raising $275 million through the issuance of its 8.875% Series J fixed-rate cumulative redeemable preferred stock.

Here is a snapshot of key figures related to these channels as of late 2025:

You can see the sheer scale of the balance sheet activity just by looking at the deployment figures. The ability to raise $1.1 billion in a single quarter and deploy it into an $87.3 billion Agency portfolio, while simultaneously funding credit assets through $3.9 billion in securitizations, shows the operational throughput of these channels. It's all about speed and scale in the securitization and financing markets.

• NYSE trading provides access to public equity capital, underpinning the firm's $15.58 billion market cap.
• Institutional desks manage the core asset base, with the Agency MBS portfolio at $87.3 billion.
• Repo market usage is optimized, maintaining 49 days in weighted average repo duration.
• The correspondent channel is active, evidenced by $3.9 billion in Q3 securitizations.
• Direct capital raises, including $800 million via ATM in Q3, fuel asset growth.

Annaly Capital Management, Inc. (NLY) - Canvas Business Model: Customer Segments

You're looking at the different groups Annaly Capital Management, Inc. (NLY) serves, which is key to understanding how they make money and manage risk. For a mortgage REIT, the customer base isn't just who buys the stock; it's also who provides the necessary funding and who buys the assets they create.

Retail and institutional investors seeking high, regular dividend income are central. These are the equity holders who rely on Annaly Capital Management, Inc. for consistent payouts. The commitment to this segment is clear in their dividend policy. As of the third quarter of 2025, the declared common stock cash dividend was maintained at $0.70 per share. To support this, the Earnings Available for Distribution (EAD) for that quarter was $0.73 per average common share, showing solid coverage. The total number of common shares outstanding as of November 2025 was 656,335,974.

Holders of preferred stock (e.g., Series J) with fixed-income preferences provide a more stable, often lower-cost, layer of capital. These investors prioritize the fixed coupon over equity appreciation. For example, the 8.875% Series J Fixed-Rate Cumulative Redeemable Preferred Stock carries a stated coupon of 8.875%. Annaly successfully raised $275 million of preferred stock during the third quarter of 2025 alone. Even as of September 30, 2025, there were cumulative and undeclared dividends of $3.7 million on the Series J Preferred Stock.

Global financial institutions providing short-term funding (repo counterparties) are critical because Annaly Capital Management, Inc. uses repurchase agreements (repo) to finance its large asset portfolio. This is implied leverage in action. Looking at the second quarter of 2025, the weighted average rate on these repurchase agreements at period-end was 4.76%. The overall leverage stance, a measure of how much funding is used relative to equity, was an economic leverage of 5.7x at the end of the third quarter of 2025. Furthermore, the company maintains a high hedge ratio of 92% as of Q3 2025, which is a direct reflection of managing the risk associated with these funding counterparties.

Buyers of securitized products (MBS) issued by Annaly's platforms represent the exit point for Annaly Capital Management, Inc.'s residential credit business, primarily through its Onslow Bay Financial shelf. This platform is a major player; Onslow Bay represents nearly 20% of non-QM (non-qualified mortgage) issuance this year. Year-to-date through the third quarter of 2025, Annaly had priced 24 securitizations totaling $12.4 billion in proceeds. Buyers for a recent non-QM deal included Money managers, insurance companies and hedge funds. The record quarterly issuance for securitizations in Q3 2025 was $3.9 billion.

Financial analysts and rating agencies evaluating mREIT performance are a distinct, though indirect, customer segment. They use the reported numbers to form opinions that influence the broader investor base. Here are some key metrics they focus on from the Q3 2025 results:

The Agency portfolio, which is the largest segment, grew by 10% during the third quarter to reach $87.3 billion.

These segments interact constantly; for instance, the $823 million of common equity raised in Q3 2025, alongside the preferred stock, was deployed predominantly into Agency mortgage-backed securities. This deployment directly impacts the asset base that funding counterparties finance and that investors value for dividend generation. Finance: draft 13-week cash view by Friday.

Annaly Capital Management, Inc. (NLY) - Canvas Business Model: Cost Structure

The cost structure for Annaly Capital Management, Inc. (NLY) in late 2025 is heavily influenced by the cost of funding its substantial asset base and managing interest rate risk.

Interest expense on repurchase agreements (repos) is a primary driver of costs. The average economic cost of funds on interest-bearing liabilities for Annaly Capital Management, Inc. (NLY) was reported at 3.96% in Q3 2025.

Hedging costs are managed actively, with the hedge ratio remaining stable at 92% as of Q3 2025. While the blended hedge mix favored swaps for carry, the firm experienced net negative impacts from derivatives; the net gains (losses) on derivatives for Q3 2025 were $(92.3) million. These losses on hedge positions partially offset asset gains as rates fell during the quarter.

The impact of the Premium Amortization Adjustment (PAA) is reflected in the spread metrics, as the company reports results excluding this item for clearer operational comparison. The Net interest spread ex-PAA was 1.50% in Q3 2025, and the Net interest margin ex-PAA was 1.70%.

Costs associated with the Mortgage Servicing Rights (MSR) portfolio involve subservicing arrangements. Annaly Capital Management, Inc. (NLY) entered a strategic subservicing relationship with PennyMac Financial Services, Inc. for an initial $12 billion in UPB (unpaid principal balance) of MSRs, where PennyMac handles all servicing and recapture activities. The MSR portfolio itself had a market value of $3.5 billion as of Q3 2025.

Key financing and risk metrics that underpin the cost structure include:

• Economic leverage ratio: 5.7x as of Q3 2025.
• Weighted average repo days: approximately 49.
• Average repo rate improved by three basis points to 4.5% in Q3 2025.

Here's a quick look at the relevant financial structure data from Q3 2025:

The General and administrative expenses (G&A) for internal management and operations are not explicitly detailed in the provided Q3 2025 highlights, so that specific dollar amount isn't available here. The firm is internally managed, which impacts the G&A profile relative to externally managed peers.

The MSR portfolio, representing 19% of dedicated capital, carries stable cash flows due to its low-note-rate profile.

Finance: draft 13-week cash view by Friday.

Annaly Capital Management, Inc. (NLY) - Canvas Business Model: Revenue Streams

The revenue streams for Annaly Capital Management, Inc. (NLY) in late 2025 are heavily reliant on the spread between the yield on its assets and its cost of funding, supplemented by performance in its credit and servicing businesses.

Net Interest Income (NII) and Spread Performance

The core revenue driver is Net Interest Income (NII), which comes from the spread earned on the investment portfolio. For the third quarter of 2025, Annaly Capital Management, Inc. generated an average yield on interest-earning assets of 5.46%, up from 5.41% in the prior quarter. The funding side saw the average repo rate improve by three basis points to 4.5%. This resulted in the net interest spread ex-PAA increasing again to 1.5%, while the net interest margin ex-PAA was comparable with the prior quarter at 1.7%.

The primary components contributing to the overall financial performance that supports distributions are summarized below:

Gains and Losses from Investment Activities

Realized and unrealized gains or losses on investment securities and derivatives are a volatile but significant component of total revenue. For the third quarter of 2025, the company reported specific figures for these activities:

• Net gains (losses) on investments: $561.9M.
• Net gains (losses) on derivatives: $(92.3)M.

The total revenue for the quarter was reported as $759.33 million, which significantly beat forecasts.

Mortgage Servicing Rights (MSR) and Residential Credit Contributions

Cash flows and gains from the Mortgage Servicing Rights (MSR) portfolio and the Residential Credit business provide diversification and fee-based income streams. The MSR portfolio grew 6% to a market value of $3.5 billion at the end of Q3 2025. The company highlighted that its focus on low note rate MSRs is expected to provide durable, predictable cash flows.

The Residential Credit business saw increased yields driven by securitization activity:

• Record quarterly securitization issuance totaled nearly $4 billion.
• Average yields on securitization loan purchases rose to 6.29%.
• The Residential Credit portfolio reached $6.9 billion.

The company also announced a strategic subservicing relationship with PennyMac Financial Services, Inc. involving the servicing and recapture activities for an initial $12 billion in UPB of MSR sold to Annaly Capital Management, Inc.

Earnings Available for Distribution (EAD)

The ultimate measure of distributable earnings for Annaly Capital Management, Inc. shareholders was $0.73 per average common share for the third quarter of 2025. This figure was consistent with the second quarter of 2025 and again exceeded the common stock cash dividend of $0.70 per share for the third quarter. The economic return for the quarter was 8.1%.